In 2020, will retail enterprises flourish?

	Domestic retail enterprises promoted and supported
	Traditional trade – Tasty cake will certainly be no more

The M&A deal between Vinmart and Masan will keep the retail market share in Vietnamese people. Photo: Internet

"Like mushrooms after rain"

According to the General Statistics Office, the total retail sales of goods and consumer services in 11 months of 2019 increased sharply over the same period last year (11.8%).The market was vibrant, with stable development, goods were rich, diversified, ensuring supply and demand of all kinds of goods. The reason for this growth, according to experts, is the opportunity that Vietnam is creating for retail enterpriseswhen the market is opening with the potential available.

Mr. Nguyen Duc Hung Linh, Chief Economist and Director of Research and Development, Director of Analysis and Investment Advisory of Saigon Securities Incorporation (SSI) said that Vietnam had a market of up to 100 million people, which was extremely attractive, especially for foreign investors.According to Mr. Linh, when interacting with Thai enterprises which were finding opportunities to invest in Vietnamese stocks,they were often interested in the consumer goods sector. Therefore,the development potential of this industry was huge and would be the "rising" market segment in the near future,not only in the retail sector such as consumer goods, but also in arts, entertainment and education,which are very large business industries but theservice and quality of the goods were low.

In fact, the market shows that, in Hanoi, the chains of coffee shops, franchised chains are growing "like mushrooms after rain". Many enterprises said that this seemed to be a small business opportunity, but it was really huge when hitting the psychology and demand of the Vietnamese market. In recent months, lemon tea shops have sprung up, of which, Bui Pho lemon tea had nearly 400franchised stores throughoutthe country. This chain of stores was a startup of a group of young people, due to "hitting" on the psychology of enjoying sidewalk drinks, affordable prices of young people in Vietnam, they have achieved success.

It can be seen that Vietnamese enterprises are trying their best to keep the retail market in their hands, because the opportunity from this market is huge. Recently,the merger and acquisition (M&A) deal may be the most popular in 2019 between Vinmart and Masan, showing the efforts of the two "giants" in keeping the retail market.It is forecasted that by 2020, the market share of modern retail channels in Vietnam will increase from the current 25% to 40% and scale up to US$180 billion. So if it falls into the hands of foreign enterprises like previous M&A cases,the growth of this market will be difficult to bring benefits to Vietnam. Therefore, the "billion-dollar deal" of the two Vietnameselarge enterprises is also a "bright spot" for Vietnam's retail industry to continue developing in the comingyears,especiallyas Masan has a lot of experience in the consumer goods industry,

Take advantage of e-commerce

Talking about the current retail distribution industry, it is impossible not to mention the benefits of e-commerce. According to the Ministry of Industry and Trade, in the period of 2015-2018, e-commerce in Vietnam sawhigh growthcontinuouslyat the core criteria. Retail sales of Vietnam’s market in 2019 areestimated at US$211 billion, of which e-commerce revenue is about US$10.4 billion(up 30%), equivalent to 4.92% of the retail market share.The growth trend of the e-commerce segment is expected to grow in the future(estimated annual growth of about 30%) to reach US$50 billion, accounting for about 12% of the domestic retail market by 2025.

Commenting on Vietnam's potential, Mr. Bernard Tay, Director of Amazon Global Selling in Southeast Asia, Australia and New Zealand, said that Vietnam was a country with great potential to develop e-commercecross-borderdue to advantages in manufacturing, as well as abundant labor supply.Therefore, Amazon Global Selling in Vietnam would constantly support Vietnamese sales partners throughout their business journey on Amazon.This idea shows that e-commerce is an indispensable trend and an opportunity for retail enterprises.E-commerce not only helps enterprises expand their domestic market share but also exportaroundthe world.

Over the years, many Vietnamese enterprises have taken advantageand developed thanks to e-commerce.However, statistics of the Ministry of Industry and Trade show thatthe majority of domestic e-commerce enterprises are still on the sidelines. Up to82% of enterprises in the industry are beginning to join e-commerce, ofwhich, 61% are still on the sidelines and 21% of enterprises arestarting their first preparatory activities.Mr. Tran DinhToan, Deputy General Director of OSB Investment and Technology Joint Stock Company, said that enterprises should have a proper investment strategy to take full advantage of e-commerce. Besides, enterprises also have to change their minds and need initiative.Therefore, in order to help enterprises in this matter, recently, Amazon Global Selling has cooperated with T&T Group and SHB Bank in programs to promote e-commerce activities and support Vietnamese enterprises to export on the basis of e-commerceplatform through the banking system.