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Vietnam’s retail industry: Prospects for 2022

Vietnam’s retail industry: Prospects for 2022

Friday 11, 03 2022
In 2022, Vietnam’s retail industry is expected to reach new heights thanks to its experience in flexibly responding to the pandemic and the economic recovery when entering the state of new normal. Large-scale retail businesses are considered to have many prospects in 2022.

Vietnam’s retail industry on recovery

Many companies in Vietnam’s retail industry have adjusted their plans to expand their businesses. Along with policies to open up the tourism market, ensure adaptation and safety against the pandemic, experts say this is a golden time for the retail industry to recover.

According to a report by Savills Vietnam, the revenue of many retail businesses is recovering from 50-80%. Consumer demand is also recovering strongly.

Savills Vietnam

In addition, the policy of reducing VAT from 10% to 8% and the Economic Recovery Program approved recently by the National Assembly will also be positively impacting Vietnam's retail industry.

Therefore, market research companies anticipate that 2022 will be the year of the retail industry recovery.

Chances and challenges

The retail industry has always been an important bridge between production and consumption, especially in the context of COVID-19. Vietnamese goods currently account for a high proportion in distribution systems, creating outputs for enterprises' products, thereby contributing to promoting products and ensuring the supply chain is not interrupted.

Retail is considered one of the industries strongly affected by the pandemic. Since the outbreak from the end of April 2021, the Vietnamese retail market has seen many companies closing or having to downsize their business models.

However, the retail industry is also assessed to have a positive recovery with remarkable growth. The revenue of some retail companies has begun to grow in the final months of 2021 after service business activities are gradually adapting to the new normal.

foreign enterprises

In 2021, foreign enterprises such as Aeon, Lotte, or retail enterprises with state capital such as Saigon CO.OP, were not very active due to the pandemic. Meanwhile, Masan and The Gioi Di Dong rushed to restructure and promoted M&A to quickly reshape the Vietnamese retail market.

The crisis from the COVID-19 has become an opportunity for large-scale enterprises, especially listed retailers with strong brands and management systems in the market. Large enterprises will reduce the risk of competition, gaining them the advantage of acquiring more market share in most of their main business segments.

As a result, large-scale retail and distribution companies are forecast to recover quickly and grow strongly in 2022.

Trends driving growth for the retail industry

Large-scale retail businesses are considered to have many prospects in 2022. VNDirect company has pointed out three growth trends for the retail industry in 2022.

First, omnichannel and online will become the main driver for retail companies in the new normal. Surfing and researching products are now mainly done online instead of offline. At the same time, the share of spending spent on offline channels is shrinking, according to research by Facebook and Bain & Company.

For listed retail companies, developing an omnichannel strategy is the right move to increase revenue. Putting stores on e-commerce sites will help retailers and distributors expand their customer base and increase sales from these new customers.

Second, the growing demand for smartphones and work-from-home products will continue post-pandemic.

The demand for high-end products is less affected by the pandemic. Meanwhile, tightening regulations on hand-carried goods helps authorized retailers gain more market share.

As for work-from-home products, only 30.7% of Vietnamese households have computers, showing that the computer market still has a lot of growth potential, especially during the period during and after the pandemic when the demand for computer products will increase sharply, thanks to the demand for work from home and entertainment.

Vietnamese households

Third, modern department store chains benefit from the post-pandemic shift from consumption to modern commerce.

According to Kantar Worldpanel, by mid-October 2021, the market share of online channels and small supermarkets fell back to around 6-10% after peaking between August and September 2021. However, market share is still high compared to pre-pandemic, about 3% for online channels and 5% for small supermarket channels, showing the ability of these channels to maintain operations during social distancing and the changes in consumption trends after the pandemic.

 

The Ministry of Industry and Trade forecast that by 2025 the added value of Vietnam's commercial sector will contribute about 13.5% of GDP. The total retail sales of goods and services will increase by 9-9.5%/year from 2021 to 2025. The proportion of total retail sales of modern trade channels will reach about 35-40% by 2025.

With this forecast, the modern trade industry can maintain its growth momentum above double digits throughout the period 2021-2025. Therefore, enterprises with modern sales chains will maintain their growth momentum better than the general market.

 

Source: vtv.vn, thuonghieucongluan.com.vn

Compiled by VietnamCredit

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