Large domestic retailers are seeking to expand their scale in major Vietnamese cities to compete alongside foreign players.
Emart supermarket chain, linked to THACO Group and Vietnamese billionaire, Tran Ba Duong, aims to have 20 hypermarkets across the country by 2026 with revenue exceeding US$1 billion. THACO acquired the hypermarket business in Vietnam from South Korea’s EMart Inc in 2021.
Meanwhile, earlier in July, Nova Consumer, part of NovaGroup, had completed its acquisition of Sunrise Foods. This allows it to expand its distribution channel to 450,000 retail points in the future and promote e-commerce channels and increase exports. At the same time, NovaGroup opened its first 2,000 sq.metre Nova Supermarket in HCMC as part of its plan to expand to more than 2,000 points of sale in the next 3 years across the country.
The lucrative US$170 billion domestic retail market with 10% CAGR over the next 5 years has attracted domestic players to expand their market shares. The offline retail market has recovered from the pandemic in 2022, and saw domestic retailers starting to expand and adopt new retail models, to compete alongside foreign players.
According to Fitch Solutions, the rising rates of urbanisation, the expansion of the middle class and high rates of mobile internet adoption also contributed to the rise of delivery services in urban centres like HCMC, where consumers are willing to pay a premium for home-delivery options.
Fitch estimated that the mass grocery retail (MGR) spending will experience strong growth over the medium term (2022-2026) in Vietnam. As with most emerging economies, food and non-alcoholic drinks spending still take up the largest slice of household spending categories in Vietnam at 21.2% of total household spending in 2022. This proportion is expected to stay the same up to 2026, but spending on food and non-alcoholic will still grow strongly, averaging growth of 10.7% a year, over the next 5 years, from Dong 1,025 trillion (US$44.2 billion) in 2022 to Dong 1,557 trillion (US$63.8 billion) by 2026.
Due to this projected growth, many players, both domestic and foreign, are planning to expand their operations in Vietnam. Domestic retail giant, WinCommerce for instance also announced in July that they are planning to open another 720 stores by the end of 2022.
By 2030, 44.5% of Vietnamese will be living in urban areas, an increase from 38.8% in 2022 thereby translating to higher disposable incomes and a bigger market for modern grocery retail players.
