The Rise of Modern Grocery Shopping in Vietnam

November 25, 2020

Although traditional grocery shopping through local markets and independent stores dominates Vietnam’s grocery industry, modern channels are expanding rapidly due to the change of customers’ behavior, pushed extra by the growing e-commerce during the COVID-19 pandemic.

Vietnamese woman shopping in a supermarket

 

Vietnam’s retail market has grown with a CAGR of 12.73% over the past decade, driven by an increasing wealth and disposable income, as well as a growing population. Among the categories of retailing, grocery and electronic appliance are the largest categories in Vietnam, accounting for more than half of the total retail sales in the country (by value).

Grocery retail has grown by 5% yearly between 2014 and 2019, with traditional channel (markets and independent stores) still playing the leading role and dominating more than 90% of total market. Modern channel’s accounts for roughly 8% of the overall grocery retailing, but its big growth rate of 8.5% per annum shows that it is increasing faster than the market average.

 

Chart showing Vietnam grocery sales by channel

Vietnam’s retail market has the highest growth rate in modern grocery retail in comparison to other Southeast Asian countries. Therefore, Vietnam expects the greatest potential for modern grocery retail expansion in the future.

Chart showing Vietnam grocery market size 2019

Among the modern channels, supermarkets have become more and more popular for modern grocery shopping with an expansion rate of 16% (YoY) while hypermarket shopping appeared to stabilize in 2019. Convenient stores have the highest growth rate of 18% (YoY), with a market size of 190 million USD in 2019.

Modern retail chains of grocery are continuously growing by expanding distribution networks to gain more market share. The number of modern grocery outlets soared from around 1,200 in 2014 to nearly 4,800 in 2019.  Supermarket and Minimart segment is dominated by local players, such as Saigon Co.op and Bach Hoa Xanh, Vinmart and Vinmart+. Within the Hypermarket segment, Big C is the biggest chain with 57.6% market share, followed by Lotte Mart, AEON, and Co.op Xtra (Saigon Co.op), while the convenient store segment is dominated by international companies including Family Mart (Japan), Circle K (US), Minimart (Japan) and B’smart (Thailand).

Graph showing coverage of grocery retail chains in Vietnam

In 2020, modern grocery saw a boost of online sales due to the COVID-19 pandemic. In addition, leading e-commerce providers in Vietnam, including Tiki, Shopee, Lazada, Sendo, Foody, etc. expanded their product range to groceries and fresh food. Vietnam’s e-commerce sector has already been experiencing significant annual growth of 30% over the past two years, and now it is becoming even more clear that the rise of online shopping is one of the major trends in the future.

In conclusion, modern trade of grocery through supermarkets, hypermarkets and convenient stores has become more and more popular in Vietnam with a high growth rate, challenging the prevalence of traditional retail. In the future, the growth of omni-channel retailing, e-commerce shopping and market consolidation are pinpointed as key trends within the Vietnamese grocery market.


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