Convenience stores are gaining ground and posing greater competition on traditional trade in Vietnam, with the number of corner shops jumping fourfold in a six-year period ending 2016, Kantar Worldpanel said in a report released on Tuesday.
In the first quarter of this year, FMCG (Fast Moving Consumer Goods) in the Southeast Asia country’s urban areas enjoyed a 10.7 percent growth in modern channels, and a 2.6 percent decline in traditional trade, compared to the same period last year, according to the report.
Traditional trade channels include medium-sized or small street shops and wet market, while specialty stores, hypermarkets, supermarkets, minimarkets, and convenience stores fall in the modern category.
The rapid expansion of convenience store in major cities was to blame for the bad performance of traditional channels.
According to the report, the number of convenience stores in the country’s four key cities including Hanoi, Ho Chi Minh City, Da Nang, Can Tho nearly quadrupled in the 2012-16 period.
While local shoppers turn to modern shopping formats for greater and diversity of choices, they still favor specialty stores to find specialized products for their specific needs, such as healthcare or cosmetics.
This is proven by the fact that the number of specialty stores in the four big cities has doubled in the last two years.
Minimarket expanded at the fastest pace among other modern channels in 2016 and 2017, and investment for this kind of shop is expected to keep rising, according to the report.
As of the end of March, there were more than 1,800 convenience stores and minimarkets across Ho Chi Minh City both in urban and rural, according to data from Jones Lang LaSalle, an American professional services and investment management company specializing in real estate.
These outlets have a total floor area of 270,000 meters square, up 5.1 percent compared to the end of last year.
Competition in the Vietnamese retail market now mainly focus on convenience stores and minimarkets, which target a wide range of consumers, from high school and college students to white collars living in metropolitan areas, according to industry insiders.
Even Saigon Co.op, Vietnam’s leading supermarket chain, has recently dipped its toe in the market with the launch of Cheers, a 24/7 convenience store chain it operates in collaboration with Singapore-based supermarket chain NTUC Fair Price.
Kantar Worldpanel is an international company dealing in consumer knowledge and insights based on continuous consumer panels