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Featured information about Masan Group and Market

May 24, 2023

Modernize the retail landscape in Vietnam

Vietnam, a nation with a promising trajectory to become one of the powerhouses in Asia, is an exciting destination for the development of a digital economy. With a young and eager population with a taste for digital consumption, digitalization in the retail industry is considered one of the most anticipated fields for Vietnam business opportunities.

 

Overview of Vietnam retail landscape

Vietnam is considered one of the most dynamic and fast-growing economies in Southeast Asia with a GDP growth of 8.02% in 2022. The highest in five years and the highest among like-to-like countries in the ASEAN block such as Thailand, Malaysia, and Indonesia, as reported by the International Monetary Fund. Vietnam aims to become an upper-middle-income country by 2035 and a high-income by 2045. With this trajectory, Vietnam is expected to add 36 million people to the middle-class population.

 

The boost in the middle-class population presents the country with higher disposable income and higher ownership of smartphones and internet usage. Hence, this new wave of consumers possesses a higher demand for better quality products and shopping experiences. It is reported that in 2020, approximately 70% of Vietnamese people used the Internet, and more than 50% of people made at least one online purchase. As the e-commerce industry in Vietnam expands swiftly, it is crucial that the FMCG industry would also need to branch out from conventional retail channels to reach out to more consumers with less costs.

 

Regardless of the booming e-commerce sector, the majority of purchases made online are from non-essential items such as clothing, cosmetics, household items, and consumer electronics. Whereas for grocery shopping, the dominating destinations are still traditional grocery retailers. However, following the effects of Covid-19, traditional grocery retailers went into suspension and consumers are wary of their purchases’ sanitation. Convenience stores, supermarkets, and hypermarkets are growing tremendously to catch up with these demands.

 

The 2022 retail industry, despite not fully recovering to the pre-Covid scale of operation and revenue, still witnessed considerable growth. According to the General Statistics Office (“GSO”),  the overall retail sales of products and services to consumers are estimated at VND 5,679.9 trillion in 2022, an increase of 19.8% from the previous year. The year 2022 saw a 15% increase in total retail sales of consumer goods and services more than 2019, the year before the Covid-19 outbreak.

 

Omnichannel sales expansion continues to be a trend. At least two channels, some of which are in-store and some of which are online, are used by 57.65% of merchants. 23.71% of business owners exclusively sell in-person at physical locations, whereas 17.35% exclusively sell online according to a survey conducted by Sapo (a multi-channel sales and management platform) in January 2023 .

 

Vietnam business opportunities in the retail industry

Even though Vietnam's economy still confronts several challenges in 2023 with the uncertainty of global geopolitical tension and global interest rates remaining high, the government has been putting in efforts to boost the economy and local consumption through reducing operation interest rates and inflation control. The Ministry of Industry and Trade reported that the retail industry will continue to recover significantly since the market size is estimated to reach 350 billion USD by 2025 and contribute 59% to the overall domestic budget.

 

The top 10 modern retailer companies in 2022 include Central Retail Vietnam, WinCommerce, Saigon Coop, MM Mega Market, Aeon Vietnam, SATRA, Lotte Vietnam, SASCO, Hapro, and IPP Group as announced by the Vietnam Report JSC on September 30 of 2022. Within the early days of 2023, Vietnamese and international retailers are planning to scale up their operations and investment.

 

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Masan Group with their WinCommerce operation has also laid out plans for the year 2023. Nguyen Thi Phuong, WinCommerce’s standing Vice CEO, presented her assessment of the retail sector in 2023, noting that despite the economy's continued struggles in 2023, the retail market is recovering. WinCommerce will therefore continue to build a system of supermarkets and convenience stores in addition to maintaining 3,400 of them throughout 62 provinces and cities.

 

Apart from expanding the network of supermarkets and convenience stores, Masan Group is also prioritizing the enhancement of the technology for the Point-of-Life strategy in the hopes to accelerate the digitization of consumers, starting in 2023. To catch up with the digital economy trend,

through the introduction of the WIN AI application, which is integrated into the store's "Smart POS" system. The artificial intelligence and machine learning technology in this application will help Masan better understand and serve its consumers more efficiently. Through data-driven recommendations from the system, cashiers may help customers have a better shopping experience beyond merely processing payments.

 

Through the WIN Membership platform, Masan Group also aims to surpass 1 million unbanked customers and become the gateway to mass retail banking. By combining WIN AI with Trusting Social's credit scoring platform, we are aiming to simultaneously meet the financial requirements of our WIN Members and issue 500,000 credit cards digitally.

 

Finally, Masan uses Win+ to set itself apart in the B2B2C market, by giving its customers the ability to buy the best products on membership offers and giving merchant partners access to unique products at a lesser price.

 

Modern retail outlets, such as convenience stores and e-commerce, have undergone significant changes as a result of the rapid rate of urbanization and the changing shopping tastes of young urban consumers. Market leaders and independent retailers both place more importance on online sales. Retailers are using favorable factors, such as rising smartphone ownership and internet penetration, to offer their products online. Throughout the projection, these variables will promote a great rate of market expansion. Vietnam's business opportunities in the retail industry are massive in the recovering year of 2023, this shows a potential ground for further investment growth.

 

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