REATAIL MARKET REPORT 12/2023 TABLE OF CONTENT Retail market size in Vietnam ......................................................1 Retail growth by year 3-5 years ...................................................2 Retail trends in the latest 3-5 years ............................................2 Factors that are driving the market ............................................2 Challenges that the market faces ...............................................2 Regional factors that shaped retail market in HCMC ...............3 Segment analysis...........................................................................3 Source reference...........................................................................4 MARKET SIZE The Vietnam Retail Market size is expected to grow from USD 246.65 billion in 2023 to USD 435.59 billion by 2028, at a CAGR of 12.05% during the forecast period (2023-2028). Contemporary retail establishments provide exclusive private brands and products available solely within their stores. Supermarkets, in particular, curate a range of items tailored to meet the daily requirements of the average consumer. This encompasses a diverse array of products, spanning from food items to non-food products and even home appliances. The convenience of finding all essential items in one location simplifies the shopping experience for customers, offering a comprehensive solution under a single roof. Many of these supermarkets go a step further to enhance the overall shopping experience by incorporating in-house bakeries and cafés. These additional amenities create a welcoming environment for consumers to spend quality time with family or friends while enjoying refreshments. While the COVID-19 crisis impact was felt globally, Vietnam's effective control of the pandemic led to the recovery of retail sales of consumer goods and services in 2020's final months. The growth rate, while remaining lower compared to the 12.7% recorded the previous year, was an encouraging sign for the business community amid the global retail market suffering a plunge in revenue during the pandemic. Retail sales growth rate by year-end was due to retailers and shopping malls offering sales promotion programs to stimulate domestic consumption. The leading players in the Vietnamese retail market are Saigon Co.op, Central Group, AEON, Vingroup, and Lotte. These companies are investing heavily in expanding their retail networks and developing new formats. Vietnam is currently experiencing a continual shift towards urbanization, accompanied by changing consumer preferences among the younger urban population. This shift is playing a pivotal role in fueling significant growth in contemporary retail channels, notably departmental stores and the rapid expansion of e-commerce. The impact of these evolving trends is evident in the rise of new retail formats like mini supermarkets. These compact stores cater to the demand for convenient grocery shopping, aligning seamlessly with the fast-paced lifestyles of urban residents. The transformation in consumer behavior and the demand for more accessible retail options reflect the dynamic landscape of Vietnam's evolving market. 1 FACTORS DRIVING THE MARKET RETAIL GROWTH Rapid growth in consumer spending is a driving factor. Vietnam's disposable income per capita is expected to grow quickly and reach USD 3,062 in 2023. Vietnam's real household spending increased 8.3% to USD 121.3 billion in 2021, compared to USD 112.1 billion in 2019 . The private consumption rate is also high, more than 67% of the GDP. This is the second highest in the region, behind the Philippines (73.8%) and ahead of Malaysia and Indonesia (57.0% and 57.3%, respectively) Retail trade in Vietnam climbed by 10.1% year-on-year in November 2023 from a 7% rise in the previous month. It was the 24th straight month of expansion and the sharpest since May, as higher sales growth were observed in all sub-indices, namely; sales of goods (9.1% vs 6.7% in October), accommodation & food services (18.3% vs 14.9%), travel activity (70.9% vs 51.4%) and other services (7.3% vs 0.2%). Considering the January to November of 2023, retail trade went up by 9.6% CHALLENGES THAT THE MARKET FACES Retail Sales in Vietnam increased 10.10 percent in November of 2023 over the same month in the previous year. Retail Sales YoY in Vietnam is expected to be 9.00 percent by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long-term, the Vietnam Retail Sales YoY is projected to trend around 8.80 percent in 2024 and 2.50 percent in 2025, according to our econometric models. RETAIL TRENDS CASUALIAZATION In 2023, a continuation of the casualization trend thạt took hold during the pandemic as more shoppers shifted to working from home. Casualwear, followed by sportswear and sneakers, are the highest-ranking categories in tém of where we see the greatest growth potential. POP-UP STORE Due to limited supply expected to launch in CBD area in the coming years, etailers seek space in no-CBD ares to launch pop-up stores while contunue looking for prime locations. 2 Intense Competition: As the retail sector becomes increasingly competitive, businesses need to differentiate themselves by offering unique value propositions, personalized customer experiences, and innovative marketing campaigns. By understanding consumer preferences and staying ahead of emerging trends, retailers can stand out from the competition and secure a larger market share. Supply Chain Optimozation: Efficient supply chain management is critical in meeting consumer demands, minimizing costs, and maintaining a competitive edge. Retailers must focus on streamlining logistics, improving inventory management, and establishing strong partnerships with suppliers to ensure a smooth flow of goods from production to the end consumer Omnichannel Approach: To provide a seamless shopping experience, retailers should adopt an omnichannel approach that integrates physical stores, online platforms, and mobile applications. This approach allows consumers to engage with the brand through multiple touchpoints, fostering customer loyalty and increasing sales. Localization and Cultural Sensitivity: Understanding local customs, preferences, and cultural nuances is vital for successful market entry and expansion. Retailers should tailor their product offerings, marketing messages, and store layouts to resonate with Vietnamese consumers. By embracing the local culture and adapting to the specific needs of the market, businesses can build strong customer relationships and drive sales. REGIONAL FACTORS THAT SHAPED RETAIL MARKET IN HCMC Economic condition: The economic conditions play a crucial role in shaping the retail market in Ho Chi Minh City (TPHCM). The economic situation in this region significantly influences consumer spending habits, market trends, and overall business viability. The fluctuations in the labor market and income levels are also pivotal factors, impacting the types of products and services that are favored. Supply and demand conditions are decisive, affecting the availability and pricing of goods and services in the retail sector of TPHCM. Demographic: The population density of Ho Chi Minh City (TPHCM), coupled with population growth, can generate significant consumer demand, driving the development of retail areas. Simultaneously, the distribution of the population by age influences the diversity of preferred products and services. For instance, a younger population may create distinct shopping preferences compared to an aging population. Income levels also determine the choices and spending priorities in the retail environment. Individuals with higher incomes may generate demand for premium products and services, while those with lower incomes may focus on more affordable products. thấp hơn có thể tập trung vào các sản phẩm giá rẻ. Supply and demand Supply and demand dynamics form another critical aspect, impacting the availability and pricing of goods and services within HCMC's retail sector. The interplay between supply and demand directly affects the equilibrium of the retail market in TPHCM. When demand surpasses supply, it can lead to increased competition among retailers, potentially driving up prices. Conversely, an oversupply of certain products can result in price reductions and promotions as businesses seek to clear excess inventory. Government policies: Government policies, encompassing regulations related to trade, taxation, and business operations, wield a substantial influence on the structure and functioning of the retail market. These policies can either foster or impede business growth, shaping the competitive environment. Natural disasters: In addition, the ability to influence nature, such as nature, is also an important factor in the retail market. Situations such as storms can cause disruptions in on-chain applications, affecting lower layers and changing consumer user behavior. Businesses in Ho Chi Minh City must adjust and adapt to these natural fluctuations, while creating special formulas and opportunities in the retail sector. 3 SEGMENT ANALYSIS The Vietnam Retail Market is segmented by Product Category (Food, Beverage and Tobacco Products, Personal Care and Household, Apparel, Footwear, and Accessories, Furniture, Toys, and Hobby, Industrial and Automotive, Electronics and Household Appliances, Other Products) and by Distribution Channel (Hypermarkets/Supermarkets, Specialty Stores, Department Stores, E-Commerce, and Other Distribution Channels). The report offers market size and forecast values for the Vietnam Retail Market in USD million for the above segments. By product Type Food, Beverage, and Tobacco Products Personal Care and Household Care Apparel, Footwear, and Accessories Furniture, Toys and Hobby Industrial and Automotive Electronics and Household Appliances Other Products By Distribution Channel Hypermarkets, Supermarkets Specially Store Department Stores E-commerce Other Dustribution Channels THANK YOU Soure Reference: https://www.cbrevietnam.com/insights/reports/vietnam-market-outlook-2023 https://www.ceicdata.com/en/indicator/vietnam/retail-sales-growth https://www.vietnam-briefing.com/news/vietnam-retail-market.html/ https://www.mordorintelligence.com/industry-reports/retail-industry-in-vietnam 4
