Economic experts believe that Vietnam’s retail market is going to witness a strong rebound of both supply and demand after a long period of "compression" because of the epidemic.
Positive consumer economic indicators
After Vietnam had achieved its dual target of both constraining the Covid-19 epidemic and maintaining economic growth, economic experts and market research organizations continued to give positive forecast about the resilience of the Vietnamese market in 2021. In particular, Fitch forecast that Vietnam's GDP growth might reach 7.5% in 2021, which nearly triples that of 2020 (2.91%). Euromonitor also gave a positive figure of 11% for Vietnam in 2021, much higher than the 6.2% - 9.6% of Indonesia, Thailand, Singapore and the Philippines.
In this positive economic picture, retail is expected to be one of the brightest spots with strong rebound and enormous investment. This is explained by the fact that both the supply and the demand of this market have been "compressed" for a long time due to the epidemic. Trading Economics also forecast that Vietnam's retail sales would increase to 11% in 2021, outperforming many other Southeast Asian countries.
Regarding demand, after entering the "new normal" period, people have adjusted the balance of demand and purchasing power instead of focusing on essential products. The income of people is stabilizing, leading to a stronger ability to spend. Fitch Solutions quantified that Vietnamese household spending alone in 2021 would increase to 9.69%, much higher than that of other ASEAN countries such as Thailand (3.9%), Malaysia (6.3%), the Philippines (5.5%) and Singapore (3%).
It can be seen that Vietnam’s retail market is being supported by a “tripod" to both stand firm and accelerate in 2021. The three legs of the tripod include growing market size, increasing investment in retail, and rising consumer purchasing power.
Opportunity for those with flexible offline - online business strategy
In addition to the potential of the market, the retail model has also quickly adapted to the new normal situation, in which the growth of online channels is outstanding. To be more precise, market leaders are focusing on developing multi-channel sales.
Economist Vu Vinh Phu said that although online channel is a good experience, it is only part of shopping activities, it cannot be a channel that will completely replace traditional stores. Researches on consumer behavior also show that 90% of customers who go to a store to shop directly will make further purchase. "Stores create a real feeling of products and promoting better shopping", which is a philosophy summarized by many large businesses around the world. This is clearly demonstrated when online retailers such as EverLane, KeepLand, Habitat or Amazon have to open more physical stores to improve the customer experience.
Mr. Phu added that shopping offline not only brings a complete shopping feeling but also is "the need for social contact". This demand will increase significantly after a long period of "living online", especially for products and services that cannot be experienced online such as makeup, beauty, food, sports, and entertainment items, etc. In fact, after each period of social distancing, the desire to go out is satisfied immediately with meetings and exchanges in places that ensure safety. During the Lunar New Year holiday, that Vincom shopping mall system recorded 90% of visitors compared to the same period in 2020 clearly demonstrates that.
In addition, after the epidemic had been controlled, shopping centers became the most popular destination when they promptly and seriously implemented epidemic prevention measures, providing a safe space to experience for customers.
The year 2021 will witness an "amazing race" of Vietnamese retail. The market will receive hundreds of thousands of square meters of retail space from new projects, a series of domestic and international brands expanding their retail system, and especially the "storm" of offline consumption people who have stayed online for a long time.