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2013 VIETNAM RETAIL - Market, Structure, SWOT, Investment, Entry Strategies, Operations, and Key Players

May 2013 | 52 pages | ID: 2E0C45F9A6BEN
NNMT Advisor

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Despite the fact that the Vietnam’s economy has a slow growth within the past two years, the retail market keeps attracting global and regional players. In addition to Big C and Metro C&C who have been years in Vietnam, there are several others who have tried to strengthen their presence or attempted to penetrate the modern trade sector which is only account for 20% of the whole market at this point in time. Different operators from various segments: shopping malls, grocery retailers and supermarkets, and convenient stores have been working hard to gain new market share. Existing operators such as Parkson, Lotte Mart, Family Mart, and Circle K are competing with newcomers such as Aeon, E-Mart, NTUC Fairprice, and Giant.

We are going to examine many aspects of Vietnam’s Retail Industry. Normally, a retail sector would go through several phases of development: small grocery stores, wet and flea markets, supermarkets, hypermarkets, shopping malls, department stores, convenient stores, E-Commerce, and m-commerce. This would be the case of retail sectors in many economies. However, for Vietnam, one can find most, if not all, physical presents of retail sector at a time, growing together and surviving the competition. In Ho Chi Minh City, one can go to buy a cigarette box at a small grocery store in Tran Hung Dao Street and drives his wife to pick up a perfume at a Vincom mall when she just needs to cross out one or two blocks to meet her friends busy shopping for clothing at a department store in Dong Khoi Street. His maid might go to a nearby supermarket Co.op for some foods while his son steps into a convenient store Family Mart for an ice cream or snack. He could eventually order some stuffs via local E-commerce website chodientu.vn and purchase something else using his mobile phone to pay via an application MobiVi. Vietnam does not move step by step in retail development path. Instead, one could see Vietnam’s retail’s progress impressive and chaotic.

Vietnam was ranked as one of the top emerging markets for retail in 2008-2009 but since then its rankings have continued to fall as the Vietnamese economy has not performed as well and stably as others. There are several reasons for that pull-back but it cannot be denied that the potential is great and is still there. Increasing demand of consumer goods and rising disposable incomes will be driving potential growth in a 90-million-population economy. Also, rising urbanization and expanding rural retail area promoted by improved infrastructure will be facilitating such growth. Within the past few years, market players have been increasing their presence in Vietnam. The number of modern stores, supermarkets, and shopping malls has increased tremendously. So has the number of foreign brands been penetrating into the market. Market volume is estimated at US$ 123.8 billion by end of 2013.

Numbers never tell lies. We are confident that with processed data collected from reliable trade sources, interviews with decision makers in the field, and our own observations and analyzed insights, readers can use our findings in several ways such as the followings:
  • A strategic industry review and analysis that covers historical development and relevant foundation, industry structure, overall industry strategies, and major considerations for investments and businesses;
  • A helpful reference manual of the Vietnamese retail sector that indentifies challenges and strategies for entering the market, that points out areas for continuous improvement, that forecasts development and market trends, and that reports where market opportunities exist.
  • A deep report of metrics of several major retailers, both local and international brands such as Saigon Coop, Big C, and Metro Cash & Carry;
  • A management case study for any stakeholders in the retail sector;
This comprehensive dataset includes a full suite of up to more than 50 figures and tables containing about 600 key metrics and indicators that feature our deep interaction with more than 60 companies in the Vietnamese retail industry. We are confident that our endless efforts and selective study methods have made the research and report reliable and helpful. At such, policy makers, local and foreign retailers, suppliers, and any stakeholders of the retail industry could find great implications for their future directions and actions.

For readers’ convenience, the report is structured into the following components: Market, Structure, SWOT, Investment Considerations, Entry Strategies, Operations, Industry Forward Looking, and Key Players’ Profiles.
1 EXECUTIVE SUMMARY

2 METHODOLOGY

3 OVERVIEW ABOUT RETAIL DEVELOPMENT IN VIETNAM

4 INDUSTRY STRUCTURE OF VIETNAM’S RETAIL

5 SWOT ANALYSIS FOR VIETNAM’S RETAIL

5.1 STRENGTHS
5.2 WEAKNESSES
5.3 OPPORTUNITIES
5.4 THREATS

6 INVESTMENT CONSIDERATIONS

6.1 LEGAL FRAMEWORK
6.2 KEY SUCCESS FACTORS
6.3 MAJOR CHALLENGES FOR INVESTORS
6.4 DIFFERENCES AMONG CATEGORIES OF PLAYERS
6.5 REAL-LIFE EXAMPLE OF AN INVESTMENT PROJECT

7 MARKET ENTRY STRATEGIES

7.1 STRUCTURE OF MODERN RETAIL
7.2 COMMON ENTRY STRATEGIES
7.3 ENTRY BARRIERS
7.4 M&A IN THE SECTOR

8 OPERATIONAL ISSUES

8.1 COST AND COST STRUCTURE
8.2 SOPHISTICATED AND DYNAMIC CONSUMER BEHAVIORS
8.3 SUPPLY CHAIN AND DISTRIBUTION NETWORK
8.4 SUPPLY OF HUMAN RESOURCES
8.5 TECHNICAL SOLUTIONS

9 INDUSTRY FORWARD LOOKING

10 PROFILES OF KEY RETAILERS

10.1 SAIGON CO.OP (SGC)
10.2 HAPRO MART
10.3 VINATEX MART
10.4 BIG C
10.5 LOTTE MART
10.6 METRO CASH & CARRY

TABLE OF FIGURES

Figure 1: GDP vs. Retail Sales in Vietnam
Figure 2: Key Indicators of Economy and Retail Development in Vietnam (1995-2007)
Figure 3: Key Indicators of Economy and Retail Development in Vietnam (2008-2013)
Figure 4: A Floating Market in Mekong Delta
Figure 5: An Old Grocery Store in Hoi An
Figure 6: Vietnam's Retail Structure (Traditional Trade vs. Modern Trade)
Figure 7: Vietnam's Retail Components (Shopping Malls, Supermarkets, Convenient Stores, and Wet Markets)
Figure 8: SWOT Analysis for Vietnam's Retail
Figure 9: Vietnam as an Urbanizing Society
Figure 10: Geographical Concentration & Urbanization
Figure 11: Vietnam’s Golden Population Structure
Figure 12: Wealth Distribution among Vietnamese Households
Figure 13: Assessment of Disposable Incomes vs. Expenditures in Hanoi and Ho Chi Minh City
Figure 14: Review of Personal Income Tax Indicators
Figure 15: Vietnam Literacy
Figure 16: Vietnam Tourism
Figure 17: Vietnam’s Infrastructure Development
Figure 18: Key Information and Telecommunications Indicators
Figure 19: Renting Fee in Shopping Malls and Department Stores (early 2013)
Figure 20: Employment in the Retail Industry in Vietnam (2009-2013)
Figure 21: Monthly Inflation
Figure 22: A Comparison between ROI and Lending Rate in Vietnam
Figure 23: Demand-side Contribution to Growth
Figure 24: Ho Chi Minh City's Retail Stocks vs. Those of Comparable Cities in the Region
Figure 25: Licensed Foreign Investment Projects in Ho Chi Minh City
Figure 26: Key Success Factors for Chosen Retail Business Strategies
Figure 27: Challenges Facing Retailers in Vietnam
Figure 28: Evaluation of Key Business Factors among Different Kinds of Retailers in Vietnam
Figure 29: An Investment Case: A Shopping Mall Project Proposed in Binh Duong Province
Figure 30: Structure of Retail Sales of Vietnam in Grocery vs. Non-Grocery
Figure 31: Structure of Non-Grocery Retail Sales in Vietnam
Figure 32: Market Share of Fast Food Sector in Vietnam
Figure 33: An Example of Leading Retail Product in Vietnam: Smart Phones
Figure 34: Another Example of Leading Product: Sales of Automobiles in Hanoi
Figure 35: Favorable Market Entry Strategies for Retailers in Vietnam
Figure 36: Typical Entry Barriers against Foreign Retailers
Figure 37: Relevant M&A Deals in the Retail Industry in Vietnam
Figure 38: Cost Considerations for Retailers in Vietnam
Figure 39: Allocation of Operating Expenses for One Retail Shop in Ho Chi Minh City
Figure 40: Vietnamese Consumer Behaviors Regarding Payment Instruments
Figure 41: Major Retailers in Vietnam and Their Key Network Indicators
Figure 42: Typical Terms Applied to Suppliers of Supermarkets
Figure 43: The Role of E-Commerce in the Retail Industry in Vietnam
Figure 44: Supply of Human Resources in the Retail Industry in Vietnam
Figure 45: List of Common Retail Solutions Providers
Figure 46: Structure of Modern Trade Retail
Figure 47: Development of Saigon Coop's Network of Supermarkets
Figure 48: Saigon Coop's Key Financials and Operations Performance Indicators
Figure 49: Market Share of Supermarkets in Ho Chi Minh City
Figure 50: Saigon Coop's Supermarket Network Indicators
Figure 51: Hapro's Key Performance Indicators
Figure 52: Vinatex’s Key Financial and Performance Indicators
Figure 53: Big C’s Key Financial and Performance Indicators
Figure 54: Big C Vietnam’s Hypermarket Network Indicators
Figure 55: Lotte Mart Vietnam’s Supermarket Network Indicators
Figure 56: Metro Cash & Carry’s Key Financial and Performance Indicators
Figure 57: Metro C&C Vietnam’s Network Indicators

COMPANIES MENTIONED

Savico, Vingroup, Parkson, AEON, Takeshiyama, Vivo City, Saigon Coop, Citi Mart, HaproMart, FiviMart, MaxiMark, Metro C&C, Lotte Mart, Big C, Auchan, NTUC Fairprice, Berli Jucker, Wellcome, Dairy Farm, E-Mart, U&I, S-Mart, C.T Group, Satra, Intimex, SJC, PNJ, Nguyen Kim, Vinatex Mart, Mobile World, Circle K, Family Mart, Shop & Go, G7 Mart, MiniStop, C Express, New Chợ, CoopFood, SatraFood, Trung Nguyen, Highland Coffee, Starbucks, Coffee Bean & Tea Leaf, Gloria Jean, Lotteria, Pizza Hut, KFC, Burger King, Jollibee, Pho 24, Nam An Group, Viet Thai International, Minh Van Ltd. Co., Sato, SAP, Oracle, Retail Pro International, Wincor Nixdorf.


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