Vietnam’s retail market witnessed a positive rebound in 2023 following the severe impact of the Covid-19 pandemic. Total retail goods and consumer services sales reached VND 6,231.8 trillion, up 9.6% from 2022. Retail sales of goods played a dominant role, accounting for 78% of the total and increasing by 8.6%. However, compared to the pre-pandemic period, the growth rate has not yet reached the pre-pandemic level (over 10%) and has shown a trend of deceleration in the last months of 2023 (compared to an increase of 16.3% in the first 6 months of the year).
According to economic experts, modern retail channels account for 25% of the market share, indicating that Vietnam's modern retail market still has significant room for growth. The trend of retail through modern channels was also growing stronger and gradually replacing the traditional grocery store model, which has existed for a long time in Vietnam, and is associated with the living and consumption habits of the people.
Convenience stores are one of the fastest-growing models among modern retail formats in Vietnam. Despite representing a small proportion of total goods retail revenue (about 0.3%), they were the fast-growing format, with a CAGR of around 18.4% during 2020-2022. The market's growth potential was assessed as very large due to several factors, including population structure, urbanization, the rise of the middle class, and the development of the tourism industry.
As of September 2023, Vietnam's urbanization rate reached 41.5%, and about 50% of the urban population was in the age group of 15 to 50 years old (an age group that is easily accessible and familiar with modern shopping methods). The tourism industry was accelerating strongly (both in domestic and international tourist numbers) from the second half of 2023 onwards. And the number of people in the middle class in Vietnam has been rapidly growing in recent years and was forecast to increase by more than 2.5 times (to over 36 million people) by 2030.
Despite being consistently rated as having high growth potential, the Vietnamese retail market in general and the convenience store business segment in particular have always faced fierce competition. Especially with the explosion of foreign convenience store chains, they created significant competitive pressure for Vietnamese brands. Possessing strong financial resources, extensive management experience, and aggressive marketing strategies, these major players were gradually taking over the market share, making the "pie" of the Vietnamese convenience store retail market increasingly narrow for domestic businesses.
Alongside the race to expand market share among convenience store chains, this retail channel also faced significant competitive pressure from the explosion of e-commerce. According to the 2023 E-commerce Report released by the Ministry of Industry and Trade, up to 74% of Vietnam's population regularly participated in online shopping (through websites, and social networks like Facebook, Zalo, or e-commerce platforms). B2C e-commerce revenue in 2023 was estimated at USD 20.5 billion, growing by over 25% (an increase of about USD 4 billion compared to 2022), accounting for 7.8 - 8% of total retail sales of goods and consumer services revenue nationwide. The online shopping channel was gradually overshadowing direct retail channels (offline).
Facing escalating rent costs, fierce competition among competitors in the same segment, and the demand for product diversification, a focus on convenient shopping experiences, and attentive customer service from consumers, direct retail businesses (offline) in general, and convenience store chains in particular, are facing immense pressure. Direct retail businesses are forced to transform strongly by applying electronic payments, building a multi-channel retail model (combining online and offline sales), and approaching new and modern product display trends and delivery methods.
Circle K
Circle K Vietnam achieved remarkable growth during 2021-2022, affirming its position among the top players in the convenience retail industry. The store network has expanded robustly with over 50 new locations, bringing the total to 464 stores, covering a wide range nationwide. Circle K stood out with its automated payment systems, modern QR code scanning, and diverse home delivery services through applications like Grab, ShopeeFood, NowFood,... providing customers with convenient and quick shopping experiences.
Having overcome the challenging Covid-19 pandemic, Circle K Vietnam recorded impressive extremely business results in 2022, with revenue increased by 44.5% compared to 2021, reaching nearly VND 4,000 billion and earning over a hundred billion VND in profit, "makeover" complete turnaround compared to the accumulated losses of the previous two years. And this was also a rare convenience store chain brand to "escape losses."
GS25
GS25 entered the market "latest" than other businesses in the industry (officially operating since 2018) but has made a strong mark in Vietnam with an impressive expansion rate, currently owning 209 stores, and ranking among the top 2 largest convenience store chains. The chain, owned by GS 25 Vietnam Co., Ltd. (GS25 VN), is a joint venture between GS Retail Korea (holding a 30% stake) and Son Kim Retail Joint Stock Company (Son Kim Retail). This chain is affirming its position as one of the leading brands with its creative business model, effective franchising strategy, and diverse and convenient shopping experiences for customers.
Thanks to a clear development strategy, GS25's revenue in Vietnam grew steadily during 2021-2023, reaching over VND 1,500 billion in 2023 (an increase of 23% compared to the previous year). GS25 has pursued an ambitious development strategy, aiming to expand to 700 stores by 2027, accepting short-term losses to capture market share. In 2023, GS25 continued to record accumulated losses; however, the loss level improved compared to previous years.
FamilyMart
FamilyMart, Japan's third-largest convenience store chain, has gradually asserted its position in the promising yet competitive Vietnamese market. Despite setting an ambitious goal of owning 1,500 - 2,500 stores by 2023, as of July 2024, the number of FamilyMart stores in Vietnam had only reached 160. Instead of being discouraged, FamilyMart Vietnam still showed positive signs with steady revenue growth over the past three years, reaching VND 1,600 billion in 2023 and gradually reducing losses over the years.
Ministop
Ministop is also a "formidable" competitor for dominating market share in Vietnam. The convenience store chain from Japan, owned by retail "giant” AEON, entered Vietnam in 2015 and has expanded to 184 stores in Vietnam (as of July 2024).
However, Ministop also faced a "disappointing" financial situation. Although the convenience store chain's revenue grew by around 12%, reaching nearly VND 1,300 billion in 2023, the brand's net profit also recorded accumulated losses.
7-Eleven
7-Eleven, a well-known American brand, was granted an "exclusive" franchise in Vietnam, an experienced "player", and held a significant market share in the convenience store sector in other countries. Since establishing its first store in Vietnam in 2017, 7-Eleven has taken a rather slow pace compared to other later "giants" (such as GS25). However, in the past year, 7-Eleven has implemented a size expansion strategy, increasing its number of stores from 79 (January 2023) to 114 by now.
7-Eleven was one of the few businesses that experienced strong and stable revenue growth since the Covid-19 pandemic. Specifically, its revenue in 2021, 2022, and 2023 increased by 17.7%, 26%, and 37.4%, respectively, compared to the previous year, reaching nearly VND 850 billion in 2023. However, this giant remained among the group with the highest annual losses in the convenience store chain system.
K-Market (K-Mart)
First appearing in 2006 with products bearing a strong imprint of Korea, K-Market was considered the first Korean supermarket in Vietnam, offering high-quality and diverse products to meet the diverse needs of customers. After 18 years of formation and development, K-Market has affirmed its strong position with a chain of 69 stores spread across major cities such as Hanoi, Ho Chi Minh City, Hai Phong ..., becoming a reputable shopping destination for consumers, especially the Korean community living and working in Vietnam.
Vietnam's convenience retail market in recent years has witnessed many businesses struggling because of losses due to "rapid" expansion and being heavily affected by the Covid-19 pandemic. In this gloomy context, K-Market emerged as a "bright spot" with a "sustainable" business strategy and achieved impressive success. Revenue grew steadily, 8.3% in 2022 and 6.9% in 2023, respectively, reaching over VND 650 billion. K-Market was the only convenience retail business to record consistent positive profits during 2021-2023.
Co.op Smile, B's Mart
After the aforementioned "giants", some convenience brands such as Co.op Smile and B's Mart had revenue ranging from over VND 200 billion to VND 500 billion despite operating for many years, and the profits of these brands also recorded at a relatively high loss level.
Specifically, for Co.op Smile, after nearly 10 years of development, the brand had a total of 96 stores across Vietnam (including franchises). Revenue grew steadily at an annual rate of 1.7%, reaching VND 380 billion in 2023. Like other brands in the industry, Co.op Smile also recorded after-tax losses.
For B's Mart, established in 2013, is showing signs of being "short of breath" in the face of fierce market competition, by now, the chain has developed 78 points of sale across Ho Chi Minh City. The revenue of the B's Mart convenience store chain in 2023 was recorded at the lowest level in the past 3 years (2021-2023), reaching around VND 300 billion, a decrease of 14.7% compared to the same period in 2022. This brand has also been continuously recorded as making losses, with the annual losses increasing gradually.
In general, convenience store businesses in Vietnam experienced a satisfactory recovery in their business operations after the Covid-19 pandemic period. However, businesses are focusing on expanding their scale to increase market share and putting pressure on competitors to withdraw from the race.
Source: Vietdata's Convenience Retail Market Report 2023
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