06-Jan-2022 Intellasia |
Large retail firms are to gain even more market share this year as smaller competitors have been forced to exit the game after prolonged lockdowns and mobility restrictions during recent years, said industry experts.
A forecast by the Ministry of Industry and Commerce said by 2025, domestic sales are to account for 13.5 per cent of the country’s GDP with sales of products and services to increase by 9 to 9.5 per cent annually.
Sales of products and services for 2021 reached nearly VND4,800 trillion, a 3.8 per cent decrease from the previous year. Sales of non-essentials, including real estate and jewellery, suffered disproportionately while sales of essential remained strong amid the pandemic.
According to a recent report by the Ministry of Planning and Investment, the number of newly-established firms in November last year saw a sharp decline of 15 per cent compared to the same period the previous year, at just over 105,000. Meanwhile, nearly 40,000 firms were shut down during the period.
The figure indicated lower competition overall during 2021′s 4th quarter, which in turn gave larger players an advantage in gaining market share.
The majority of firms who left the market were small players who were hit hard by the lockdowns while lacking the resources to sustain themselves, said stockbroker VNDirect.
As the country entered another new normal phase with the probability of lockdowns and mobility restrictions remaining low, experts said retail was set to bounce back strongly in 2022.
The industry’s three major driving forces have been said to include digital commerce, electronics for work and study from home, and a shift in consumer behaviour from traditional shopping to digital shopping.
A recent paper released by Facebook and Bain Company said consumers had been spending more money on digital commerce, a trend associated with increased time spent on browsing and studying products online before purchases.
According to iPrice, during the third quarter last year, 77.8 million visits were recorded on Shopee and 21.4 million visits on Lazada, two of the most popular digital commerce sites in Vietnam, making them the most effective platforms for retailers to reach consumers, especially those who have well established their online sales.
Phone retailers enjoyed an unexpected boom in sales in 2021 after the market reached a saturation point since 2019 as demand soared and the government introduced stricter regulations on imported devices.
This is a large boon for official distributors for big branches. In the market of personal computers, experts say there is still a lot of room to grow as only 30.7 per cent of Vietnamese households possess a PC, while demand has been on the rise as work and study from home became the norm last year.
The pandemic has also pushed consumers to move away from traditional shopping to online shopping. According to Kantar Worldpanel, an international company dealing in consumer knowledge and insights, market share for brick-and-mortar stores contracted from 6 to 10 per cent between August and September last year.
With the Lunar New Year holiday around the corner, demand for agricultural produce is expected to shoot up.
Dao Van Ho, director of the agricultural product sales and promotion centre under the Ministry of Agriculture and Rural Development, said localities and production centres had been working around the clock to ensure ample supply for the holiday.
Category: Business, Vietnam
Article source: https://www.intellasia.net/retail-to-bounce-back-strongly-in-2022-1004177