Domestic retailers go in search of rural prospects

Rural areas are a promising market for domestic retailers as they face intense competition from foreign businesses, especially given the full opening of the retail market from next year.

Mai Thi Tuyet Hoa, director of Niesel Viet Nam's Research Department, said at a conference on the country's retail sector held in Ha Noi last Friday.


Hoa said that several domestic retail companies wanted to expand their market share in rural areas. The expansion to rural market was considered as one of the best solutions, although urban areas were the main focus of their development strategy.

"I think the impact of retailers in rural markets will be larger than in urban markets. Several big retailers, for example, Unilever P&G, as well as small firms have asked us to provide information about the characteristics of rural areas and the strategies that should be employed in these markets," Hoa said.

According to a survey conducted by Nieisel, customers in rural areas were strongly affected by advertisements and introductions from retailers. In addition, 90 per cent of the retailers in the area tended to introduce products and advice buyers.

The survey also revealed that with 477,000 big and small shops in the country's rural areas, if on an average 64 customers visited a shop in a day, there will be about 2.75 million buyers who will buy products after retailers' introduced them.

"The data surprised many retailers and led them to rethink their development strategies in the rural market," she added.

Dinh Thi My Loan, chairwoman of the Viet Nam Retailers Association (VRA), said these areas were promising markets because of the young population, integration trends and a modern retail system that was in its infancy.

"However, domestic retailers should not only expand their markets, but also ensure quality and gain customers' trust to compete with foreign firms," Loan said.

She added that customers' trust had gone down because of problems relating to products' quality.

The problems were unavoidable because of the sheer number of items in the market. However, it was important for the retailers to learn from the problems and make efforts to gain the trust of customers, she added.

Under the World Trade Organisation's commitment, Viet Nam will fully open its retail market to foreign retailers by the beginning of next year.

Experts said foreign retailers with their financial might, trademarks and market experience will prevail in the market.

Several big retailers from Japan, the US, South Korea and Singapore are slated to start operations in the country.

In addition, the country already has two big foreign retailers, Big C and Metro Cash&Carry. Big C had expanded its chain. It now has 24 supermarkets nationwide.

It was forecast that the modern retail channel will account for 45 per cent of the market in Viet Nam by 2020.

The country's growth rate in the retail market was 23 per cent, indicating its large potential