After joining many major brands and companies such as Apple, Lululemon and Victoria Secret’s, Mr. Nick Bradstreet, Head of Retail Asia – Pacific at Savills, shared the interest in the company’s international businesses in the region.
According to the Savills representative, Thailand and Vietnam are two prominent markets in Southeast Asia. Many global retailers, especially those with offices in Singapore, are exploring investment opportunities in the two countries. However, the retail industry in Thailand has been significantly affected by the epidemic factor. The reason comes from the drop in retail sales for international visitors in the two years of Covid-19.
Meanwhile, Vietnam has strong domestic demand. Vietnamese retail is less dependent on foreign factors. Moreover, difficulties in international mobility have changed the consumption habits of Vietnamese people. Since they couldn’t fly abroad, they got used to shopping in the country.
This will be reflected in Vietnam’s retail consumption indices when there is a recovery from the end of 2021. Overall, in the first 7 months of 2022, total retail sales of goods and revenue from services increased by 16% over the same period last year. It can be seen that the domestic retail sector is gradually catching up with the growth rate in the pre-Covid-19 period. The Vietnamese economy maintained a good growth momentum of 6.4% in the first 6 months of 2022. These are positive signals to attract retail brands to learn and build confidence about the country’s growth and development potential.
mr. Nick Bradstreet, Head of Retail, Asia Pacific at Savills.
Mr. Nick Bradstreet commented: “The Vietnamese market has the advantage of jumping higher than the major markets in South East Asia such as Singapore and Thailand. Most of the well-known international brands are already present in these places. From low-end brands like H&M and Zara to high-end brands like Louis Vuitton and Dior, they all have 5 to 6 stores in Singapore and Bangkok, while these brands have only opened about 1 to 2 stores in Vietnam’s major cities. This is an opportunity for brands and brands to come to Vietnam and expand the market.”
In the past year, there have been more retail brands in the major cities opening new stores or increasing the number of stores. The affordable segment serving mass demand, such as supermarkets, convenience stores, home appliances, health services and restaurants, is all doing well and continues to grow. Many new brands are also entering the market with online stores before brick-and-mortar stores like Sephora, Perfect Diary, and Maje open.
In the higher end segment, Statista estimates show that the luxury goods market in Vietnam will grow by 34% year over year in 2022 and will continue to grow at an annual rate of 4% through 2025. However, companies have difficulty finding suitable premises.
Brands in this segment often target locations where high-end customers are concentrated, usually in the central area. According to expert Savills, they have a habit of setting up shops in malls on “expensive” streets, such as IFC Mall of Hong Kong or IAPM Mall of Shanghai. However, the standard offer in Vietnam is still very limited.
Currently, there is only one building in a prime location in the heart of the city, at the corner of the intersection of four major roads Nguyen Hue, Dong Khoi, Le Loi and Le Thanh Ton in District 1, collecting many brands of widely known slag .
Given the Hanoi market, the central part of Hoan Kiem district is currently lacking suitable space for high-end brands. Research by Savills shows that rents in this area have also become more competitive, with some streets increasing by 15% between 2020 and 2021.
According to Mr. Nick’s share, the biggest obstacle companies face when entering the market lies in the condition of the property. “The lack of space in the center that suits the brand and technical criteria complicates the store opening process. This makes luxury brands hesitant to make decisions. Therefore, when entering a new market, they often look to an intermediary to act as a bridge with investors.”
Savills expert said that the solution for Vietnamese retail to attract international brands, especially in the high-end segment, lies in the supply problem. Investors should pay attention to building properties that meet international standards. In addition to retail townhouses, the market is to add a high-end downtown commercial center. These projects must be professionally designed and executed to meet the stringent requirements of international brands.
Source: CafeF
