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Viet Nam loses allure with global retailers

Publication Date : 15-06-2012

 

Viet Nam is less attractive to global retailers, failing to make the list of top 30 developing countries for retail investment in the 2012 Global Retail Development Index published by US-based consulting firm A.T. Kearney on Tuesday.

The slide down index was bad news for the domestic retail industry as it was the fourth consecutive year that Viet Nam has fallen in the rankings.

A.T. Kearney ranked Viet Nam as the world's most attractive retail market in 2008 but it lowered the country's ranking to 6th and 23rd in 2009 and 2011.

Many in the domestic retail sector were not surprised at A.T.

Kearney's latest report, saying that the economic crises have sharply reduced Viet Nam's consumption demand, causing many retailers to scale back operations during the past year.

Economist Pham Chi Lan said that Viet Nam's retail market last year grew by only 5 per cent, much lower than the impressive rate of more than 20 per cent several years ago.

Viet Nam Association of Supermarkets chairman Vu Vinh Phu attributed the domestic sector's slide to increasingly heavy overhead for retailers, the overly-complex system of administrative procedures and a lack of a comprehensive master plan for the development of the retail industry.

Phu said comprehensive measures ranging from stabilising the macro economy to raising labour productivity and tackling monopolies were needed to revitalise the sector.

According to A.T. Kearney's rankings for this year, while the world's largest developing markets – particularly the BRIC nations of Brazil, Russia, India and China – still tempt the largest global retailers and show no signs of slowing down, many smaller, untapped markets are providing new profit frontiers, particularly for regional and speciality players.

New entrants in the 2012 index include Georgia, Oman, Azerbaijan, and Mongolia, which are becoming attractive destinations for global retailers, particularly speciality and luxury players. These markets, though small in total retail market size, appeal to retailers targeting a concentration of wealth and seeking to be the first to move into fast-growing markets.

For the second year in a row, Brazil held the top ranking, leading the way for Latin America, which has seven markets represented in the index. Botswana, new on the Index, reflects steady development in Sub-Saharan Africa, which could emerge as a major player in the index in coming years.

This year, the six Asia Pacific nations of China, India, Malaysia, the Philippines, Ski Lanka and Mongolia were among the top 30, of which China gained the highest position of third ranking.

According to the report, technology is transforming the way retailers operate in developing markets. Shoppers' expectations and behaviours are evolving, driven by both the economic climate and increased access to information through technology. Consumers are more connected than ever to brands, merchandise, and their fellow shoppers. The proliferation of channels and media outlets for retailer-consumer interactions has forced retailers to approach international expansion from a multi-channel perspective.

Even in developing markets, people are increasingly willing to purchase online. Growth in e-commerce and mobile commerce outpaces physical retail in nearly every market, demonstrating that the internet is both a viable complement to bricks-and-mortar operations and a pure-play channel for market entry, the report said.

 

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