Insights on Vietnam’s Retail Industry in 2024

Vietnam’s retail sector has emerged as a formidable engine for socio-economic growth in 2024, reflecting resilience and adaptability amid various challenges. Over the first eleven months of this year, the sector saw total retail sales and service revenues soar to approximately VND 5,822.3 trillion ($232.89 billion), marking an impressive year-on-year increase of 8.8%. Retail activities continue to dominate, representing 60-70% of this total, with e-commerce contributing a remarkable 20% to overall retail sales.

Highlights of the Industry

Several companies have distinguished themselves in Vietnam’s highly competitive retail landscape, earning recognition among the top 10 most reputable retailers. According to Vietnam Report, this prestigious list includes major players like Central Retail Vietnam, Saigon Co.op, WinCommerce, MM Mega Market, Aeon Vietnam, and more. Notably, 74.6% of retail businesses have reported revenues matching or exceeding their 2023 performance, with 66.3% experiencing significant improvements.

Despite facing formidable hurdles, such as intense competition and supply chain disruptions exacerbated by Typhoon Yagi, retailers have demonstrated remarkable resilience. They have successfully implemented measures to stabilize goods supplies, address pricing concerns, and curb inflation, all while transitioning towards greener and sustainable consumption practices.

Strategic Operational Transformation

A key highlight for the retail sector this year has been its strategic pivot towards operational transformation. According to a recent survey by Vietnam Report, 79.2% of businesses have adopted omnichannel sales models, underscoring a significant shift in consumer engagement. Many retailers are diversifying their product offerings and enhancing quality control, reporting a 22.6% increase compared to the previous year. Furthermore, collaboration with supply chain partners and logistics providers has become paramount for fostering sustainability and stability within the industry.

Infrastructure improvements, particularly in rural areas, have significantly enhanced shopping accessibility and modernized consumer experiences, all while adhering to stringent food safety standards. On a broader scale, supportive government policies, such as VAT reductions and salary increases, have bolstered consumer spending and tourism, providing a direct uplift to the retail sector.

Challenges Ahead

While the outlook for the retail industry remains promising, several challenges are on the horizon. Climate change is increasingly prompting the need for modern retail business models focused on greening supply chains and promoting environmentally-friendly products. The post-pandemic recovery phase has also spotlighted a skills gap within the workforce, hindering uniform growth as retailers struggle to meet the demand for professional training.

Intensifying competition from international brands is yet another hurdle, compelling domestic retailers to innovate continually and adjust pricing strategies to maintain relevance. It’s no longer sufficient to compete solely on price; domestic businesses must stay ahead of consumer trends, leverage technology, and enhance the overall shopping experience.

Retaining Consumers with Omnichannel Models

The rise of omnichannel sales models—adopted by 79.2% of retail businesses—presents an opportunity to boost profitability, as these customers tend to spend more than their single-channel shopping counterparts. However, to effectively retain customers, omnichannel retailers must elevate both their online and offline offerings, ensuring a smooth and hassle-free journey from discovery to purchase.

Overcoming challenges like inconsistent data integration and variations in customer experience across different channels will be crucial. Implementing integrated data management systems, maintaining uniform promotional policies, and simplifying returns and customer support processes will enhance the overall shopping experience.

Emphasizing Sustainability in Retail

As we look toward 2025, it is clear that green and sustainable consumption will continue to gain momentum. Retailers will need to adapt to new trends, integrating technology and aligning themselves with consumer behavior changes while navigating market liberalization challenges. Strategic collaboration with manufacturers will be fundamental to optimizing product selections and ensuring competitive pricing against low-cost imported goods.

To harness the growing trend toward sustainability, retailers should focus on four key areas:

1. Building Sustainable Infrastructure: Retail spaces should comply with environmental standards, utilizing sustainable designs and energy-efficient technologies like solar power.
2. Raising Consumer Awareness: Encouraging eco-friendly purchasing behaviors and reducing reliance on plastic products is vital for fostering a culture of sustainability.
3. Collaboration with Responsible Producers: Establishing partnerships with producers who practice environmentally-friendly manufacturing will enhance the overall sustainability of the supply chain.
4. Post-Product Responsibility Management: Encouraging manufacturers to manage products after use can foster responsible consumption and recycling practices.

Emphasizing the competitive pricing of green products relative to conventional options will be critical in promoting sustainable practices among consumers. Retailers are at a pivotal juncture where they can not only respond to market dynamics but also lead the charge towards a more sustainable future.