Vietnam’s retail market is promising, but there are pitfalls

Family Mart has had losses in Vietnam, Thailand and Indonesia. Reuters quoted Koji Takayanag, president of FamilyMart UNY, which now owns the second largest convenience store chain in Japan, as saying that the chain has decided to stop injecting more money into Family Marts in Vietnam.

According to Tri Thuc Tre, Parkson reported another loss of VND20 billion in Vietnam in the first quarter of the year, which means a total loss of VND50 billion in the last nine months of the fiscal year.

Parkson Retail Asia has two subsidiaries in Vietnam – Parkson Hai Phong Co Ltd and Parkson Vietnam Company Ltd. The latter has two subsidiaries – Parson Vietnam Service Management Company Ltd and Parkson Hanoi Company Ltd.

Parkson Hanoi which manages two buildings Parkson Keangnam and Parkson Viet Tower. Both shopping malls have shut down (the former in January 2015 and Viet Tower in mid-December 2016). Also in 2016, Parkson Paragon in HCMC also stopped operation.

Though FamilyMart has taken a big loss, it will stay in Vietnam. While some retailers have left, others have arrived. Aeon Mall has announced the construction of a second mall in Hanoi.The Malaysian retailer’s fiscal year will end in three months, but analysts don’t think the business performance of the year will be satisfactory. Parkson’s managers have admitted that it is more and more difficult to do business in Vietnam as the market is getting more crowded.

Other retailers have left, including Metro Cash & Carry, Best Carings, Wonderbuy, HomeOne and Sapomart.

Meanwhile, market analysis firms, in their latest reports, say that Vietnam is a lucrative market.

Phap Luat quoted Pham Thanh Cong from Nielsen Vietnam as saying that it is among the top three markets of investors.

David Tan, CEO of Abeo Vietnam, said the Vietnamese retail market in 2016 was valued at $118 billion with the 10 percent growth rate. Of this, revenue from food service reached acrecord high of $41 billion.

In fact, though the Vietnamese market is attractive, it has become ‘cramped’ with the presence of many retailers, both foreign and Vietnamese.

According to Cong, there are 20 supermarket brands in Vietnam, while other countries have only five.

A report of the Ministry of Industry and Trade shows that Vietnam has more than 700 supermarkets, 132 shopping malls and hundreds of convenience stores. By 2020, Vietnam is expected to have 1,200-1,500 supermarkets and 180 shopping malls, while traditional markets still exist.