What are your thoughts on Vietnam’s retail industry in 2024 and what were the key highlights?

Vietnam’s retail industry played a pivotal role this year in driving socio-economic development. Over the first eleven months, total retail sales and service revenues reached VND 5,822.3 trillion ($232.89 billion), for an 8.8 per cent increase year-on-year. Retail activities dominated, consistently accounting for 60-70 per cent of the total, and e-commerce experienced remarkable growth, contributing an average of 20 per cent to overall retail sales.

Several companies earned recognition as being among the top 10 most reputable retailers in the general supermarket sector, as announced by Vietnam Report. These include Central Retail Vietnam, Saigon Co.op, WinCommerce, MM Mega Market, Aeon Vietnam, Lotte Mart Vietnam, SATRA, SASCO, TASECO, and BRG Mart. An impressive 74.6 per cent of retail businesses reported revenues equal to or exceeding 2023 levels, with 66.3 per cent recording notable improvements.

Despite the challenges, such as fierce competition, supply chain disruptions, and the substantial impact of Typhoon Yagi on production and business activities in early September, retailers demonstrated resilience, implementing measures to ensure stable goods supplies and price stabilization to help curb inflation. The industry is also transitioning towards green and sustainable consumption.

Retailers have actively collaborated with government agencies to launch initiatives such as the “Centralized promotion program”, “Vietnamese people prioritize using Vietnamese goods”, “Protecting consumer rights”, and “Community livelihoods”. These efforts aim to support farmers in overcoming poverty and posting sustainable growth.

The key highlight of the retail sector in 2024 was its strategic pivot towards operational transformation. According to a survey from Vietnam Report, 79.2 per cent of businesses have adopted omnichannel sales models. Some have also prioritized product diversification and enhanced quality control of inputs, showing a 22.6 per cent increase compared to 2023. Additionally, retailers have strengthened collaboration with supply chain members, manufacturers, and logistics providers to foster sustainability and stability.

Efforts to enhance commercial infrastructure, particularly in rural areas, have created more accessible and modern shopping environments while ensuring food safety standards are met. On a broader scale, government policies have significantly bolstered consumer spending and tourism. These measures include VAT reductions, salary increases, and expanded visa exemptions for tourists. Such supportive policies have been instrumental in stimulating Vietnam’s consumer market, providing a direct boost to the retail sector.

Many believe the retail sector holds significant potential for breakthroughs in the years ahead, yet challenges persist. What do you think?

While the retail industry is poised for growth, it also faces notable obstacles in the near future. Climate change is driving the need for modern retail business models that prioritize greening supply chains, promoting environmentally-friendly products, and reducing waste in retail operations.

Additionally, though retail services have been expanding during the post-pandemic recovery, a shortage of skilled, high-quality workers has hindered uniform growth. Retail businesses face ongoing difficulties in meeting the demand for professional training and skills development in their workforce. Challenges also persist in addressing supply chain pressures, ensuring high-quality logistics, and meeting product quantity and market delivery timelines.

Competition in Vietnam’s retail market is also intensifying, with the entry of numerous foreign retailers and major global brands. This has placed significant pressure on domestic businesses, pushing them to innovate continually, adjust pricing strategies, and adopt new approaches to maintain their market position.

As such, domestic retailers must go beyond price competition by staying ahead of consumer trends, leveraging technology, embracing innovation, and enhancing the value, convenience, emotional connection, and overall shopping experience they offer. Such efforts are crucial to meeting the evolving demands of customers.

With omnichannel retail models gaining traction, how can businesses retain consumers and enhance their competitiveness?

Some 79.2 per cent of retail businesses have adopted omnichannel sales models. This approach tends to generate higher profits, as omnichannel shoppers typically spend more than those who shop through a single channel. These consumers are intentional about what they want, understand when to use specific channels, and prefer retailers that deliver a seamless and convenient shopping experience across platforms.

To retain customers, omnichannel retailers need to invest in upgrading both online and offline offerings to ensure a smooth, efficient, and hassle-free customer journey, from product discovery to purchase.

Businesses must also overcome challenges such as inconsistent data integration, inventory management, and variations in the customer experience across channels. Implementing integrated data management systems, maintaining consistent promotional policies, and simplifying return, exchange, and customer support processes across channels are key strategies to deliver a cohesive and satisfying shopping experience.

2025 is poised to be a transformative year for Vietnam’s retail market, with green and sustainable consumption continuing to gain momentum. What should retailers do to leverage this trend?

New trends such as the integration of technology in e-commerce and the evolving dynamics of consumer behavior will redefine the market landscape this year while presenting both opportunities and challenges for businesses. To thrive, retailers must focus on technological innovation, digital transformation, and omnichannel sales strategies while staying responsive to shifts in consumer preferences. Collaborating directly with manufacturers to optimize product selection, reduce costs, and compete fairly is essential, as is addressing the growing influence of low-cost imported goods in the market.

Retailers should also prioritize workforce development by working with training institutions to recruit and enhance the skills of their employees, to ensure they can meet the demands of a more competitive and integrated market. They need to seize opportunities and mitigate challenges that arise from market liberalization while collaborating closely with regulatory authorities to combat smuggling, counterfeit goods, and substandard products, particularly in online retail.

To align with the green and sustainable consumption trend, retailers should focus on four key areas. First, building environmentally-friendly infrastructure. Retail spaces should adhere to environmental protection standards by incorporating sustainable designs, materials, and energy-saving solutions like solar power. Second, raising consumer awareness is equally important, encouraging the purchase of eco-friendly products while discouraging the use of plastic bags and other environmentally-harmful items.

Third, retailers must collaborate with responsible producers who comply with environmental regulations, innovate their production processes, adopt energy-efficient technologies, and prioritize the use of eco-friendly materials. And finally, businesses should advocate for manufacturers to take responsibility for managing products after they have been used. Enhancing competitiveness, particularly in the pricing of green products compared to conventional ones, will be key to fostering widespread adoption of sustainable consumption practices.