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Vietnam Retail Market 2019 Preview


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Vietnam Retail Market 2019 Preview
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Vietnam Retail Market 2019 Preview

  1. 1. 1Financial Information | Business Information | Market Research INDUSTRY PREVIEW Vietnam retail market 2019 Prepared by FiinGroup Aug 2019
  2. 2. 2Financial Information | Business Information | Market Research Content Content Page 1 Overview of retail market in Vietnam 2 -7 2 Infrastructure for modern trade & e-commerce 8 - 16 2.1 Payment services 8 - 13 2.2 Express services 14 - 16
  3. 3. 3Financial Information | Business Information | Market Research Vietnam has been experiencing rapid retail growth Overview of retail market in Vietnam Source: FiinGroup Figure 1: Vietnam retail revenue & growth 85 94 107 116 129 142 0 40 80 120 160 2013 2014 2015 2016 2017 2018 Revenue (US$bn) • In recent years, Vietnam has been experiencing rapid retail growth. From 2013-2018, the retail sector recorded a compound annual growth rate (CAGR) of 11.0%. Total retail revenue is also expected to reach US$180bn by 2020, which would represent an increase of 26.6% from 2018. With the influx of investments into the sector, it is poised to witness further growth in the near future. CAGR 2014 – 2018 = 11.0%
  4. 4. 4Financial Information | Business Information | Market Research Despite having the most traditional retail landscape compared to other region, Vietnam represents a huge opportunity for modern trade and e-commerce Overview of retail market in Vietnam Figure 2: % value share 2017 and annual growth % Source: FiinGroup, Kantar Worldpanel +11.0% 77.8 17.4 4.8
  5. 5. 5Financial Information | Business Information | Market Research Ecommerce in Vietnam Booming e-commerce market in Vietnam Figure 6: B2C e-commerce revenue in Vietnam 3.0 4.1 5.0 6.2 7.8 3.1% 3.8% 4.3% 4.8% 5.5% 0.0% 1.5% 3.0% 4.5% 6.0% 7.5% 0.0 2.0 4.0 6.0 8.0 10.0 2014 2015 2016 2017 2018e B2C e-commerce revenue (US$bn) Percentage of total retail revenue (RHS) Source: FiinGroup, VECITA The recent recipient of US$ 18mn from VNG, has been aggressively expanding its products offering further away from its original starts in book selling. With VinGroup’s backing, has the financial support and the logistics advantages that other e-commerce sites often lack. Sendo belongs to FPT Telecom, which has been growing at a fast pace these past two years. Recently acquired by Alibaba Group, Lazada has been prominent in the B2B2C model. Vat gia has been around since 2007 under a Vietnamese owner. It was one of the first to offer an online marketplace with logical structure and categorization, smart searches and secure transactions. Shopee is an e-commerce platform headquartered in Singapore under Sea Group (previously known as Garena). Shopee first launched in Singapore in 2015, and since expanded its reach to Malaysia, Thailand, Taiwan, Indonesia, Vietnam and the Philippines Robust growth with CAGR 2014-2018 of 27.3%
  6. 6. 6Financial Information | Business Information | Market Research Robust expansion of modern trade retail in Vietnam Modern trade Figure 4: Number of MT stores in Vietnam Source: FiinGroup No. Store brand* Owner # stores 2018 Expansion plan 1 Mobile World Investment Corporation 2,166 N/A 2 Vincommerce (Subsidiary of Vingroup) 1,828 N/A 3 FPT Shop FPT Studio FPT Retail 531 N/A 4 Saigon Co.op 111 130 by 2020 5 Central Group (Thailand) 35 7 new stores, starting from 2016 6 TCC Group (Thailand) 19 5 new stores/ year during 2018 – 2020 7 Lotte Group (Korea) 15 60 by 2020 8 Aeon Group (Japan) 4 2 new malls/year • In recent years, there has been an explosion in the number of Modern Trade channels across Vietnam, with a variety of players offering different retail formats. Some of the most notable recent developments can be found in commercial centers, convenience stores, as well as digital platforms. 2,263 1,333 736 374 336 246 2,927 2,121 856 503 385 347 Home appliance & consumer electronics chains Minimarts & foodstores CVs Mom & kid chains Supermarket Modern drugstores & personal care 2017 2018
  7. 7. 7Financial Information | Business Information | Market Research MWG is a leading player in Vietnam home appliance and consumer electronics retail Modern trade I Profile of a leading retail chain STORE COVERAGE • Established in 2004 • Website: • Contact: • Head Office: No. 222 Yersin Street, Phu Cuong Ward, Thu Dau Mot Town, Binh Duong Province, Vietnam • Net sales 2018: US$3.72bn • Business lines: Mobile World Investment Corporation, formerly known as Mobile World Co., Ltd, was established in 2004. The Company mainly operates in the field of retailing of mobile phones, laptops, tablets, household electronics, digital appliances and food products. According to the Annual Report 2017, The Company maintains its leading position in the mobile phone and electronics markets with 43% and 30% of market share respectively. The Company has been listed on the Ho Chi Minh City Stock Exchange (HOSE) since July 2014 (ticker: MWG). COMPANY OVERVIEW PARTNERS Figure 5: MWG’s no. of outlets by business line, 1H2019 Source: MWG’s performance report 1H2019 Segment Partner Sound Dalton, Arirang, Rinton, Nanomax, Acnos Mobile Vivo, Xiaomi, HTC, Mobell. Motorola, BKAV Housewares Sunhouse, Luminarc, Comet, Happytime Cooking appliance Fivestar, Philips, Braun, Kangaroo, BlueStone STRATEGIC PARTNERS OTHER PARTNERS 384 724 1,782 2,166 600 838 1,849 2,449 BHX (supermarket) DMX (home appliance retail) TGDD + DMX (consumer electronics retail) Total 1H2018 1H2019
  8. 8. 8Financial Information | Business Information | Market Research Content Content Page 1 Overview of retail market in Vietnam 2 -7 2 Infrastructure for modern trade & e-commerce 8 - 16 2.1 Payment services 8 - 13 2.2 Express services 14 - 16
  9. 9. 9Financial Information | Business Information | Market Research Non-cash payment has been gaining the popularity in Vietnam with CAGR 2015-2018 of 35% for transaction value… Source: FiinGroup, SBV (1) Other payment instruments include bills, standing orders, domestic letter of credit, SMS banking, mobile banking, phone banking, internet banking, money transfer instructions from CA-current account,... • Vietnam has seen the soaring number of non-cash payment in terms of # transaction and transaction value. As of March 2019, non-cash payment jumped to 338mn transactions with total value of US$1,120bn. • Credit transfer and direct debit are the most common means of liquidity, accounting for over 90% of total domestic transaction volume as of March 2019. 702.1 762.1 1,131.6 1,066.0 1,120.0 114.6 151.3 262.0 283.4 338.0 0 100 200 300 400 500 0 300 600 900 1,200 1,500 Dec-15 Dec-16 Dec-17 Dec-18 Mar-19 Transaction value (US$bn) # transaction (mn items) - RHS 87.8% 88.7% 5.1% 5.0% 6.1% 5.3% Dec-18 Mar-19 80.0% 84.0% 88.0% 92.0% 96.0% 100.0% Credit transfer Direct debit Bank card Check Others (1) CAGR 2015–2018 (transaction value) = 35% Domestic transaction value by means of payment NON-CASH PAYMENT: 10%CASH PAYMENT: 90% Payment services in Vietnam | Non-cash payment Figure 9: Domestic transaction by means of payment, non-cash payment
  10. 10. 10Financial Information | Business Information | Market Research Under 40, 62% Over 40, 38% 1.31 Mobile phones/person 54% are Internet Users 47% Rise in household spending Expected during 2017-2021 22,812 3,593 1,769 1,204 837 29,856 5,149 2,418 1,797 1,352 6.4% 8.3% 5.5% 7.5% 10.1% Singapore Malaysia Indonesia Phillippines Vietnam 2016 2021 CAGR Source: FiinGroup from BMISource: FiinGroup from World Bank A Profile of Vietnam Payment services in Vietnam | Strong Foundation for Cashless Payment Vietnamese population are young, have rising disposable income, are well-connected and tech- savvy Figure 10: Breakdown of Vietnamese population by age, 2018 Figure 11: Disposable income per capita (US$) 46.7% are Facebook Users
  11. 11. 11Financial Information | Business Information | Market Research Number of users by end-2017 2018 Target Ecosystem 10 million 3.5 million ? 1 million ? 20,000 40,000 100,000 950,000 1,000,000 1,300,000 2,000,000 5,000,000 ZaloPay AirPay Moca VTCPay ViettelPay Ngan Luong Vi Viet Momo Very strong growth Payment services in Vietnam Ecosystems are key: E-wallets are currently focusing on grabbing market share through ecosystems, which in turn could bring in profits via increased transaction volumes Figure 12: E-wallets in Vietnam Source: FiinGroup • The use of e-wallet in Vietnam is still limited. Almost e-wallet users maintain their accounts to pay utilities, internet bills, taxi bills and especially top-up their phones. To increase the operation efficiency, E-wallets are currently focusing on grabbing market share through ecosystems which in turn could bring in profits via increased transaction volumes
  12. 12. 12Financial Information | Business Information | Market Research 1.9 2.1 2.5 3 3.5 4.3 5.2 6.5 2013 2014 2015 2016 2017 2018 2019f 2020f MILLION Source: FiinGroup, ASEAN Banker Research CAGR = 19.2% 41/45 Banks with m-banking 28 E-wallet licenses (23 IPS and 5 banks) 65.8% increase Internet transactions volumes in Q1/2019 97.7% increase Mobile transactions volumes in Q1/2019 Payment services in Vietnam | Trends of E-payment Electronic payment rising on the back of e-commerce platform expansion, with focus on strong growth for mobile banking, e-wallet and QR code. Figure 7: Number of registered mobile wallets in Vietnam Figure 8: QR payment value, 2017 vs 2018 0.44 3.01 2017 2018 USDmn +592% Source: FiinGroup, Statista, PwC’s “The Future of ASEAN - Time to Act,” 2018
  13. 13. 13Financial Information | Business Information | Market Research + Remittances + Financial Services + Credit Cards + Lifestyle Apps Intermediary Payment Services Domestic fund transfers via E-wallet, QR Pay for Utilities, Mobile Top-ups, etc. One stop shops via partnerships: Insurance, Consumer Finance, Delivery Services, Taxi services, E- commerce, Flights and Hotels Partner with banks to issue virtual credit cards Credit Scoring P2P Lenders MicroLoans Overseas Transfer Not yet available in Vietnam Payment services in Vietnam With Payment Services as the introductory feature, FinTechs will build upon collected user data to develop more sophisticated products Source: FiinGroup
  14. 14. 14Financial Information | Business Information | Market Research Content Content Page 1 Overview of retail market in Vietnam 2 -7 2 Infrastructure for modern trade & e-commerce 8 - 16 2.1 Payment services 8 - 13 2.2 Express services 14 - 16
  15. 15. 15Financial Information | Business Information | Market Research Express services in Vietnam The robust growth of ecommerce in Vietnam drives express service industry Figure 13: Service offering of Express services in Vietnam SERVICES Same day & in-night/ Next day Specified time Certain/ uncertain day Next flight out/Road express Air Charter Express freight Priority express Deferred or other express services MARKET OVERVIEW DEFINITION: As of Decision No. 128/2007/ND-CP, Express delivery means delivery services with a quick factor in terms of time and a high degree of reliability. Express delivery shall also include other value-added elements such as collection from a sender's address; delivery in person to the receiver, discovery of current addresses and locations for receipt in person; the capability of changing the place and address for receipt during transportation; reporting on delivery and other value-added elements. ➢ 1986: Since Vietnam participated WTO, the rising of demand for time-sensitive international trading urged the emergence of express services. ➢ 1995 – 2013: Big international companies such as DHL, UPS, FedEx, TNT penetrated the market by forming joint venture with domestic firms. For example: DHL-VNPT, DHL-VNpost, UPS – VNPost Express, FedEx – a domestic firm, TNT – Viettrans. After the government relaxed the threshold of foreign ownership in postal service by 2012, the giants stepped up and wholly purchased the shares from their joint-ventures. ➢ 2015 – 2017: Thanks to exponential growth in e-commerce, many new domestics firms were established to meet the demand of cash- on delivery trend resulting from online shopping and e-commerce. Some of the names can be seen as Giao Hang Nhanh, Giao Hang So 1, and Giao hang Ong vang. On top of that, the increase number of smartphones gives a new breeze into apps to facilitate e-commerce delivery such as ShipS, AhaMove, Giao hang ong vang. The newest launched app in the market is Pegasus Speedlink, which is developed by Indo Trans Logistics. Source: FiinGroup
  16. 16. 16Financial Information | Business Information | Market Research Express services in Vietnam Foreign players dominate Vietnam express services market, especially the international route • MNCs such as FedEx, UPS and DHL participated in Vietnam courier services market in early day through the partnership with domestic players. Thanks to the strong financial base, technology-driven services, professional team and its reputation, international corporation can meet the demand from highly time- sensitive order to tailor-made freights, thus, quickly capture the majority of express delivery market share in Vietnam, especially the international route segment. • In near-term prospects, giant international companies would keep strengthening its presence and tapping Vietnam E-commerce market. For instance, in May, 2018, DHL eCommerce introduced DHL Parcel Metro Same Day services utilizing different transportation lines for lowering in HCMC and Hanoi. Meanwhile, FedEx also established new enterprise in Vietnam (‘FedEx Trade Networks Transport & Brokerage Co., Ltd’). FOREIGN PLAYERS • Domestic players are struggling in the fierce competition with giant international competitors to capture the domestic delivery share. While big names such as VNPost and Viettel Post invested in new trucks and warehousing services, smaller-scaled enterprises (Nhat Tin Logistics, 247Post, Netco, etc.) tended to push sales by offering discount/lower price and serving demand from big cities mainly (Hanoi, HCMC and Da Nang). In 1Q2018, Viettel Post express services revenue grew significantly by 58% y.o.y, occupying 92% of the total revenue. • In postal service segment, key domestic players such as VNPost and Viettel Post still remained its leading position thanks to the long operation history in Vietnam market, nationwide distribution channels and well-established network. DOMESTIC PLAYERS NEW PARTICIPANTS • The fast-paced growth of e-commerce in Vietnam resulted in the rising number of new participants commencing in 2012. There are two main types of new businesses in Vietnam: ➢ Individual companies: These companies tend to focus on a certain service serving the domestic delivery demand from individuals or small-scaled businesses, especially in eCommerce field. In 2012- 2013 period, the business model of customers sending goods to the shippers at the point of delivery was very popular. Key names include Giaohangnhanh, Giaohangtietkiem, Ninja Van and DHL eCommerce. However, as the demand for time-sensitivity and convenience is on the rising trend, recent years witnessed the appearance of Lalamove, AhaMove, GrabExpress, Delivery Now, of which shippers will take the orders from the appointed places and directly deliver to the customers. ➢ Subsidiaries of e-Commerce companies: Lazada (LEL Express), Tiki
  17. 17. ‹#›Financial Information | Business Information | Market Research Services Contact us Dong Le, CFA Director, Market Research & Consulting Services M: +84 (024) 3562 6962 (ext. 110) T: +84 (0) 912 057 529 E: W: Hai Khieu Manager, Market Research & Consulting Services T: +84 (024) 3562 6962 (ext. 120) M: +84 (0) 966 510 388 E: W: Head Office 5th Floor, Anh Minh Building 36 Hoang Cau Street Hanoi, Vietnam + 84 (24) 3562 6962 Ho Chi Minh City Branch 3rd Floor, Profomilk Plaza Bldg 51-53 Vo Van Tan, District 3 Ho Chi Minh City, Vietnam + 84 (28) 3933 3586