Hanoi (VNS/VNA) - Vietnam, with a population of nearly100 million people, is considered a potential investment market for famousretailers around the world, therefore, many foreign retailers have increasedtheir investments.

According to the Ministry of Industry and Trade, Vietnam's retailmarket has a scale of more than 142 billion USD, 16% of which comes frome-commerce. This scale is forecast to increase to 350 billion USD, or nearly2.5 times higher, by 2025.

The retail based on e-commerce platforms is also growing at anexponential rate. E-commerce businesses in Vietnam gained a revenue of 14billion USD by 2022, and the revenue is expected to reach 32 billion USD by2025.

These figures show the huge potential of Vietnam's retail marketfor enterprises at home and abroad.

A supermarket is still considered an attractive retail option in Vietnam,with diverse products, a seamless customer experience, and guaranteed productquality.

Data from Euromonitor shows that supermarket revenue in 2023 isestimated to reach about 110 trillion VND (4.5 billion USD), an increase of 8.8%over the previous year.

These figures confirm a significant change in consumer shoppingbehaviour.

Vietnam has witnessed excitement in the domestic retail marketfrom the first months of the year until now, when a series of big brands in theforeign retail industry has announced an increase in investment capital to thismarket.

Among them, MUJI - a famous retail brand for lifestyle, leathergoods, and office furniture from Japan, has expanded its retail system in HàNội and HCM City to 11 stores.

Meanwhile, Uniqlo - another big brand from Japan, also opened its19th store in Hanoi, which is the fourth new store in the first half of 2023.

Additionally, in recent years, many large Thai enterprises havealso evaluated Vietnam's retail market as one of the most potential andattractive markets.

Therefore, Central Retail Group, a giant in Thailand's retailindustry, has announced a schedule to increase investment capital in Vietnam to1.45 billion USD (35 trillion VND) in the period of 2023 - 2027, along with thegoal of doubling the number of stores and supermarkets in Vietnam to 600 in 57out of 63 provinces and cities. This is considered the largest investment everannounced by Central Retail.

To implement those goals, this year, the company has spent about 4.1trillion VND in the Vietnam market, focusing on developing essential foodsbusinesses, stabilising prices, and restructuring electronic stores.

Central Retail also aims to become the largest multi-channelretailer in the food industry, and the second largest investor in the shoppingcentre segment in Vietnam's real estate market by 2027.

Meanwhile, local retailers still dominate the domestic market,accounting for 70 - 80% of total retail sales points nationwide. There are bigbrands with thousands of sales points such as WinMart, Co.op Mart, and Bach HoaXanh.

However, foreign retailers' investment in the Vietnam market alsoputs certain pressure on domestic retailers. This situation urges domesticbusinesses to find ways to compete with foreign rivals.

In the past few years, Vietnamese businesses expanded their retailmarket share strongly in the segment of supermarkets and convenience stores.

Of which, in mid-2018, Saigon Co.op acquired the entire retailsystem of Auchan (France) in Vietnam. In 2019, Singapore's Shop&Go alsosold its business in Vietnam to VinCommerce.

Last year, THISO International Commerce and Services Corporation(THISO), a subsidiary of THACO Group, completed the acquisition of the Republicof Korea (RoK)’s Emart Inc’s business in Vietnam.

Along with implementing the merger and acquisition (M&A)activities with foreign brands in Vietnam, many domestic retailers have also expandedtheir retail systems in the domestic market.

Notably, Vingroup's Vincom Retail system owns more than 80shopping centres nationwide. The WinMart and WinMart retail chains, with morethan 3,500 convenience stores, are constantly opening new sales points.

Although the market is very competitive, economic experts stillbelieve that Vietnamese retail businesses will have a solid foothold in thedomestic retail market due to the advantages of understanding Vietnameseconsumers, implementing digital transformation, and restructuring humanresources.

To maintain their market shares, expert Vu Vinh Phu said that Vietnamcompanies need to improve in all aspects, from training professional humanresources to building modern infrastructure, meeting the needs of the digitalage to continue development in the retail sector.

Retail enterprises must always link to producers of Vietnamesegoods, especially agricultural and food products, to ensure stability for theinput of the distribution system.

Also, according to Phu, the domestic retailers are now mostlysmall and medium-sized enterprises, and there is no large retail group.Therefore, a joint venture with foreign retailers is necessary.

The newly published report of Rong Viet Securities (VDSC) predictsthat the retail industry will slightly recover in the second half of 2023 andimprove more clearly in 2024. Market leaders will continue to grow their marketshare after the slowdown.

Retailers will increasingly target the Northern regions, wheremodern trade channels have not yet gained substantial traction. However, theywill first focus on consolidating their market share in the South beforetapping into these untapped markets. Urbanisation will also play a role inshaping consumer behaviour, allowing for the expansion of modern retailnetworks in Tier 2 and 3 areas, according to the report.

To restore consumer demand in the last months of the year,localities are ready with promotion programmes. In Hanoi, this year's promotionprogrammes last longer and focus on each kind of goods according to eachmonth's theme.

Tran Thi Lan Phuong, Acting Director of the Hanoi Department ofIndustry and Trade, said the department has received 21,000 trade promotionprogrammes from 4,000 businesses registered to participate, double last year'snumber, and continues to add more.

For example, in November, the "Promotion Month" event isdeployed in the city with participants being enterprises, production, andbusiness facilities of all economic sectors.

Also in November, the event "Hanoi Midnight Sale 2023"will attract about 200 businesses, shopping centres, supermarkets, conveniencestore chains, production, and business facilities.

The Ministry of Industry and Trade also said that from now untilthe end of the year, the ministry will direct the people's committees of citiesand the departments of industry and trade to promote the consumption stimulusprogramme associated with stabilising the market of goods for the Lunar NewYear in 2024, and organising the cultural and tourism events to both attracttourism and increase purchasing power.

Businesses also said that many policies of the Government, such asreducing value-added tax and increasing the base salary from July 1, areexpected to increase consumers' purchasing power, contributing to the recoveryof GDP in 2023.

The experts also believed that the State's efforts to promoteconsumption and the businesses' diverse business strategies are helping thebusiness of the retail industry be better in the last months of the year./.