Convenience stores are forecast to continue to upsurge in Ho Chi Minh City, Vietnam’s top economic engine, as retail sales in the country leaped 10.2% last year to reach $1180 billion, according to Jones Lang LaSalle (JLL) Vietnam.
“Convenience store is a favorable channel for both local and foreign retailers with aggressive expansion strategies to increase stores in the next quarters,” the U.S.-based real estate service firm has said in a report.
According to the report, future supply will add a significant amount of space to the HCM City retail market. Notably, further retail development is expected in non-CBD area thanks to lower rents and moderate footfall with increase in residential supply and better quality infrastructure.
In the fourth quarter of 2016, convenience stores remained an attractive segment for retailers, with active store openings from major players reaching over 184,800 square meters (sqm).
Total stock of shopping centers touched 814,435 sqm at the end of last year. The supply of high-grade shopping centers leveled out compared with the previous quarter due to no new projects while the occupancy rate rose to 91.1%, up 22 basis points quarter-on-quarter.
The overall gross rent averaged $46.3 per sqm per month, a slight increase of 0.03% quarter-on-quarter and 0.43% year-on-year.
Total stock and supply under construction of shopping centers in HCM City.
A larger number of foreign retailers, especially from Thailand, Japan and South Korea, have entered Vietnam through mergers and acquisitions to capitalize on a rapidly expanding middle class and higher living standards.
Thailand’s Central Group
last year acquired the supermarket chain Big C from France’s Casino Group in a deal that was valued at $1.14 billion. It also bought a 49% stake in consumer electronics retailer Nguyen Kim Trading.
In addition to buying a 30% stake in Fivimart
and a 49% stake in Citimart
, two players in the local retail market, Japan’s Aeon expand operation to northern Vietnam by opening a shopping mall in Hanoi’s Long Bien district.
The number of supermarkets will nearly double to 1,300 and shopping malls to 300 by 2020, according to the government’s development plan for the retail sector.
Spending at supermarkets, convenience stores and shopping malls is expected to rise to 45% of total consumer spending by 2020, up from 25% now.