VN’s retail market ranking sliding down since ‘08
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Vietnam’s retail market ranking has slipped from first place in 2008 to 23rd place among the this year’s 30 surveyed emerging economics, which includes China, India, Sri Lanka, Morocco and Kazakhstan, according to A.T. Kearney’s recent survey.
Vietnam’s weak infrastructure and costly rental space are barriers for foreign rentals, A.T. Kearney said in the 10th annual Global Retail Development Index (GRDI).
Meanwhile, domestically traditional distribution channels are still dominating the market while new forms are emerging. Competition is fiercer, that's why foreign investors find it difficult to participate.
This is the third consecutive year Vietnam's retail market was downgraded. In 2008, Vietnam jumped three grades, surpassing India to become the world's most attractive market thanks to strong economic growth, improved policies which were friendlier to foreign investors and demand of consumers on the modern retail forms.
One year later, Vietnam's retail market only ranked sixth in terms of attractiveness, and lost the Top 10 attractive retail markets in 2010.
However, the firm also noted that Vietnam still has certain attractiveness thanks to the size of its market as well as the number of consumers. By 2012, the market may reach the size of $US113 billion and the population is estimated at nearly 89 million people.
Starting in 2009, Vietnam opened the door to the market by allowing fully foreign-invested retailers to operate. Famous firms such as UK-based Tesco or Singapore's FairPrice are planning to join Vietnam's market within the year.
But A.T.Kearney also warned that the world economy has not completely recovered so multinational companies remain cautious in expanding their network.
Data from the general Statistic Office (GSO) showed that total retail sales and service turnover in 2010 reached around $US80 billion. During the first five months of 2011, the market size gained VND762.7 trillion ($US40 billion), growing 22.5 percent compared with one year earlier. Excluding price factors, the growth was 6.4 percent.
Real estate management firms have repeatedly assessed that Vietnam's retail space cost is too high despite the rising supply.
A.T.Kearney also announced that 2011 is the 10th year GRDI reports, which were conducted in 30 emerging economies and scored based on 25 variables across four primary categories including: economic and political risk; market attractiveness; market saturation; and time pressure (difference or addition between gross domestic product and modern retail area growth).
Globally, South American countries occupy the top three positions, China slipped to sixth place and India dropped to fourth.
South American countries have fared well during the recession posting an impressive 6 percent GDP growth in 2010. In addition to Brazil’s top ranking, three other South American countries, Uruguay, Chile and Peru, made the Top 10 of the GRDI.
A.T. Kearney Global Retail Development Index, 2011
Country | 2011 Rank | 2010 Rank | Change |
Brazil | 1 | 5 | +4 |
Uruguay | 2 | 8 | +6 |
Chile | 3 | 6 | +3 |
India | 4 | 3 | -1 |
Kuwait | 5 | 2 | -3 |
China | 6 | 1 | -5 |
Saudi Arabia | 7 | 4 | -3 |
Peru | 8 | 9 | +1 |
U.A.E. | 9 | 7 | -2 |
Turkey | 10 | 18 | +8 |
Lebanon | 11 | N/A | N/A |
Egypt | 12 | 13 | +1 |
Albania | 13 | 12 | -1 |
Russia | 14 | 10 | -4 |
Kazakhstan | 15 | N/A | N/A |
Indonesia | 16 | 16 | No change |
Morocco | 17 | 15 | -2 |
Philippines | 18 | 22 | +4 |
Tunisia | 19 | 11 | -7 |
Sri Lanka | 20 | N/A | N/A |
Malaysia | 21 | 17 | -4 |
Mexico | 22 | 25 | +3 |
Vietnam | 23 | 14 | -9 |
Colombia | 24 | 26 | +2 |
Argentina | 25 | N/A | N/A |
South Africa | 26 | 24 | -2 |
Panama | 27 | N/A | N/A |
Dominican Republic | 28 | 23 | -5 |
Iran | 29 | N/A | N/A |
Bulgaria | 30 | 19 | -11 |
