Vietnam Daily News

Volatile retail climate to last through 2012

Written by Dailynews.vn Thursday, 22 December 2011 06:46

The domestic retail market will continue experiencing difficulties next year due to volatile business conditions, experts told the "World and Vietnam: Forecast 2012" seminar held in the capital over the weekend.

Phan The Rue, chairman of the Vietnam Retail Association, said at the event, organised by the Vietnam Chamber of Commerce and Industry, that the world market is predicted to undergo slow growth next year due to economic downturn in the US and Europe as well as social instability in other countries around the world. Emerging economies, including those in Asia , have been faced with high inflation and low economic growth rates compared to 2010.

These factors will affect the domestic economy as well as the retail market next year, Rue said.

In addition, the Government will continue controlling the macro-economy and inflation to boost production and ensure social security, he noted.

To achieve macroeconomic stability, both the scale and growth rate of the local retail market will have to be kept in check, he added.

With the market dependent on macro-economic development, price stability and the relationship between supply and demand will in turn depend on the price of essential, Government controlled products such as electricity, coal, petrol and oil.

The high price of import materials will continue affecting customers while real incomes reduce, Rue said, adding that competition between foreign and local retailers is also expected to remain low next year.

Nguyen Thai Dung, deputy general director of the Big C Supermarket Trading and Service Ltd Company, said that high inflation has eroded purchasing power while saving trends have affected consumption.

Consumption growth, following deducted price factors, was 14 percent in 2010 and only 4 percent in 2011, making forecasts for 2012 dismal, he said.

Inflation, along with increased interest rates, unstable exchange rates between the US dollar and Vietnamese dong, fluctuations in gold prices, a lack of capital, stagnating production, and unemployment have all affected consumer confidence.

"Small retailers in Vietnam managed to cope well with these challenges this year," Rue said.

He added that the local retail sector still has problems to address, including the quality of goods as well as difficulties in controlling food prices, hygiene and safety.

Enterprises experienced price increases without improvement to quality while failing to declare or list prices sufficiently. In addition, trade fraud has grown.

The country currently has around 600 modern retail supermarkets and shopping centres alongside around 9,000 traditional markets. Foreign retail enterprises have been allowed to promote their business activities on the local market since 2009.

According to the ranking of global retail markets (GRDI) by AT Kearny, in 2008, Vietnam 's market was the most attractive globally amongst foreign distributors. Since then, the local market has fallen to sixth place in 2009 and 14th in 2010.

Pham Tat Thang, a representative from the Trade Research Institute at the Ministry of Industry and Trade, said that the domestic management system and complicated trade barriers are to blame and not market supply and demand factors.

He expected the average retail market growth rate to remain at 23 percent - 25 percent per year until 2015 with the Vietnamese market developing into one of the hottest in the world.

"The country's retail market will become an increasing target for foreign distributors once unnecessary barriers are removed," Thang said. /.

Source: en.vietnamplus.vn/Home/Volatile-retail-climate-to-last-through-2012/201112/23112.vnplus