Vietnamese retailers say they are facing increasingly fierce competition from foreign rivals on home turf, five years after the country joined the World Trade Organization.

Local businesses still dominate the market in terms of number of outlets, but lag behind their international competitors when it comes to experience and professionalism in administrative management and technology.

Increasing the number of stores is one of the strategies to boost competitiveness, but the number of outlets does not fully reflect the influence of a retailer on the market, commented Tran Thanh Nhan, deputy CEO of Vinatexmart.

“Foreign competitors have experience in management, logistics, and professionalism, which can hardly be found in local businesses,” he said.

Phan Duc Binh, CEO of Ocean Group, said in the long term, local businesses will be challenged by the foreign competitors, who have more experience and stronger financial muscles.

“Whenever we want to open a new store, we always have difficulty finding new space and receive almost no support,” he said.

Binh said many Vietnamese retailers have lost to their foreign rivals in the race to lease good spaces for their new stores due to the lack of money and negotiation experience.

“The battle between the local and foreign retailers actually began last year, when foreign-invested businesses were officially allowed to distribute all products that are made in Vietnam, or those that are legally imported to the country,” he added.

Meanwhile, Nguyen Thi Anh Hoa, investor of the Citimart chain, said pressure from the foreign competitors has changed the business mindset of local retailers.

“Local businesses used to think that they can lure customers only by offering diversified merchandise at reasonable prices,” she said, adding that such approach is of no use today.

“Foreign retailers launch a number of promotional campaigns and PR events, which are very effective in increasing their sales and local firms should learn from this experience,” she concluded.

Outnumber

In the regard of number of outlets, Co.op Mart chain takes the lead with 61 supermarkets, 55 Co.op Food stores, and more than 100 Co.op convenient stores. The system sets a target of having 100 supermarkets countrywide by 2015, its deputy CEO Nguyen Thanh Nhan said.

It is followed by Vinatexmart, with 81 supermarkets and fashion boutiques in more than 20 provinces and cities.

Another big name is Citimart, the operator of 27 mini-supermarkets located in office buildings and shopping mall citywide.

The foreign-invested retailing system also posted positive growth over the last few years, though not as high as that of the local competitors.

France-based Big C system, for instance, currently operates 22 supermarkets and 10 convenient stores across the country, while Germany’s Metro Cash & Carry and Japanese chain Familymart have opened 19 wholesaling centers and 37 convenient stores, respectively.

“Modern retail channels now account for only 20 percent of distribution in Vietnam, so there is more chances for retailers to grow and expand their system,” said Deputy Minister of Industry and Trade Ho Thi Kim Thoa.