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Vietnam Still Prefers Mom-and-Pop Shops to Retail Chains: Report

Amidst challenges posed by shopping complexes and supermarkets, traditional stores are maintaining a firm grip on Vietnam’s retail scene.

Statistics from the latest Winning Omnichannel report by Kantar Worldpanel show that Vietnam’s brick-and-mortar retail market was among the five fastest-growing in 2016, increasing by 5% from the previous year, to hold 78.5% of total market share.

“Vietnamese shoppers prefer to shop at local stores where they have a good relationship with the owners or they would love to walk around wet markets or stop by on the street with their motorbikes buying things from street vendors,” Peter Christou, an expert at Kantar Worldpanel, explained to VnExpress.

Because of this highly personal buying pattern, a report by Nielsen suggests that manufacturers should invest in training their retailers to engage their customers with news about the products and promotions currently going on instore.

In contrast, Kantar Worldpanel also noted that hypermarkets and supermarkets worldwide suffered a minor setback with only 0.7% in growth between 2015 and 2016. In Vietnam, Parkson Retail Asia has been gradually downsizing its business, reports VnExpress in a separate article. Stifling competition from domestic and foreign players, together with the emergence of online shopping, may be the chief reasons behind why the Malaysian retail operator has closed three of its department stores in the country.

Despite this, the Ministry of Commerce projects that between 1,200 and 1,300 supermarkets and 180 shopping malls will open by 2020. To succeed however, “hyper and supermarkets have to overcome a series of challenges. They have to convince the Vietnamese to change their shopping habits,” Kantar Worldpanel’s Christou said to VnExpress.

Meanwhile, e-commerce saw an overall surge of 26% in 2016, according to the Winning Omnichannel report. The sector accounts for US$4 billion of Vietnam’s market, Nikkei says, according to an estimate by the Vietnam E-commerce Association. This figure is expected to increase by 150% to US$10 billion by 2020, as more local consumers gain access to the internet.

[Photo via Crossing Travel]

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