On November 7, 2018, the Ho Chi Minh City Union of Trading Cooperatives - Saigon Co.op successfully organized the Conference on Vietnam Retail Market Trends in the period 2018 - 2020 and Saigon Co-op’s development orientation for the coming time.
This could be said so far in 2018 a rare large-scale and the only conference for the fast-moving consumer goods in Vietnam’s retail market. The conference rounded up market research companies, international speakers and more than 300 enterprises at home and abroad. This event could help domestic retailers and enterprises position themselves on Vietnam’s retail map as well as catch up international retail trends.
The agenda of Conference on Vietnam Retail Market Trends in the period 2018 - 2020 and Saigon Co-op’s development orientation for the coming time underlined the globally-oriented vision of Vietnamese retailers, the transformation of Vietnamese retailers, the race of foreign retailers in Vietnamese market, the trend of technology application in current and future retail, and the orientation of Saigon Co.op’s consumer goods retail system – an assumed nation’s leading system in its kind. In addition to the main agenda, the conference gave scope for well-visited discussions and interactions among speakers and guests concerning world retail trends, regional trends and necessary roadmap for Vietnam’s retail to enter the big game.
Mr. Diep Dung - Chairman of Saigon Co-op’s Board of Directors delivered the opening speech at the conference
Although it is now appraised as the leading consumer goods retailer in Vietnam with the average annual sales nearly as twice as the runner-up, Saigon Co-op should not sit on its laurels, but hammer away at investment in information technology, capital sources and corporate governance, so as to maintain its top position against the fiercer and fiercer competition – said Mr. Diep Dung - Chairman of Saigon Co-op’s Board of Directors.
Vietnam’s retail market, being no exception to the world’s movements, is changing every second, said Mr. Jason Moy - Managing Director of Boston Consulting Group (BCG) Singapore. Retailers need to focus on digital marketing and online sales applications. These popular tools help accelerate the access of customers to what they want and make shopping experiences easier and more convenient.
It is also important to keep in mind that appropriate plans should be established for the digital approach to sales. Customers may replace their offline shopping habit completely as an online channel, even though the traditional practice gives interesting real-life experiences. Besides, various means of delivery connecting online and offline channels enable the linkage to consumers. It is a current vogue for international retailers to apply AI (artificial intelligence) and robotics in their supply chains, but this indeed costs very much. For example, Amazon spends US$16 billion and Alibaba spends more than US$5 billion on AI.
It was assumed by Ms. Le Thi Thuy Trang - Retail Partnership Director of Nielsen that Vietnam’s retail market saw Vietnamese consumers spending more and more on non-FMCG products, including consumer electronics, pharmaceuticals, travel, real estates, etc. This implies a trend toward improved living standards while FMCG market has been in recovery progress from the year beginning. Vietnam is still an outstanding market with a roaring growth of the retail sector, which, nevertheless, chiefly relies on traditional practice: accounting for 26% of market share, growth rate of 11.8%. Whereas, traditional retail accounts for 76% but the growth rate is only 1%.
The movements of domestic retailers proves that Co.opmart is the leading brand. According to Kanta’s survey results in “Brand Health Check”, for two years in row from 2016, 2017 and till September 2018, Co.opmart has been the most consumer-liked and trusted supermarket.
New trends that shape retail in the future will depend on such key factors as the need for convenience, the need for upgraded living standards and demands of connected consumers, who are also the major targeted customers of manufacturers and retailers in the future. The future healthcare revolution and next waves of consumers will rely upon Generation Z.
It is notable that Vietnam is now on top in terms of Internet-connected market. An average Vietnamese spends more than 24 hours per week online. Today consumers go beyond single-channel shopping and look for multichannel shopping experiences. That is why retailers should prepare for diversification of their sale channels. Cashless payment is an inevitable trend associated with multi-channel shopping.
Vietnamese retailers need cooperation to make a difference. First of all, it is necessary to categorize stores, operation governance, commitment, personalization, collaboration and differentiation.
Many foreign retailers since early have set foot in Vietnam as they saw Vietnam as the most contemporary prospective and dynamic market. The long-established BigC has 35 supermarkets, Aeon, MM Mega Market and Lotte have 4, 19 and 13, respectively. The predominant models are hypermarket and convenience store. According to Mr. Nguyen Huy Hoang - Commercial Director of Kantar Worldpanel Vietnam, foreign investment is more inclined to convenience store and mini supermarket segments. However, foreign investors lay the main course of business system and serve customers chiefly in major urban areas. Therefore, domestic retailers still gain the lion’s share.
For the last 5 years, domestic retailers, especially Saigon Co-op, have maintained a steady growth of FMCG industry. Particularly, domestic retailers are predominating the supermarket and mini-supermarket segments, yet bearing a great competition pressure in the area of hypermarket and convenience store.
Though many big names of retailers have set foot in Vietnam, there remains scope of development for late comers looking at the low store density against a high population density, stated Mr. Bod Hayward from KPMG. Large enterprises from Thailand and South Korea have made their presence felt in Vietnam, while Alibaba, We Chat, Tencent, etc., are on the way to get in.
Mr. Nguyen Anh Duc - Deputy General Director of Saigon Co.op spoke at the conference
In reply to questions concerning challenges and opportunities around the development orientation of Saigon Co-op as a cooperative against the great competitive pressure in the coming time, Mr. Nguyen Anh Duc - Standing Deputy General Director of Saigon Co.op, gave a convincing speech on solutions and specific directions for Saigon Co.op.
Mr. Duc argued that the cooperative business, with its unique advantages, had been robustly growing in many parts of the world. In the US, the cooperative model survives beside many well-developed modern retail forms. Saigon Co-op now has 100 supermarkets out of a total of more than 600 business locations with an estimated daily footfall of 1 million people. In addition to the current models, Saigon Co.op will step up to develop new retail models to reach a daily footfall of 2 million at more than 2,000 transaction points in Vietnam and neighbouring regions by 2020.
Such network development guideline will step by step call up modern technologies that fit specific retail models. As for Saigon Co-op only, traditional values will remain at a moderate level in the future, while technologies will be integrated to improve consumption standard and enhance Vietnam’s retail model, said Mr. Duc. Saigon Co.op expects to make use of many distinctive technologies to lead the market in the next 5-10 years, at the same time focusing on food sector and organic product strategy.
Vietnam’s retail market will see a common trend of IT-based virtualization of customer services, which allows merchants to know who their customers are and what they want before serving them. To pre-read the customer’s needs by analysing big data will help merchants to make better services. Vietnam’s retail industry is still very in blue sky and will further flourish. The thing is how retailers can compete and outperform their competitors. Enterprises must master the technologies and get hold of network shopping channels. One speaker concluded the conference by saying that “The game has just started and new players will come on sight”.