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Vietnam - Retail market frontier

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Retail industry has huge potential in Vietnam and it's booming

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Vietnam - Retail market frontier

  1. 1. VIETNAM <br />RETAIL MARKET FRONTIER<br />Present to:<br />R&D Summit<br />
  2. 2. TRAN TINH MINH TRIET<br />triet@cartridgeworld.com.vn<br />trietttm@yahoo.com<br />Personal<br /> information<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  3. 3. MARKET OVERVIEW<br />RETAIL MARKET PERFORMANCE BY OWNERSHIP<br />RETAIL MARKET PERFORMANCE BY FORMAT<br />RETAIL MARKET PERFORMANCE BY CATEGORIES<br />CONSUMER BEHAVIOR PATTERN<br />INDUSTRY CHALLENGES<br />FUTURE GROWTH PROSPECTS<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />Content <br />
  4. 4. Overview<br /><ul><li>Retail sales in the country grew 18–22% annually during 2003–2007
  5. 5. Vietnam currently houses around 230 super markets & hypermarket, 23 trade centers, 165 wholesale markets and nearly 1million M2 of floor area under construction for retail business
  6. 6. Forecasted growth as a CAGR of about 10-12% during 2007-2012</li></ul>Source: TNS Worldpanel Asia 2007<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />1.Market overview <br />
  7. 7. Overview<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />1.Market overview <br />
  8. 8. Purchasing power<br />Consumer spending (In Million USD), 2002-2007<br />2002<br />2003<br />2004<br />2005<br />2006<br />2007<br />Source: International Financial Statistics<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />1.Market overview <br />
  9. 9. Purchasing power<br />Forecast for consumer spending (In Million USD), 2008-2012<br />Source: International Financial Statistics<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />1.Market overview <br />
  10. 10. Overall comment<br />Young, Attractive but……<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />1.Market overview <br />
  11. 11. Overall <br />Goods & service retail sales ( in trillion VND) in 2007<br />2. Retail market performance<br /> By<br />ownership<br />Source: Vietnam Statistic Office<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  12. 12. Overall comment<br />Nonstate-owned companies lead the growth in 2008<br />2. Retail market performance<br /> By<br />ownership<br />Source: Vietnam Statistic Office<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  13. 13. Traditional trade vs Modern trade<br />Retail Structure 2006<br />3. Retail market performance<br /> By<br /> Format<br />Source: TNS Worldpanel Asia 2006<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  14. 14. Traditional trade vs Modern trade<br /><ul><li>Traditional channel is still dominating the whole market
  15. 15. Mama & Papa shops…still key player as they are part of Vietnamese culture
  16. 16. Less-developed provinces, which account 80% of population, have a larger number </li></ul>of traditional retail businesses. <br /><ul><li>Modern trade will drive the future of retail, just as it will revolutionise the way of Vietnamese shop
  17. 17. Growing middle class and expanding young population are fuelling growth of modern trade
  18. 18. In the near future, modern trade will offer all commodities at better price and with a better ambience. </li></ul>3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  19. 19. Wet market and groceries outlets<br /><ul><li>Food distribution is still dominated by wet markets and independent grocers
  20. 20. Non-food retailers mainly comprise small-scale businesses focused on selling white goods, consumer electronics, clothes or cosmetics & toiletries</li></ul>3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  21. 21. Supermarket<br /><ul><li>Supermarket concept is rapidly developing in Vietnam
  22. 22. The common size of supermarket format here from 500-3000 square meter
  23. 23. It has a wide range of location selection
  24. 24. There are currently 200 supermarkets
  25. 25. This format is enjoying a healthy growth
  26. 26. Supermarket is still play a key role in modern trade for the next 10 years
  27. 27. Coopmart is a leader in this concept</li></ul>3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  28. 28. Hypermarket , Cash & Carry and department stores<br /><ul><li>Hyper market is a bit low in Vietnam but expected increase due to improving infrastructure and changing life style</li></ul>-Cash & Carry format is lead by Metro C&C, which having a certain success here<br />-Department stores is still limited <br />Big challenge for those format is “location, location, location” <br />3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  29. 29. Mini market &Convenience stores<br /><ul><li>They are self-service air-conditioner Grocery stores</li></ul>-Local player can prove their anticipation by link with street shops by add more convenience for consumers<br />-The growth of this format will be faster by franchising concept<br />- G7 Mart is a volunteer of this concept <br />Big challenge for those format is “franchise concept & knowledge”<br />3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  30. 30. Speciality stores<br /><ul><li>They are really category killers</li></ul>-There currently are some category players work very good with<br />Electrical-electronic, Jewelery, Clothings, IT, mobilephones, Books-stationery, Perfumes-fragrances<br />-They offer very good service for consumers and enjoy great success<br />3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  31. 31. Non-store retailers<br /><ul><li>They are doing direct sell</li></ul>-Customer order from catalogues, by phones, through TV or internet<br />-This channel is growing very fast ( around 35% last year)<br /><ul><li>Common categories in this channel are cosmetic and other special non-food
  32. 32. This channel will take a foothold in retail marketing sooner or later but limited in major urban centers</li></ul>3. Retail market performance<br /> By<br /> Format<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  33. 33. Food<br /><ul><li>Food is most important component of retail industry, which account 2/3 of total sales in the country</li></ul>-Food retailer account for around 80%of the overall retailing sector in terms of No of outlets<br />-Independent grocers still is a biggest channel <br /><ul><li>Food sales in supermarket chain grow substantial</li></ul>2007 Retailer share by sector (value%)<br />Source: TNS Worldpanel VN 2007<br />4. Retail market performance<br /> By<br /> Categories<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  34. 34. Non-Food<br /><ul><li>Non food sales have grown at a rapid pace</li></ul>-Non food retailer mainly consist of small scale of businesses focused on selling white goods, consumer electronics, clothes, cosmetic & toiletries <br />-A large number of modern complexes has been opened successfully <br />-Non food retailers will grow quickly as category killers<br />2007 non food retail sales <br />(value%)<br />Source: Euromonitor<br />4. Retail market performance<br /> By<br /> Categories<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  35. 35. Average household spending patterns<br />Spending on basic goods and services such as food, clothing, hygiene products and transportation<br />Brand/Price sensitivity<br />Vietnamese generally prefer foreign brands to domestic brands, therefore, it is likely that they remain fairly price sensitive given their moderate income position<br />Emerging middle & upper class<br />Growing middle & upper classes have shown particular interest in<br />Foreign luxury brands, electronics, cosmetics<br />Geographic<br />Consumer behavior difference from the south to the north<br />5. Consumer behavior <br />pattern<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  36. 36. General consumer behavior<br /><ul><li>75% tend to buy what children want</li></ul>-70% like to grocery shop with their family<br />-73% ask for recommendations when shopping<br />-66% enjoy shopping in supermarkets<br />A competitive and attractive shopping environment and a vast <br />Fresh food offer, is key if modern trade wish to appeal to more<br />Consumers regularly<br />Source: TNS Worldpanel VN 2007<br />5. Consumer behavior <br />pattern<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  37. 37. Skilled staffs<br /><ul><li> A serious shortage of skill staffs</li></ul>-All positions being on demanded <br />-Retailer should also work with foreign partner to share management experience and information<br />Consumer price index<br />-Rising consumer price inflation is definitely hitting the demand of consumer goods<br />Trade barriers & State subsidiaries<br />-The retail barriers have been removed in 2009 for foreign retailer<br />6. Industry <br />challenges<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  38. 38. Retail space & Cost<br /><ul><li> According to CBRE at the end of Sept 2007, retail space average USD 40 per square meter in HCMC & HN</li></ul>-In district 1 & 3 in HCMC, the best retail space had climbed to USD 200 per square meter <br />-Very hard to find a location for a supermarket<br />Infrastructure<br />-Poor logistics network and service for all retailers<br />6. Industry <br />challenges<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  39. 39. <ul><li>Developing trend of modern retailing</li></ul>-Online retailing<br />-Non food retailers<br />-POS terminal<br />-International brands and luxury goods<br />-High-tech retailers<br />-Food services<br />7. Future growth<br />prospects<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  40. 40. DO YOU WANT TO BE PART OF THIS USD 90 BILLION INDUSTRY? <br /> End<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />
  41. 41. THANK YOU<br /> End<br />VIETNAM <br />RETAIL MARKET FRONTIER<br />

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