VIETNAM

RETAIL REPORT
TABLE OF CONTENT
I. Overview of Vietnam’s retail sector
II. Eco nom ic Status
III. Retail Market Size
IV. Retail Market Players

V. Consumer Behavior and Retail Trends

VI. Vietnam and Philippines Comparison
VII. Conclusion
 OVERVIEW
Like most countries in Southeast Asia, Vietnam’s retail landscape is heavily
dominated by its traditional wet markets and small independent stores catering small
quantities of goods and products for day to day consumption of shoppers. However, modern
retail is a concept that have grown tremendously in the country – from 2 supermarkets in the
1990s to thousands of modern stores to date.

The economic growth, rising middle class, urbanization and higher standards and
demands for sanitation and hygiene keeps on fueling its growth in Vietnam’s retail industry.
VIETNAM (2016) CURRENT GROSS DOMESTIC PRODUCT
202.616 BILLION

According to the latest data by World Bank, the Gross

ECONOMIC STATUS
Domestic Product (GDP) of Vietnam started to flourish
by 2000. By 2016, Vietnam’s GDP is at 202.616 billion
USD.

ANNUAL GDP GROWTH

Vietnam’s GDP is forecasted to grow by 6.3% in 2017,

Maintain this growth in 2018, and a minimal decline in
the following year (2019) at 6.2%.

VIETNAM (2017)
VIETNAM’S POPULATION GROWTH

ECONOMIC STATUS
WHAT DRIVES VIETNAM’S ECONOMIC GROWTH?
2016 GDP WEIGHT (%)

ECONOMIC STATUS
Agriculture, Forestry, Fishery 11% 15%

Mining
Manufacturing 8%

Utilities
Construction
39%
Trade and Services
Tax Excluded Subsidy 6% 5% 16
%

Trade and Services continue to be the main economic driver for Vietnam at 38.57%. This can be attributed to
the strong domestic consumption. The industry sector, at 34.6% continues to contribute a lot, with robust growth
on mining, manufacturing, utilities and construction.
WHAT DRIVES VIETNAM’S ECONOMIC GROWTH?
2016 vs FORECASTED 2017 GDP GROWTH

ECONOMIC STATUS
Tax Excluded Subsidy

Trade and Services

Construction

Utilities

Manufacturing
-6.00% -4.00% -2.00%
Mining 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00%

2017F Growth 2016 Growth

Agriculture, Forestry, Fishery

Most sectors are forecasted with a robust growth. However, they are at lower growth rate in comparison to
2016 with the exception of the Mining sector growing from -4% at 2016 to 1.64% by 2017 forecast.
Source: General Office of Statistics of Vietnam, HSC, TIM
WHAT DRIVES VIETNAM’S ECONOMIC GROWTH?
Trades and Services

Exports surged at 15.10% amounting to

ECONOMIC STATUS
44.7 Billion US Dollars. Imports, on the
March 2017
Amount U SD
other hand has a growth rate of 24.9%
YOY amounting to 46.6 Billion US Dollars.
Exports
4.5 The surge in exports is because of the
44.7 billion huge demand for electronics, computers
Imports 6.9% and components driven by the foreign-
46.6 billion invested manufacturing sector. Top exports
markets of Vietnam in 2016 are US, China
and Japan.
Whereas, the largest source of Vietnam’s imports are: Chins, Korea and Japan. Most of the imported items in
2016 consisted of machinery, equipment, electronics and computers which is heavily related to export assembly.

Source: Vietnam General Department of Customs, HKTC

MODERN RETAIL CHANNEL SALES (Trillion VND)
45

40

RETAIL MARKET SIZE

35

30

25

20

15

10
5

0 2011 2012 2013 2014 2015

Convenience Stores Hypermarkets Supermarkets

Unlike most of its neighboring countries, convenience stores in Vietnam accounts for the lowest sales among
retailing channels. In 2015 alone, sales among convenience stores accounted only to 2.3 trillion VND, while
hypermarkets accounted to 27.2 trillion VND and supermarket with the highest sales at 39.8 trillion VND.
However, it is also worth noting that modern retail sales in Vietnam is in a steady growth every year, growing
from 30.9 trillion VND in 2011 to 69.2 trillion VND in 2015 – A 124% growth rate in 5 years.
TRADITIONAL RETAIL CHANNEL SALES (Trillion VND)

1000

RETAIL MARKET SIZE

900
800
700
600
500
400
300
200
100
0
2011 2012 2013 2014 2015
Food/Drink/Tobacco Specialists Independent Small Grocers Other Grocery Retailers

On the other hand, other grocery retailers (wet markets, food stalls, etc) account for the largest sales among
traditional markets. In 2015, other grocery retailers account for 895.6 trillion VND, followed by independent
small grocers at 374.6 trillion VND and lastly, food/drink/tobacco specialists at 32 trillion VND.
Similar with modern retailing channels, the growth among traditional market channels continue to grow
progressively.
Source: Euromonitor, USDA
TRADITIONAL RETAIL VS MODERN RETAIL (Trillion VND)

RETAIL MARKET SIZE

30%

25%

20%

15%

10%
2012 2013 2014 2015
5%
Modern Retailing Channel Traditional Market Channel
0%

Despite both channels’ steady growth in the past years, the growth rate of its traditional market is declining in
comparison to modern retail. Modern retail experienced a steep growth rate by 2014 at 28%. However declined
the following year at 18%.
Traditional Retailing declined from 2012 having the growth rate of 24% down to 8% by 2015.
SUPERMARKETS AND HYPERMARKETS

RETAIL MARKET PLAYERS

Considered as the largest
Owned by a private company,
retailer in Vietnam
second largest retailer in
A specialty store in Vietnam Vietnam
offering
wide range of imported goods and
82 private brands 80
outl outle
ets ts
5
outl
ets Owned by a French
Retailing Company
present in 16
countriesthe world
around
8
outl
ets

55 Japanese retailer expanding

outle its domain in Vietnam
ts
CONVENIENCE STORES

RETAIL MARKET PLAYERS

Convenience Store in Malaysian-Invested
Second to Vinmart with
Vietnam with the company expanding its
the most number of
domain mainly around
highest number of outlets
Ho Chi Minh City
outlets nationwide
700 217 128
outle outle outle
ts ts ts
 RETAIL MARKET PLAYERS
Image Source
Most of Vietnam’s population still rely on wet markets or traditional retail channels in making their day to day
purchases.

Primarily,
Vietnamese dishes are composed mainly of fresh fruits and vegetables, making wet markets the most convenient
place to purchase fresh goods for everyday consumption. In addition to this, traditional retail outlets also pose as
a more viable option for most Vietnamese shoppers.
However, it is evident that modern retailing

RETAIL MARKET PLAYERS

continues to flourish in a country heavily
dominated by its traditional market.
Remarkably, from 2 supermarkets in 1990s,
thousands of modern concept retail stores are
built around Vietnam and their numbers
continue to grow each year.

Vietnamese love fresh vegetables and fruits.

Thus, modern retailing outlets make it a point
to offer fresh products that can compete with
goods sold in the wet market. Besides the
impeccable look and feel, they assure their
consumers that all areas of the store is
completely sanitary.
 RETAIL MARKET PLAYERS
The d eli s e c t i o n a l s o
offers a wide range of
cheeses a n d cold cuts for
f o rei g n er s o r e x p a t s a n d
e v e n f o r t h e Vi e t n a m e s e
consumers to enjoy.
 RETAIL MARKET PLAYERS
I m p o r t e d w i n e s a n d liquors f ro m different con tin ents a re also
offered , g i v i n g t h e c o n s u m e r s a v a r i et y o f c h o i c e s t h a t c a n b e
a c c o m p a n i e d b y c o l d c u t s a n d c h e e s e s t h a t t h e y p u rc h a s e .
 RETAIL MARKET PLAYERS
Modern retailing outlets also offer wide range of
imported products. With the growing number of
tourists and expats in the country, the demand
for imported products also continue to grow. In
addition to this, Vietnamese consumers are
developing a taste and appreciation for
imported products.
 RETAIL MARKET PLAYERS
Modern retail outlets also offer private
brands/products that can be exclusively
purchased in their stores. In this way, they can
assure every consumer that the products they
sell are specially made to fit the demands and
needs of their shoppers.
 RETAIL MARKET PLAYERS
One key factor why Vietnamese consumers
choose to shop in traditional markets is
because they can decide to buy ingredients in
smaller portions. In response to this,
supermarkets are offering RTCs or ready to
cook packages that is better suited with the
daily needs of an average consumer.
 RETAIL MARKET PLAYERS
B e s i d e s f o o d p r o d u c t s , n o n -f o o d p r o d u c t s a n d h o m e a p p l i a n c e s
a re a l so o f f e re d i n s u p e r m a r k e t s m a k i n g s h o p p i n g f o r h o u s e
n e e d s e asi er a n d p o s s i b l e u n d e r o n e ro o f .
 RETAIL MARKET PLAYERS
To f u r t h e r i m p r o v e s h o p p i n g e x p e r i e n c e , s o m e s t o r e s h a v e i n -
house bakeries a n d cafés where consumers ca n ha ng out a n d
enjoy with family or friends.
A. VIETNAM’S POPULATION IS STILL INCLINED TO

AND RETAIL TRENDS

CONSUMER BEHAVIOR
BUY FROM TRADITIONAL RETAIL CHANNELS

The local population’s inclination to make their purchases in the

traditional outlets are hinged on four major factors. (1) Traditional outlets
are seen everywhere posing convenience and ease of access for
consumers. (2) Comparatively lower prices of goods and products to which
consumers can still bargain (3) Fresh produce supply source is better at wet
markets (4) Traditional retailers offer flexible package sizes for day to day
consumption.
 Traditional Modern

6%

AND RETAIL TRENDS

94%
According to Euromonitor’s 2016 report, traditional
Market accounts for 94% of retail sales while
modern accounts to the remaining 6%.
CONSUMER BEHAVIOR
However…
The growth of sales in Traditional Market is declining compared to Modern
Retailers. According to Nielsen, foot traffic on traditional outlets declined. In
2012, 81% of consumers go to traditional outlets while in 2014, it declined to
64%. On the other hand, foot traffic on convenience stores increased from
5% (total number of consumers) on 2012 to 11% on 2014.
B. INCREASED HEALTH CONSCIOUSNESS AND SPEND

AND RETAIL TRENDS

CONSUMER BEHAVIOR
1 Health
Top 5 2 Economy
concerns in
3 Job Security
Vietnam Increased Utility Bills
4

5
Work Life Balance

Source: Nielsen
 8
2014
7
7.067

AND RETAIL TRENDS

CONSUMER BEHAVIOR
6

4
2002
3
4.698
2

2000 2002 2004 2006 2008 2010 2012 2014 2016

Health consciousness ranks 1st on top 5 concerns by Vietnamese people according to a research conducted by Nielsen. In
addition to this, the latest data released by the world bank proves the growth on healthcare
spending in Vietnam (% of GDP).
A S E A N Healthcare Spending ( % of GDP)

AND RETAIL TRENDS

CONSUMER BEHAVIOR
8

0
2011 2012 2013 2014
Vietnam Malaysia Philippines Indonesia Thailand

In comparison to its neighboring Asian countries, Vietnam has the highest spending on healthcare particularly
due to its high demand from citizens. Spending on healthcare grew by 241% over the past decade.
C. BEVERAGE TOPS IN CONTRIBUTION AMONG ALL CATEGORIES

AND RETAIL TRENDS

CONSUMER BEHAVIOR
3%

8% 13% 40% Growth

12%
6%
10%

8%
15%
6%

15%
4%
Beverage Food Milk Base Home Care
2%
Personal Care Cigarette Baby Care
0%
Q1 - 15 Q2 - 15 Q3 - 15 Q4 - 15 Q1 - 16 Q2 - 16 Q3 - 16 Q4 - 16

Beverage tops in Contribution among all categories at 40%.

Far behind is the second category which is food at 15%.
Source: Nielsen
D. KIDS ARE LESS INFLUENTIAL IN DETERMINING

AND RETAIL TRENDS

CONSUMER BEHAVIOR
PURCHASE PRIORITIES

With the maturing life stages (more and more family are having no dependent
children), kids will have less influence in determining purchase priorities. Baby
formula or children’s snack and beverage is starting to be bought seldom on retail
stores.

In 2015 alone, 44% of the total households in Vietnam have no dependent

children. This is forecasted to grow up to 60% by 2025.
LIFE STAGES GROWTH 2015

AND RETAIL TRENDS

CONSUMER BEHAVIOR
74% 63% 36%

The number of Old and Single among the population has the highest growth rate in Vietnam while Families
that have dependent kid/s has the lowest growth rate and is forecasted to even drop further.
Families with Source: Cimigo
Moreover…

3%

AND RETAIL TRENDS

CONSUMER BEHAVIOR
13%

8% 40% Baby Care

6.0%
6%
4.0%

0.0%
15% 2.0% Q1 - Q2 - Q3 - Q4 - Q1 - Q2 - Q3 - Q4 -
- 15 15 15 15 16 16 16 16
15% -4.0%
2.0%

Milk Base -6.0%

-8.0%
Beverage Food Home Care
Baby Care
-
Personal Care Cigarette 10.0%

Baby Care Products have the lowest contribution among all -

12.0%

categories and continues to decline per quarter.

-
14.0%

Source: Nielsen
D. E-COMMERCE IS A RETAIL CHANNEL THAT HALF VIETNAM’S
POPULATION IS UNFAMILIAR OF

AND RETAIL TRENDS

CONSUMER BEHAVIOR
Population Internet Users Mobile Internet
Subscription

94.9
50.05 47.19
3 Million Million
Million
Pen et ration

50%
Pen et ration

53%
Urbanization

31% Source: wearesocial

VIETNAM AND PHILIPPINES
IN COMPARISON
 PERCENTAGE OF THE POPULATION 0 – 14 ARE BOTH DECLINING IN
VIETNAM AND PHILIPPINES WHILE 15 – 65 AGE GROUP ARE BOTH
ON THE RISE

VIETNAM - PHILIPPINES
45.00% 80.00%
40.00% 70.00%
35.00%
30.00%
60.00%
25.00%
20.00% 50.00%
15.00%
10.00% 40.00%
5.00% 30.00%
0.00%
20.00%
1990 1995 2000 2005 2010 2015 2020 1995 2000 2005 2010 2015 2020

10.00%
PHILIPPINES VIET PHILIPPINE VIETN
0.00%
NAM S AM
1990

0 – 14 AGE GROUP . 15 – 65 AGE GROUP

Despite their similarities, it can also be noted that the ratio of adults to children in Vietnam is 3:1 whereas in the
Philippines it is at 2:1. This denotes that there are fewer families in Vietnam with dependent children, highly affecting
the purchase priorities.
VIETNAMESE PEOPLE TEND TO SPEND MORE ON
HEALTHCARE COMPARED TO FILIPINOS

COMPARISON
8% 7% Based on the data released by the World
7% 5% Bank, among the neighboring countries,
6% Vietnam has the most percentage in its
5%
GDP allotted for healthcare, characterized
by the population’s demand. Furthermore,
4%
health and wellness is a booming sector in
3%
Indonesia Malaysia Thailand
Vietnam.
2%

1%

0%

Source: World Bank

Philippines
PHILIPPINES HAS A BETTER PLATFORM FOR E – COMMERCE
COMPARED TO VIETNAM

COMPARISON
50% 126%
Penetrati Penetratio
on n

Mobile Subscription
Penetration R a t e

Source: wearesocial
TIME SPENT ON INTERNET USAGE

COMPARISON
Average time spent Average time spent
via PC or Tablet via mobile phone

Philippines Vietnam Philippines Vietnam

9H 00M 6H 53M 3H 36M 2H 33M

On average, Filipinos spend more time on their computers and mobile phones compared to Vietnamese people.
This implies the inclination to purchase services or goods online is stronger in the Philippines
compared to Vietnam.
Source: wearesocial
 CONCLUSION
TRADES AND SERVICES

Vietnam’s GDP growth can be attributed to its strong trade and services
sector, further fueled by Foreign Direct Investments and Free Trade
Agreements.

TRADITIONAL MARKET

Traditional Market still rules the retail landscape in Vietnam. However,

sales on this channel is declining while modern retail sales is on the rise.
 CONCLUSION
HEALTH AND WELLNESS

Health and Wellness sector in Vietnam’s market is a good place of

investment as it is the primary concern of the population.

FAMILIES

The number of families with dependent children in Vietnam is declining

making baby/kids products have the lowest sales.
 CONCLUSION
E - COMMERCE

In comparison, Philippines sets a better platform for E-Commerce to

flourish. If Vietnam wants to tap into this market, penetration rates for
internet usage should improve.
END OF REPORT