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Spire research and Consulting’s comprehensive study on Vietnam’s retail industry

Vietnam Retail – Logistics – Distribution Summit 2010
Ho Chi Minh City, Vietnam, 30 June 2010
Synopsis of Spire’s address to the conference

Synopsis

“Vietnam’s retail industry is set for double digit growth in 2011-13, with retail sales expected to surpass VND2.4 trillion (US$126.1 million) by 2013,” cited Jeffrey Bahar, Spire’s Managing Director for Southeast Asia. In the course of his speech to the 2nd Vietnam Retail – Logistics – Distribution Summit, Jeffrey highlighted key insights on the evolution of modern retail in Vietnam. 

The speech alluded to Spire Research and Consulting’s comprehensive study on Vietnam’s Retail Industry, examining the sea of changes in 2008 –2010 and forecasting the growth trajectory for Vietnam’s modern retail industry in 2011-2013.

Key Retail Trends in Vietnam

Despite the global economic crisis, Vietnam’s retail turnover rose by 18.6 percent in 2009 – an encouraging figure at a time when many retail markets in the world recorded negative growth.

In 2009, Vietnam was named the 6th most attractive emerging market destination for retail investment in the world, owing to increasing demand for consumer goods and rising disposable incomes, along with increased interest from foreign investors.

Significant changes in the country’s retail industry, in terms of both value and format, have been seen in the past few years, primarily driven by:

1. Favorable Economic Factors

2. Strong GDP Growth

In 2009, Vietnam recorded economic growth of 5.3 percent, one of the highest in the Asia Pacific.

3. Changes in Regulatory Structure

Vietnam’s membership in the World Trade Organization has led to a rapid growth in Vietnam’s retail market in the recent past and made the country an attractive destination for multinational retailers.

4. Increasing Consumer Demand for Modern Retail Concepts

Vietnam’s population is one of the youngest in East Asia, with approximately 66 percent between 15 and 59 years of age.

This dominance of the youth segment is an important driver in the country’s economy, as they make up the largest spending group and are expected to fuel retail market growth.

5. Entrance of Established Foreign Retailers

Vietnam’s geographic proximity to key markets such as India and China and developing markets such as Laos and Cambodia has helped the country attract many distributors and retailers as they expanded globally. The current foreign retail landscape includes:

Many foreign retailers & distributors have also unveiled plans to expand distribution networks to cities and provinces throughout the country

Expectations for Vietnam’s Modern Retail Industry, 2011-2013:


With its strong fundamentals, Vietnam’s retail industry is set for double digit growth. The value of retail sales is expected to surpass VND 2.4 trillion by 2013.

“It is expected that by 2010, the modern distribution system will make up 30 to 40 percent of the marketplace, reaching 60 percent by 2020. Many foreign retailers and distributors have also announced plans to expand distribution networks to cities and provinces throughout the country,” said Jeffrey Bahar, Spire’s Managing Director for Southeast Asia.

However, despite the potential of the retail market, the country’s relatively poor infrastructure, especially the highway system, is one of the key hurdles for distributors in delivering goods on time and safeguarding quality during transportation, he added.

 

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