Vietnam's retail market is gradually recovering with abundant supply from large-scale commercial center projects. In that context, another foreign retailer, Aeon Group, is also planning to build more hypermarkets in Hanoi.

Illustrations

This not only meets the needs of new openings and expansion of business locations of retail "big guys", bringing positive signals for retail real estate in the coming time.

The race to expand market share

In the first half of 2023, Vietnam's retail industry witnessed clear signs of recovery with the race to expand market share after the Covid-19 pandemic of domestic and international "big players". For example, MUJI opened the 5th store in Ho Chi Minh City in the first quarter and the sixth in Hanoi in the second quarter, both with a scale of 2,000m2.

Meanwhile, UNIQLO also continues to realize its expansion plan in Vietnam through the opening of the 19th store with a scale of 1200m2 in Hanoi. This is the 4th new store in the first half of 2023 of this fashion retail giant from Japan,...

WinCommerce also opened 152 more Winmart+ stores and 2 Winmart supermarkets in the first 6 months of 2023, bringing the total number of points of sale to 3,511 locations nationwide for both supermarkets and mini-marts. Thereby, consolidating its position as the largest modern retail chain in terms of number of points of sale.

Especially, the new Win integration model with more than 30 WinMart+ stores converted to WIN model gave encouraging initial results. Accordingly, revenue per m2 increased by 20% and EBIT margin (profit before tax and interest) increased by 0.6% compared to before conversion.

Continuously evaluated as one of the potential sectors, maintaining the annual growth rate in double digits for decades, the scale of Vietnam's retail industry is forecasted to increase to 350 billion USD by the Ministry of Industry and Trade. by 2025, contributing 59% of the total national budget GDP.

Although the economy still faces many difficulties, the growth rate of total retail sales of consumer goods and services in the first 6 months of 2023 still achieved a positive increase, up 10.9% over the same period last year. , equivalent to the same period in 2022 (if excluding the price factor, the increase of 8.44%).

Contrary to the difficult situation of the individual commercial townhouse segment with a series of stores closing or downsizing due to the difficult market. Retail space in apartment podiums and commercial centers in big cities is still active, the rental capacity is over 85% with rents continuing to increase in the central area.

In the Hanoi market, the ground floor rent in the second quarter of 2023 increased by about 2% compared to the previous quarter. In Ho Chi Minh City, the rent in the CBD was similar to the previous quarter but increased by about 8% year-on-year with more than 20 new brands opening and expanding to increase presence while new supply was scarce. Rarely, the average vacancy rate in this area is only about 5%.

In the second half of 2023, the abundant supply from large-scale commercial center projects to meet the new opening demand, expanding the business locations of retail "big guys" promises a positive future for real estate. retail products in trade centers in big cities in the coming time.

In the city. In Ho Chi Minh City, it is expected that there will be 3 projects in the non-CBD area that will come into operation with a leasable area of ​​about 66,000 m2. Notably, the supply of retail segment by 2026 will increase sharply, expected to reach 201,000 m2 of floor space from 13 projects in operation.

Meanwhile in Hanoi, Lotte Mall West Lake Hanoi has just contributed 82,550 m2 to the total retail space supply in the whole city. It is expected that from now until the end of 2023, there will be two commercial centers and four commercial podium projects with a total area of ​​more than 47 thousand m2.

The "big man" continues to pour capital

In fact, the rise of Vietnam's retail industry after the pandemic comes not only from the growth in average income and disposable income of people, but also from the shift in shopping habits along with revenue. from the return of international visitors to Vietnam and the number of domestic tourists.

According to research by VARS, in the difficult economic situation, consumers are forced to tighten their spending, at the same time, people tend to increase spending on essential goods and reduce spending on social services.

If in 2019 (the year before the epidemic) retail sales of goods accounted for 75.9% of the total retail sales of consumer goods and services, by 2023 this proportion has increased to 78.9% (up add 3 percentage points). Meanwhile, in the first five months of the year, revenue from consumer services (including accommodation, food, travel and other services) in 2019 accounted for 23.6%, and by 2023 only accounts for 21.2%. (down 2.4 percentage points).

According to VARS, this is an opportunity for the retail real estate sector, especially the group of essential goods such as food and beverage, convenience stores, pharmaceuticals, popular fashion, etc. Customers in this field have also been implementing expansion plans.

For example, Central Retail, a Thai retailer, has announced that it will invest an additional VND 20,000 billion in the Vietnamese retail market in the next 5 years, aiming to expand its point of sale from the current 40 provinces and cities to 55. provinces and cities nationwide with about 600 stores.

In addition, another foreign retailer, Aeon Group, is also planning to build more hypermarkets in Hanoi. This enterprise aims to develop 20 trade centers in Vietnam by 2025, 100 AEON MaxValu Supermarket in Hanoi by 2025. Meanwhile, WinCommerce plans to open 1,000 more stores, while Saigon Coop sets a target of number 1 in the supermarket retail segment.

However, brands are increasingly demanding in terms of selection. To meet this large amount of demand, what the Vietnamese market needs is not only the quantity but also the quality of the retail space.

In the context of the economic situation continues to be difficult, retail rental prices in the suburbs are expected to decrease in the near future as brands have more choices in the context of growing supply. . Especially in poor commercial centers that do not actively renovate and upgrade.