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Retail industry in Vietnam: Undergoing recovery

Retail industry in Vietnam: Undergoing recovery

Friday 20, 05 2022
The retail industry in Vietnam has witnessed a good recovery in the past few months. Retail real estate also enjoys benefits coming from the recovery of the retail industry.

A positive recovery

Vietnam’s retail industry is starting to recover after years of being affected by the COVID-19.

A representative from AEON Vietnam stated that they recorded positive growth during the recent national holiday in early May. For example, AEON Tan Phu in Ho Chi Minh City reported an increase of 30% in the capacity of customers and 50% in purchasing power over the same holiday period in 2021.

AEON Vietnam

Similarly, BigC and MM Mega stated that the number of customers has increased sharply. The representative from MM Mega said that purchasing power was equal to and at some points higher than before the pandemic.

The latest report of the Ministry of Industry and Trade shows that the total retail sales of goods and service revenue in the past 4 months have a remarkable growth compared to the same period last year; goods are abundant, and purchasing power tends to increase.

Specifically, in April 2022, the total retail sales of goods and services reached 455.5 trillion VND, up 3.1% over the previous month and 12.1% over the same period in 2021.

In the first 4 months of this year, the total retail sales of goods and services reached 1,777.4 trillion VND, up 6.5% over the same period last year.

Retail sales of goods in the first 4 months of 2022 increased by 7.6% over the same period last year, and food alone increased by 13.2% due to rising commodity prices. However, garments and household appliances, tools, and equipment in the same period decreased by 3.5% and 4.6%, respectively, over the same period in 2021, because people's income is still low after the prolonged period of the Covid-19 pandemic.

According to the assessment of the Ministry of Industry and Trade, Vietnam’s market of essential commodities does not have large fluctuations in supply and demand. However, due to the influence of the price increase in the global market, the prices of some domestic products such as fertilizers, animal feed, and raw materials, construction steel increased compared to the previous month.

retail industry

According to experts in the retail industry, the increasing number of customers returning to shop in recent months is the driving force leading the market to return to normal. “With GDP growth targeted by the Government at around 6%-6.5% this year, we hope to regain our pre-COVID-19 growth rate,” commented Aeon Vietnam General Director, Furusawa Yasuyuki.

Analysts assess that with the current situation, Vietnam is a potential retail market for goods and attracts many foreign retailers to invest in the business in the coming time.

Retail real estate on the rise

According to the Vietnam Association of Realtors (VARS), the retail market in Vietnam is gradually recovering, promising a positive future for retail real estate, especially in big cities.

VARS points out that big names in the global retail industry are not missing out on the rebound of the retail market in Vietnam. They have been grasping opportunities in the real estate market when the new rental price has just started increasing slightly, establishing a good foundation for a long-term strategy in Vietnam.

After the pandemic, the rise of Vietnam's retail industry comes from the growth in average income and disposable income of people and from shifting shopping habits. Shopping now represents the need for experience aside meets the needs of food, clothing, and consumption. That is an opportunity for the retail real estate sector since it meets the needs of consumers' experiences, while e-commerce and other forms of online shopping cannot.

Vietnam's retail industry

It is forecast that the food and beverage, convenience stores, and pharmaceutical industries will have strong growth potential due to the expansion plans of brands in this field and the demand for consumer experiences.

Besides, in the past 3 years, retail real estate supply has grown slowly, while the demand from big and small brands is constantly recovering after the pandemic. Therefore, the rental price of retail real estate, especially in commercial centers of big cities, is forecasted to increase significantly in the coming time. In Ho Chi Minh City, the rental price of premises is expected to grow by 1.5-3.5% next year. Meanwhile, the rental price increase is forecast to be lower in Hanoi, at about 1-1.5%.

 

Compiled by VietnamCredit

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