Domestic businesses eye rural retail market
AsemconnectVietnam - Domestic businesses are seeking to develop the rural retail market given fierce competition from foreign rivals, according to Cong Thuong (Industry & Trade) newspaper.
Vietnam was listed among the world’s 30 most attractive retail markets by the US’s AT Kearney Company.
Statistics from the Ministry of Industry and Trade showed that foreign-invested companies make up about 17% of retail market share via trade centres and supermarkets and 70% via convenience stores.
President of the Vietnam Retailers Association Dinh Thi My Loan said the Vietnamese retail market has become more attractive since the country signed free trade agreements.
Policies attracting customers and increasing competitiveness have been implemented, she added.
Some foreign firms have increased their engagement in the race to dominate retail in Vietnam.
For example, Aeon – a Japanese retail giant, has opened four trade centres in Vietnam and plans to increase this number to 20 by 2020.
Japan’s 7-Eleven convenience store chain also announced plans for stores in Ho Chi Minh City last February.
Other overseas groups such as Lotte of the Republic of Korea and Central Group of Thailand have expanded their market share in Vietnam and plan to double and triple their number of stores in the upcoming years.
Therefore, the expansion of goods distribution in rural areas is considered a way for domestic companies to increase competitiveness.
Director of the Business Studies and Assistance Centre Vu Kim Hanh said rural areas have high potential.
If domestic companies don’t seize the chance to dominate this segment, foreign retailers will make use of it, she added.
Vo Van Quyen, head of the Domestic Market Department under the Ministry of Industry and Trade, said the golden population structure and increasing local income are attractive factors of the rural market.
Average purchasing power in rural areas has grown 15% in recent years, he said, adding that Vietnamese retailers could secure the rural market by selling products at reasonable prices.
To dominate this market, Vingroup plans to open an additional 70-80 supermarkets and 1,500 stores in remote districts.
Meanwhile, the Saigon Union of Trading Co-operatives (Saigon Co.op) has built a strategy to make inroads into the rural market via selling essential commodities at supermarkets and convenience stores.