French Auchan, one of the world's largest hypermarket chains, is considering channeling $500 million into Vietnam in the next 10 years for its own retailing network.

The plan was revealed by Philippe Longuet, Managing Director of Auchan Group, after joining a working session with Dang Huy Dong, Deputy Minister of Planning and Investment, to learn about the Vietnamese policies for foreign investors in the field of retailing.

The decision shows the French retailer’s determination to return to the Vietnamese market, which it missed many years ago.

Auchan’s move took place right after Singaporean NTUC FairPrice and Vietnamese Saigon Co-op reached a deal for the establishment of their first hypermarket in Ho Chi Minh City’s Thu Duc District earlier this month.

The Saigon Co.op – FairPrice joint-venture will invest in and operate two hypermarket chains in Vietnam, under the brands of Co.opXtra hypermarket, and Co.opXtra plus, a model that combines hypermarket and large-scale distribution chain.

The joint-venture has a total registered capital of $6 million, of which Saigon Co.op holds a 64 percent stake.

The two retailers said they aim to open one to two new hypermarkets in Vietnam on an annual basis, and reach the target of 20 such outlets countrywide by 2020.

If Auchan realizes its plan, it will be the second French retailer in Vietnam, together with Casino Group with its Big C brand, which has a network of 22 supermarkets and hypermarkets across the country.

Auchan provides goods in 15 countries all over the world and also collects goods in the countries to distribute globally.

Losing appeal

With a population of 87 million, Vietnam is considered an attractive market for retailing which is expected to grow 10 percent annually from 2010-2020.

But the domestic economic slowdown, triggered by the global economic crisis in 2008, has hammered its potential.

In June last year, the country lost its shine as an attractive location for retail investment after making its way out of A.T. Kearney’s report on the top 30 most attractive emerging markets for retailing.

The Southeast Asian nation has continuously lost its attractiveness in the ranking of the US-based consulting firm since it topped the list in 2008, according to the 2012 A.T. Kearney’s Global Retail Development Index (GRDI).

It fell to 6th place in 2009, 14th in 2010 and 30th place in 2011.

In 2011, Vietnam slid nine grades to the 23rd position among 30 surveyed emerging economics, after China, India, Sri Lanka, Morocco, and Kazakhstan.

Promising market

Despite the downgrade, Vietnam still remains very attractive in the eyes of foreign retailers.

South Korean retail group E-Mart Co, after inking a deal with local partner U&I Co in Hanoi in 2011, has announced that it will open its first branch this year, while 17 supermarkets will be put into operation by 2017.

Japanese Aeon, which is building its first two projects in the southern province of Binh Duong and Ho Chi Minh City, has planned to set up a third project in Vietnam, a big shopping mall in Hanoi.

Despite the economic downturn, the retail market has been witnessing steady growth, with total retail turnover of goods and consumer services rising 11.9 percent year-on-year to VND213.4 trillion ($10.2 billion) in April.

The figures were VND849.9 trillion ($40.7 billion) and 11.8 percent in the first four months of 2013 in comparison with the same period of 2012.

Data from the General Statistics Office showed that the total retail turnover of goods and consumer services in 2012 reached VND2,320 trillion ($110.7 billion), up by 16 percent over 2011.