28
DEC 2017
FOOD FOCUSTHAILAND
SPECIAL
FOCUS
VietnamFoodRetailBusiness
Growingdramatically
In the current situation, Vietnam’s food
retail industry is growing unstoppably,
especially the market value which grows
averagely 16.9% annually throughout our
period of research (2011 – 2015). Only in
2015, the industry earned 1,371.4 trillion
dong profit from sales in 648,900 branches
(Figure1),mostlybecauseof theexpansion
of convenience store, whosemarket value
growth increased3 foldsduring theperiod.
The trend was the result of changing
lifestyle, for which many Vietnamese are
working longer house, particularly office
workers, and they do not have enough
time to shop for grocery. Therefore, these
consumers are hoarding large amount
of food, instant food specifically, to safe
cooking time. Such kind of products are
often available in modern retail store,
hypermarket, and supermarket, which
are different types of retail store that are
flourishing rapidlyduring this sameperiod.
Figure2:
Retail BusinessesMarket Share
Per BusinessType inVietnam in2015
Source:
Euromonitor International
Food/Drink/
CigaretteShop
Hypermarket
ConvenienceStore
Traditional
ConvenienceStore
Independent
Traditional
ConvenienceStore
Supermarket
Internet food retail store is another
interestingshoppingchannel forVietnamese
consumers. Many giant retail stores; for
example, Saigon Union of Trading
Cooperatives and Casino Guichard-
Perrachon, are developing their websites in
respond to the new consuming behaviour
where many prefer to purchase items from
theirhomes.Nonetheless,manyVietnamese
housewives still prefer to come to the retail
stores. Housewives in urban area are often
foundshoppingatmodern retail stores,while
those in rural areas are keen to shop from
wetmarketsorsmall conveniencestores.For
the provincials, it is easier for them to travel
to convenience stores close to home than
stopat supermarketsandwait for thequeue,
because they usually commute on
motorcycles.
In2015, traditional retail store is themain
channel for food trade inVietnam, taking95%
of the totalmarket value, and99.8% in terms
ofnumberofbranches.Traditional retail store
includes wet market and small independent
convenience store, who controls 65.3% and 27.3% of the national market share per
volume, respectively. (Figure2)Nevertheless, traditional retail storesare indeclineafter
manyVietnameseconsumerschanged frombuying food fromwetmarket tobuying from
supermarket.Supermarketsalso runpromotioncampaign, e.g. pricecut, toattractmore
consumers. Meanwhile, discounters are not yet seen in Vietnam as many large retail
chainshold close relationshipswith foodmanufacturers, hence, there isnoneed to rely
on suppliers for discounts.
TheKeyPlayers
Saigon Union of Trading and Cooperatives, has long been the leading food retailer in
Vietnam, controlling 1.9% of the retail market value. In 2015, its “Co.opMart” and “Co.
op Food” has 117 branches and 80 branches nationwide, respectively. “Co.opMart”
recently develop a mobile phone application for loyal customers to collect points and
receive news and promotions. Not only that, there’s also hypermarket players like “Big
C” (by CasinoGuichard-Perrachon) and “LotteMart” (by Lotte Shopping), who control
1.5% and 0.3% of themarket share, respectively. We also see a new player in 2015,
“Vinmart” (byVinPro), who kickedoff withmore than100branches and stole somemarket
share from “Fivimart” (byTCTGroup). Eventually,AeonVietnamhasbrought 30% share
from “Fivimart”,and49% from “Citimart” (byDongHungTradingService) tomaintain these
businesses. “Co.opMart”and “BigC” focusonpricecutstrategy,while “LotteMart” targets
medium to high income consumers. “Fivimart” and “Citimart”, on the other hand, add
import foods to their strength, especiallywith Japanese products.
Market Trends
Food retail industry inVietnam isset for continuousgrowth. In2020, it is forecasted that
the industrywillgenerate1,679.5 trilliondongsandexpandaveragelyat4.1%perannum
between 2016 – 2020. The expected growth rate is relatively decelerated compared to
the researchperiod,partlybecause theslowdownofVietnamesepopulationgrowthafter
cost-of-livinghas risenandmoreVietnamesewomenareentering the jobmarket.More
andmoreworkingpopulationdecide to remainsingle toease theburden fromchildcare.
Nevertheless, it ispredicted thatconveniencestorewillhave themostacceleratedgrowth
withaverage17.8%expansion invalue,due to thatmany retailersareplanning toestablish
more branches, particularly in rural area. On the other hand, traditional retail store is
seen to be in decline and losing competitiveness to modern retail store as the latter
provides food products in a better quality and safety.
Furthermore,wewill seeaclearer expansion fromonlineandmobileapplication, as
a resultofcomplicated lifestyleofVietnamese.Many retailersarekeen todevelopwebsites
andapplications topromotenewsandpromotionoffers,whichwillbemorebudget friendly
compared to television advertisement.
