What challenges face Central Retail in Vietnam?

Central Retail has recently unveiled its largest investment in Vietnam, totaling 50 billion baht from 2023-2027.

>> Vietnamese retail giants see opportunities in domestic market

Central Retail, Thailand's largest retailer, has recently unveiled its largest investment in Vietnam, totaling 50 billion baht from 2023-2027 to boost its market presence there.

Central Retail invested more than 10 billion baht to expand its retail business in Vietnam during 2012-2022. With over 340 stores and a total floor area of more than 1.2 million square meters in 40 provinces and cities, Central Retail has enjoyed rapid domestic sales revenue growth, increasing from over VND200 billion in 2014 to VND26 trillion in 2021.

In the coming years, Central Retail Vietnam aims to reinforce its position as a leader in the hypermarket sector in Vietnam by rebranding and expanding the market, while developing its food business nationwide. As part of this plan, this group is considering the addition of 8-10 new hypermarkets to cater to the evolving needs of the local consumer market.

However, Central Retail will face significant challenges in Vietnam, where it will need to compete with big foreign peers and even local retail giants that are all striving to expand their operations and dominate one of Southeast Asia's most dynamic markets.

Vietnam is a potential market with a rapidly growing middle class and urbanization, and the competition in the retail sector is fierce. The retail industry has passed the era of "Big fish eat smaller", and is now in the era of " Whoever learns the fastest wins".

Big foreign retailers, such as AEON Vietnam, are also planning to expand their networks in the country. Since the opening of its first AEON Mall in 2014, this group has established a total of five shopping centers in Vietnam.

AEON has invested nearly 700 million USD in Vietnam, a figure that far surpasses the investments of other foreign retail giants. Despite this impressive accomplishment, AEON's plans for expansion do not stop there.

"We committed to our investment plan of building 20 trade centers in Vietnam by 2025," said Mr. Iwamura Yasutsugu, General Director of AEON Mall Vietnam Co., Ltd.

Domestic players with great potential, such as Nova Consumer and WinCommerce of the Masan Group, are also looking to expand their distribution channels and retail chains. Saigon Co-op is another factor to consider, as it is speeding up to reach at least 2,000 points of sale by 2025 in order to maintain its leading position in terms of retail stores and supermarkets across the country.

These moves serve as a strong indication that Vietnamese brands are making a notable impression in the retail market. The allure of the retail market has enticed an increasing number of Vietnamese giants to enter the field.

Despite the challenges, Central Retail remains optimistic about the potential for growth in Vietnam. Olivier Langlet, CEO of Central Retail Vietnam, stated that "Vietnam's economy continues to grow despite uncertainties. We expect Vietnam's GDP to grow by 6.7% and 7.2% in 2023 and 2024, respectively, compared to Thailand's 3.5% a year over the next two years. This will make Vietnam the fastest growing market in Southeast Asia." The company also has an advantage in terms of its rapid expansion plan and large investment in the country.