Domestic supermarket chains are racing to open new stores and nail down market share before the retail sector is opened to foreign competition in January 2009, pursuant to the nation’s WTO commitments.
Sai Gon-Nguyen Kim Co Ltd is the latest domestic concern to stake out a retail niche with the opening of the CMC Plaza shopping centre in Ho Chi Minh City.
The new centre covers an area of 4,000 sq.m and can accommodate 10,000 visitors a day, according to its marketing director, Phan Linh Phuong.
Sai Gon-Nguyen Kim intends that the centre will anchor a nationwide chain of nine supermarkets, Phuong said, in such major markets as HCM City, Ha Noi, Can Tho, and Da Nang as well as Binh Duong province.
As part of the trend of globalisation and the increase in consumer purchasing power, supermarkets were expected to seize up to 20 percent of the nation’s retail market by 2010, Phuong said.
At least five new supermarkets have opened recently in HCM City, including Vinatexmart, Co-op Mart Bien Hoa and Citimart, bringing the latter chain, owned by Dong Hung Ltd. Co, to eight stores nationwide.
Dong Hung deputy director Ngo Van Hai said the boom in new supermarkets in major cities and provinces reflected a race against time to grab market share before the Government allowed foreign-invested enterprises to open supermarkets and increase competition in goods distribution and retail.
There is plenty of room for growth in the retail sector, recently market surveys have suggested.
Consumer demand for home electronics in Viet Nam could reach 3 billion USD a year, while actual retail sales currently only reached 1.2-1.3 billion USD, according to market research conducted by GfK Viet Nam and AC Nielsen Viet Nam.
A recent report by RNCOS, a market research consulting firm, said that the retail sector in Viet Nam would experience rapid changes between 2007 and 2011, becoming one of the seven most profitable retail markets in the world, with overall growth in the retail market faster than anywhere in the world outside of China and India.
With foreign investors at the gate, an issue of worry to both domestic and foreign investors is the shortage of suitable sites in urban areas for developing supermarkets and shopping centres.
A supermarket occupies an average area of 2,000 sq. and needs to be located in an area accessible to consumers.
According to real estate services firm CB Richard Ellis, land lease rates for prime building sites would likely increase 200 percent or more over the next three years, forming a potentially insurmountable barrier for domestic retailers trying to stake out the market.
Closer coordination was needed between owners of ideal locations and retail distributors to establish a competitive domestic retail sector.
Source: VNE
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