Analysis of the Retail Industry in Vietnam

1. Overview of Supermarket Industry in Vietnam

In the past 10 old ages, the retail industry in Vietnam has remarked addition in the figure of supermarkets. Harmonizing to statistics of Ministry of Industry and Trade of Vietnam, in 2009, Vietnam had 446 supermarkets ( increased by 62 shops, comparing to 2008 ) . In peculiar, the retail merchants FDI had 31 shops and domestic endeavors have 425 supermarkets ( FDI retail gross revenues history for merely 4-5 % of entire national retail gross revenues ) . Many taking retail merchants of foreign houses as Metro Cash & A ; Carry ( Germany ) , Big C Bourbon ( France ) , Parkson Lion Group ( Malaysia ) , Diamond Plaza ( South Korea ) , Lotte ( South Korea ) have been present in Vietnam. The cardinal participants in retail market in Vietnam are shown in the Table 1

A.T. Kearney – U.S. consulting house, in 2007, Vietnam ranked 4th among the 7 states with attractive retail market in the universe, in 2008, this rank rose to the first top.

There's a specialist from your university waiting to help you with that essay.
Tell us what you need to have done now!


order now

Vietnam ‘s Ministry of Industry and Trade considered that the retail market in Vietnam has been n vibrant and would open up more concern chances for both domestic and foreign retail merchants every bit good as consumers.

2. Porter ‘s Five Forces Model and Retail Industry in Vietnam

Beginning: ( Porter 2004 )

Five Forces Analysis determines that five of import forces driver competitory power in a concern state of affairs. They are: supplier power ; purchaser power ; competitory competition ; menace of new entrants and in conclusion, menace of subtitute.

Supermarket industry in Vietnam will be examined through Porter ‘s Five Forces model as following analysis.

2.1 The competition between bing Sellerss in the market

Joining WTO has made Vietnam ‘s retail be more competitory, so this besides has led to a lessening in monetary value. RNCOS analyses that international retail merchants will seek to capture the Vietnam retail market and domestic retail stores that will non be able to vie with them. Most Vietnamese supermarkets are little and independent and they could n’t woolgather of viing against international giants. The elephantine international retail merchants are to the full prepared to lose money for an drawn-out period of clip, selling merchandises cheaper so Vietnamese rivals, to win the market portion, even if it means driving an untold figure of local concerns out of concern. The largest and strongest of domestic retail merchants might now see fall ining custodies to take down monetary values, improve quality and choice, and go more service oriented. Looking at what is in shop, they might make a united force-a strong web of sweeping distributors/dealers and cooperate with big international concern groups to efficaciously be cooped by them.

2.2 Bargaining power of purchasers

Individually, clients have really small dickering power with retail shops. It is really hard to dicker for a better monetary value of merchandises. But Vietnamese consumers are more and more knowing in term of taking merchandises or make up one’s minding the monetary value, so retail merchants would see the quality of services every bit good as merchandises. Many supermarkets in Vietnam have experienced in some runs of banishing merchandises that are harmful or ill-defined beginning. Furthermore, the shift cost is low as purchasers can easy happen many Sellerss in open-markets, little shops or vicinity stores.

2.3 Power of providers

The power of providers is moderate. Although a enormous figure of providers have provide goods or logistic services in Vietnam, a small of them can fit required standard. It leads to some cardinal providers try to set up the monetary value.

2.4 Threat of new entrants

The barrier for new entrants is non strong, because the size of market is large and the authorities has opened the market for FDI. However, in the recent twelvemonth, Vietnam is deficiency of infinite for developing new concatenation of supermarket ( VOV News ) , so new entrants will confront with the challenges in happening the location every bit good as negociating in leasing premises.

Bing cognizant of challenges as the foreign houses are allowed to put up concern in the retail industry, many Vietnamese endeavors have actively banded together to construct large-sized and competitory distribution systems. As a consequence, the constitution of the Vietnam Distribution Association Network Development and Investment Joint Stock Co. ( VDA ) was seen as the start of an industry tendency geared towards greater cooperation between retail merchants.

2.5 Menace of replacement merchandises

The inclination in retail is non to specialise in one good or service, but to cover in a broad scope of merchandises and services. This means that what one shop offers you will probably happen at another shop. Retailers offering merchandises that are alone have a distinguishable or absolute advantage over their rivals.

3. PESTEL Analysis

The PESTEL Framework classifies macro-environmental influences into six chief types such as: political, economic, societal, technological, environmental and legal ” ( Johnson, et Al. 2005 ) .

3.1 Political Factors

On January 11, 2007, Vietnam officially joined the World Trade Organization ( WTO ) going its hundred-and-fiftieth member. Accession is politically important, typifying Vietnam ‘s credence into the planetary economic system and the wider international community. It will besides loosen the limitations and duties on Vietnam ‘s exports to other member states, and open further foreign investing: it is expected be US $ 22 Billion in 2010, already floaty as liberalisation opens the economic system up farther. Beside the chances after fall ining the WTO, Vietnam ‘s retail industry besides has to confront up with the challenges of weak legal model, restrictive environment, and weak rational belongings protection Torahs, etc.

3.2 Economic Factors

GDP growing

Vietnam ‘s GDP has increased significantly by 5.32 % , in malice of planetary fiscal crisis with strong enlargement in industry and services.

Vietnam became a WTO rank in January 2007. The full-year GDP is expected to keep at 8.2 % in Vietnam. Overall GDP has increased by 1.3 % from 2001 to 2005. As GDP growing of Vietnam was reasonably good in the past and presents the healthy economic place attracted many foreign retail participants in the state and will decidedly pull many others in the close hereafter.

Vietnam – Economic Indexs 2001-2009

Items

2001

2002

2003

2004

2005

2006

2007

2008

2009

GDP ( % existent alteration dad )

6.9

7.1

7.3

7.8

8.4

8.2

8.5

6.2

5.32

Consumer Monetary values ( % alteration dad: avg )

-0.4

3.8

3.1

7.8

8.3

7.5

8.3

23

6.88

Employment ( in 1000s )

38,563

39,508

40,574

41,586

42,527

43,339

44,174

44,916 Bottom of Form

N/A

Beginning: General Statistic Office of Vietnam

Higher income per capital

Vietnam has enjoyed the rapid growing of income per capital. It reached to USD $ 1052 in 2009 while this rate in 2007 was merely $ 835. This would be grounds for the growing of buying power ( General Statistic Office of Vietnam, 2009 ) .

In add-on, the employment degree bit by bit increased by of 1.16 % for the period crossing from 2001 to 2008. This has reinforced the growing of per caput income, which has influenced the retail market in Vietnam.

Contribution of retail industry in GDP

In add-on, Retail gross revenues increased bit by bit from USD $ 20,436 billion to USD $ 32,163 million for the period 2004-2009. It reflects the growing of retail market in Vietnam and attracts new concern to come in this industry.

3.3 Socio-Cultural Factors

Culture Factors:

Traditionally, Vietnamese consumers do shopping in traditional alfresco market ( Gian Report, 2005 ) . It has restricted supermarkets in altering the wont of consumers.

Population:

Year

Sum of population

Urban

Rural

A

in 1000

in 1000

%

in 1000

%

2006

84,137

22,793

27.09

61,344

72.91Top of Form

2007

85,172

23,399

27.47

61,773

72.53

2008

86,211

24,233

28.11

61,978Bottom of Form

71.89Bottom of Form

Beginning: General Statistic Office of Vietnam

Harmonizing to the statistic of Vietnam ‘s authorities, Vietnam ‘s population is making to 86.2 million in the twelvemonth 2008. In other universe, the population has increased at a per centum of 1.02 % and it is one of the tendencies for the growing of retail industry in the state. Besides the growing of urban population has and lodging undertakings in the metropoliss would ease the growing of supermarkets. Furthermore, over 67 % of Vietnamese population is between 15-64 twelvemonth olds, stand foring a powerful consumer force.

3.4 Technological Factors

Internet is now widely used in over the universe. Harmonizing to Vietnam Internet Network Information Center, In June, 2010 Vietnamese cyberspace users increased reached 35 % of population. Therefore, it would be a new manner in future for the retail merchants to run into their consumers.

Through using cyberspace and payment engineering, retail merchants, particularly supermarkets can accept net payment.

3.5 Environmental Factors

The issue of environmental pollution is important. Therefore, in peculiar, consumers tend toward utilizing environmentally friendly and safety merchandises, so such beginning should be clean and fresh plastic bags will go more common. These tendencies required purchasers be careful in choosing input goods and bundles.

On the other manus, the clime in Vietnam is change by countries like tropical in South ; monsoonal in north with hot, showery season ( mid-May to mid-September ) and warm, dry season ( mid-October to mid-March ) . This affects costs of hive awaying merchandises.

Specially, the transit substructure in Vietnam can non function the demand of travel. Consequently, so retail merchants have been suffered higher monetary values of logistic services that are frequently implement in midnight to avoid traffic jams.

3.6 Legal Factors

As a committedness with WTO, Vietnam opened retail market for foreign owner-retail house on 1st Jan, 2009. So the domestic concerns have faced large challenges as they have to vie with multi-national groups that outweigh them in finance and direction experience.

However, the current legal system for retail industry has been completed as no consistent ordinances on distribution services or non to clear up the construct of wholesaling, retailing, etc ( Vietnam Economy & A ; Investment Article ) .

Activities of supermarkets are binded under the ordinances of Ministry of Industry and Trade, and Center for Standards, Metrology and Quality in Vietnam.

4. The Drivers of Change of the Retail Industry in Vietnam

The authorities ‘s control

As representatives of the Ministry of Industry and Trade, the Ministry is developing the maestro program to develop Vietnam ‘s trade 2009-2015 and orientation to 2025 “ with the purpose of developing substructure systems in a sensible period of 2009 -2015 stuff to make an environment more favourable than, more civilised and more modern, improved concern environment, market development, including be aftering the retail market. Set marks retail gross revenues growing over 18 % in the period 2010-2015 and increased to the highest degree is over 20 % per twelvemonth in subsequent old ages.

With authorities support and favourable consumer assurance will open new position for retail merchants in Vietnam. Traditional retail channels will go on to rule the market, but authorities determination to let 100 % entry to foreign retail merchants under WTO committedness will take modern retail to recognize unrealistic growing ( RNOS, 2009 ) .

Consumer behaviour

Shoppers have preferred convenient hours and locations, outstanding services as and sensible monetary values. It is ground why retail merchants compete in seeking convenient premises and high quality and stable beginning of goods.

The roar of FDI in Vietnam

The market of 86 billion of population is a large pie that many foreign investors keep their eyes on. This was clearly apparent in the activities of many participants as they prepared for the foreign invasion by taking to offer better service, better merchandise quality, implementing more selling activities and beef uping relationships with local spouses.

4. The Industry Life Cycle Model

The growing of an industry ‘s gross revenues over clip is used to chart the life rhythm. An industry life rhythm is classified into four distinguishable phases. They are: debut, growing, adulthood, and diminution. Gross saless typically begin easy at the debut stage, and so take off quickly during the growing stage. After leveling out at adulthood, gross revenues bit by bit decline. In contrast, net incomes by and large continue to increase throughout the life rhythm, as companies in an industry return advantage of expertness and economic systems of graduated table and range to cut down unit costs over clip.

Beginning: ( Johnson, et al.2005 )

Sing the retail industry in Vietnam in general and supermarkets in peculiar, the industry has shifted to the growing phase, where reflect the high growing of retail gross revenues. Besides, with 100 % gap for foreign steadfast entrants is apparent for the low entry barriers. Because of this, domestic retail merchants should use expeditiously chances from supports of authoritiess and the in-depth apprehensions of the local market to beef up competitory advantages and avoid losing market portions in the fatherland.

5. Scenario for the Future of the Industry

In the following period, many chances will come to Vietnam ‘s retail market. The ground is that when consumers have passed the psychological science of “ tighten consuming ” in the clip of economic crisis ( VOV News, 2010 ) . Government support and favourable consumer assurance will ensue in positive mentality for retail merchants in Vietnam. Traditional retail channels will go on to rule the market, but authorities determination to let 100 % entry to foreign retail merchants under WTO committedness will take modern retail to recognize unrealistic growing.

The new tendency for the retail market will be consolidations through an increasing gait of amalgamations ( SIS International Research, 2010 ) .

Though, over 70 per centum of Vietnam ‘s population lives in rural countries, retail merchants have non been able to come in this market. Domestic retail merchants intend to spread out into rural markets by set uping effectual distribution channels. Cardinal factors that will lend to their success include location, supply, and the figure of purchasers.

No Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

Free Essays
Bullying and People Essay

Bullying- everyone knows about it, but a lot of people don’t realize why it’s serious. Bullying can be defined as unwanted, aggressive behavior among school aged children that involve a real or perceived power imbalance. About 30% of teens in the U.S have been involved in bullying. People should care …

Free Essays
Most difficult aspects of learning English Essay

I studied English language at school and in university, but when I started to work in Russian-American it-company I met several difficulties with my English. I understood that my English wasn’t perfect and I need study more to build my career,, because in this company and generally you have to …

Free Essays
Cell Phone Essay

Many kids these days have cell phones. You often see teenagers talking on their phones, or, just as often, texting. It has become a part of everyday life, and a part of our society. It is encouraged socially, especially among teenagers, to have a phone. Cell phones can be very …

x

Hi!
I'm Terry

Would you like to get such a paper? How about receiving a customized one?

Check it out