HCM City market attracts giant foreign retailers

The retail market in Ho Chi Minh City is getting set for major realignments as many of the world’s leading retailers in the food, beverage, and fashion industries formulate expansion plans to set up shop, radio The Voice of Vietnam (VOV) reported.

The retail market in Ho Chi Minh City is getting set for major realignments as many of the world’s leading retailers in the food, beverage, and fashion industries formulate expansion plans to set up shop, radio The Voice of Vietnam (VOV) reported.

In early July, Singapore’s Mapletree Group announced it is expanding its presence in the city with a Vietsin Commercial Complex Development JSC joint venture development of a one-stop 'family-lifestyle-destination' mall for both the local and expatriate communities in Ho Chi Minh City.

The five-storey mall will offer the latest fashion, a hypermarket, a cineplex as well as lifestyle, entertainment, education, dining outlets, and other entertainment on an area spanning 21,270 square metres, located at SC Vivo City’s South Palace Complex.

Mapletree Group will be introducing international brands including CGV-one from the Republic of Korea, the largest multiplex cinema chain in the RoK which has branches throughout China and the US. Saigon Co.op and NTUC FairPrice have also signed deals to set up mega supermarkets in the SC VivoCity shopping centre.

Other international giants in including Starbucks, MOF, BreadTalk, ThaiExpress, Pepper Lunch and Shabu Ya are also lining up putting the final touches on negotiations to begin operation in the shopping centre in the near future.

Robins Department Store - a member of Thailand’s leading retailer Central Group recently unveiled its plan to enter Vietnam’s southern market this November. Following a successful opening of its first store in Hanoi, Robins Department Store announced it has rented four floors covering 10,000 square metres at Ho Chi Minh City-based Crescent Mall to launch its southern campaign.

Japanese retail tycoon AEON Mall will also officially making its debut appearance in the Vietnamese market in the remaining months of the year. The group inaugurated its first commercial centre in Tan Phu district, HCM City on January 1, 2014 and is continuing to expand its market share. The company is hurriedly preparing to expand into Binh Duong province which borders HCM City in the fourth quarter (Q4) of the year.

McDonalds’s, the world’s largest chain of hamburger fast food restaurants opened its first franchise in eastern Saigon earlier this year just after the Lunar New Year (Tet) holiday. Then in Q2/2014, its second franchise opened in District 1. At the opening a representative of McDonald’s announced plans for a third and fourth franchise.

It appears McDonald’s is following the lead of its predecessor to HCM City, Starbucks, which has accelerated rapidly in the market and is on track to celebrate the grand opening of its 8th coffee shop in HCM City in Q3/2014.

Baskin-Robbins the international home of delicious cones, shakes, treats, cakes, and pies recently opened the doors for business of its 20th store in Q2/2014.

Dairy Queen, a US based franchise owned by billionaire Warren Buffett, opened its first ice cream outlet in January, 2014 with its first in District 1 and a second shortly thereafter within only a few months. As planned, over the next five years, Dairy Queen chain will massively expand to over 60 stores.

Caffe Bene, famous Korea coffee brand which currently operates in 12 countries has chosen Q3/2014 as the time to set foot in the Vietnam market. Recently, in Seoul, Caffe Bene Vina Company signed an exclusive franchise contract with Caffe Bene.

In the HCM City Q3/2014 real estate report, CBRE Executive Director Vietnam Marc Townsend predicted the landing of international retail brands in HCM City would be strong in the future.

The leading indicator of the growth he says came in a Nielsen survey, in Q1/2014. The confidence index of Vietnamese consumers was higher than the global average. This is one of the key factors that increased the confidence of international retailers and helped sway their decisions to invest in Vietnam.

Global Director of Leasing Services and Retail Consultants Cushman and Wakefield Mark Burlton recently commented that the global economic crisis created many changes in the retail market over the past five years.

Retailers no longer need to maintain a large number of stores like before in their country, he said, adding that instead, they are actively searching for opportunities to open stores in international markets, and they are particularly fond of Asia.

Currently, many international brands have their eye on the Asian market, and most particularly Vietnam.

Mark Burlton stressed that most of the products of brands making their appearance in Vietnam are readily available in other countries and have been for years. This gives them a competitive advantage as it is relatively easy to develop distribution channels and tie into their pre-existing networks.

However, prior to a retailer pouring direct investment into any project, they must always carefully weigh the pros and cons of the long-term venture.

One of the more prominent obstacles that foreign retailers coming to Vietnam face is the vast difference among differing parts of the country and the weather. When a foreign retailer enters Vietnam, it often chooses to open a chain instead of just one or two small stores and the varying factors complicate matters.

The process of finding good location is arduous work. Overall project quality in Vietnam is not equal in general. Vietnam does not have an abundance of good projects for retailers to choose from.

These are highly complex and significantly important issues that retailers coming to Vietnam must cope with, Burlton said.

Cushman and Wakefield leaders say that although many international brands are cropping up throughout the country, the number of brands has not matured as of yet.

In 2015, Vietnam is poised to fully open the retail market in line with World Trade Organization (WTO) commitments. The country should brace itself for exponential growth of the presence of foreign retailer giants in HCM City and throughout the nation in the coming time.

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