Selling meat at a wet market in Hanoi

Vietnam’s move into middle-income status has changed the way people shop. Yet the future of shopping here isn’t as predictable as it seems.

 

The last couple of decades in Vietnam have seen enormous segments of society creep closer to the middle-class category. According to market research by Cimigo, between 2005 and 2015, high-income households doubled.

 

These changes have drastically altered the way people do their shopping. New malls are opening, online shopping is becoming more popular and the traditional wet market is under threat from modern supermarkets.

 

Embrace the Change

 

In 2005, Vietnam was home to a mere 47 supermarkets and 135 modern, mostly independent, self-service stores.

 

Just 10 years on, and those figures have exploded. In 2015, there were 975 supermarkets and around 1,800 modern self-service stores, mostly belonging to well-known chains.

 

“All those chains are losing money,” says Richard Burrage, managing partner at market research company Cimigo. “They’re on a land grab; chasing market share before profits.”

 

As a result, these so-called convenience stores are not offering any real convenience to the Vietnamese shopper.

 

“Traditional wet markets are still more convenient,” says student Vu Hong Phuong, 22. “Housewives control the shopping habits of most families, and they prefer wet markets.”

 

This opinion was shared by all of the people we spoke to, with others suggesting the wet markets are often closer to home, and with much cheaper prices.

Vinmart

Circle K

Convenience stores such as Circle K and Vinmart are popping up everywhere


Size Matters

 

However, scale up the convenience store to a shopping mall, and opinions shift.

 

“Shopping centres have more variety,” says local Hanoian, Nguyen Thanh Hoa, 28. “The quality is guaranteed, they’re clean and modern. You can even hang out there, too.”

 

This last point is something which Richard believes is key to increasing the popularity of the smaller convenience stores.

 

“The convenience stores in Indonesia, or the konbinis in Japan, are places to hang out,” says Richard. “There’s aircon, WiFi, tables and chairs to eat hot food or have a drink.”

 

If the stores in Vietnam follow the same trend, as well as adding other services like the ability to pay bills or collect deliveries, Richard believes modern trade supermarkets and convenience stores could see their market share increase from the current figure of 18% of retail sales to around 25% by 2027.

 

Richard cites the example of Pharmacity, a Vietnamese pharmaceutical company, as one way modern retail centres must adapt to local demand for genuine convenience.

 

“When they opened their doors, they realised they wouldn’t be successful unless they opened like a drive-thru,” says Richard. “People can be lazy, they don’t always want to park just to buy something for a sore throat.”

 

When deciding where to hang out, however, food and beverage options seem to be a big factor in deciding the success of all the shiny new shopping malls popping up all over Vietnam.

 

“When I go to any Vincom Centre, visually, it seems to only be the F&B outlets which have any customers,” says Richard. “The developers here are making malls which are way ahead of the market, targeting A++ customers. Even the brands can’t afford to keep up with them.”

In a shopping mall

Shopping malls, like convenience stores, have become places to hang out


Cave of Wonders

 

While the food and beverage outlets may be key in attracting young people to hang out, the selection of shops and supermarkets still play a role in attracting more conventional shoppers to malls.

 

“Shopping malls save me a lot of time,” says restaurant owner Nguyen Huong Giang, 42. “The variety in shops means I can buy everything I need at the same time.”

 

In Vietnam, between 2005 and 2015, GDP per person increased by 261%. Combined with the 35 million Vietnamese consumers on social media, this adds up to a young, modern consumer base hungry for more media, more gadgets and more spending.

 

“For cosmetics or electronic products, I prefer a big shopping centre,” says local leatherworker Chu Thu Hien, 30. “Shopping centres have better standards; customer service, quality and the overall experience is always better.”

 

Others see further than the immediate benefit of greater choice.

 

“The more we develop, the higher our expectations,” claims hotel manager Ngo Thi Lan Huong, 27. “This increases competition, and forces the new shopping centres to offer better service, better products and lower prices.”

 

Cyber Shopping

 

Despite the fact there seems to be a Vincom Centre on every street these days, not everyone is sold on the merits of shopping at modern malls.

 

As of 2016, more than half of the population in Vietnam were regular internet users, defined as having access to the internet at home. This figure is slightly higher than the global average of 46%, and is set to rise.

 

Online shopping in Vietnam is dominated by two sectors; either big companies such as Lazada or smaller, independent sellers on social media platforms such as Facebook.

 

“Online commerce will be more significant than modern trade,” predicts Richard. “Especially if online traders tap into the potential collection centre market of minimarts and convenience stores.”

 

In segments such as lower-grade electronics and fashion, online shopping is already flourishing in Vietnam.

 

“It’s much easier to find what you want,” says Ngo Thi Lan Huong. “Because you can browse many products side-by-side.”

 

“You can shop online anytime, even at midnight,” adds Chu Thu Hien. “And you can do it anywhere you have an internet connection.”

 

Not everyone agrees, however, with many preferring the tangible aspect of shopping outside.

 

“You can never be sure about the quality,” says Foreign Trade University graduate Khuong Ngoc Hoa, 25. “There are so many scams online, especially with fake products.”

A street market in Hanoi

A flower seller

Despite shopping malls, convenience stores and online shopping, people still like buying from traditional street vendors


Breaking with Tradition

 

Almost everyone we spoke to finds it impossible to imagine Vietnam ever saying goodbye to the traditional wet markets and street vendors.

 

“Even Vietnamese communities in the US open up their own wet markets,” says Khuong Ngoc Hoa. “It’s our tradition.”

 

“Wet markets are connected to the beauty of our culture,” adds Nguyen Huong Giang. “There may be less wet markets in the future, but they will never disappear completely.”

 

The current trend suggests modern trade and online shopping will continue gaining market share, even though it could be at least 10 years before convenience stores start earning any real money, according to Cimigo.

 

“In the UK or US, there was already a modern trade environment when convenience stores opened,” says Richard. “In Vietnam, however, there’s almost nowhere you have to walk more than 10 minutes to buy bread.”

 

Most food is still bought daily at wet markets, and most online traders still lack the payment infrastructure to realistically compete with shopping centres. The next 10 years of commercial development will be vital if Vietnamese shoppers are to ever change their shopping habits in any meaningful way.


Photos by Sasha Arefieva

Edward Dalton

Ted landed in Vietnam in 2013, looking for new ways to emulate his globetrotting, octo-lingual grandfather and all-round hero. After spending a year putting that history Masters to good use by teaching English, his plan to return to his careers adviser in a flood of remorseful tears backfired when he met someone special and tied the knot two years on. Now working as a wordsmith crackerjack (ahem, staff writer) for Word Vietnam.

1 comment

  • Comment Link ian ian May 20, 2017

    Hi
    I like your article. We are setting up ecommerce business in ho chi min city. Look forward to speaking to you if any chance. Will stay here till month end.

    Regards
    Ian

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