According to Vietnam Report, retail is among the fields influenced the most by the spread of the Covid-19 pandemic, both positively and negatively.
In the second quarter of 2020, the national social distancing order that aimed to curb the spread of the coronavirus disease caused a series of retail stores to close. As a result, the number of businesses that were forced to suspend their operations in the retail industry increased by 21% over the same period in 2019.
As stated in the report of the Ministry of Industry and Trade, for the first 8 months of 2020, the total retail salesrevenue of consumer goods and services decreased slightly by 0.02% if excluding the price factor of 4.5%; meanwhile the 9.5% increase in the same period in 2019.
In addition, as revealed in the statistics of the Business Registration Management Agency under the Ministry of Planning and Investment, in the first 7 months of 2020, the number of enterprises operating in the wholesale and retail sectors that file for a dissolution is the largest as compared to figures in other sectors, reaching more than 8,100 businesses being on the process of being dissolved.
From an industry with a rapid growth in both total retail sales, and the number and size of retailers entering the market in 2019, the retail industry has been hit hard in 2020 due to the outbreak of the Covid-19 pandemic.
The survey conducted by Vietnam Report with the participation of Vietnamese retailers showed that 41.7% of businesses complained to be seriously affected by the Covid-19 pandemic, 50.0% of businesses reported to be moderatedly affected, and only 8.3% of businesses said to have experienced little or no significant adverse effect.
According to retailers in the Vietnam Report survey, the decline in purchasing power and sales, the change in consumer behavior and the shortage of business capital and supply chain breakdown are four difficulties. of the largest number of businesses faced by retailers under the impact of the COVID-19 pandemic.
As the opinion of retailers in the Vietnam Report survey, the decline in the purchasing power and the sales volumes, the change in consumer behavior, the shortage of venture capital, and the breakdown of the supply chain are four major difficulties that retailers have to face under the impact of the Covid-19 pandemic.
Up to 85.3% of consumers in the survey of Vietnam Report said they had to limit their spending. Besides, there wasalso a change in customer behavior with 58.8% of respondents reported to have cut down spending on non-essential products such as clothes and shoes, etc., 70.6% replied to have cut back on sports equipment and outdoor activities,and 36.3% stated to have increased the purchase of health care products, especially organic products in order to boost the immune system against diseases. All of these have had an impact on sales of the retail industry.
44.4% of retail businesses reported to have difficulty, being in short of capital to run business when sales decline while still having to incur daily expenses such as salary payment and related expenses for employees, interest expenses, rent premises, etc.
Even though the revenue from the traditional shopping channel declined substantially, Vietnam's retail industry still recorded positive signs from e-commerce, online shopping and delivery services.
In addition, the Vietnam’s retail industry has always been evaluated to have great potential for development in the long run, with a market of nearly 100 million people, an increasing income level thanks to the stable economic development, and an increase of the middle class as well as new shopping trends.
Another factor to be considered as regards to the outlook of the retail market is the great potential from the EVFTA Agreement, which has come into effect in August. The EVFTA Agreement is considered to open up opportunities for EU businesses, goods and services to access Vietnam market more smoothly.
Compiled by VietnamCredit