Mr. Nguyen Anh Duc - Chairman of the Vietnam Retailers Association had an interview with reporters of the Industry and Trade Newspaper about this issue.
The 12% growth target is not too high
- Domestic consumption is identified as one of the three key driving forces to boost Vietnam's economic growth (GDP) in 2025. What is your comment on this?
Mr. Nguyen Anh Duc : Wherever we go, we hear information about economic growth (GDP) in 2025 reaching over 8%, contributing to creating a solid foundation to achieve double-digit growth rates for a long enough period (starting from 2026). The excitement is accompanied by pressure. Because if retail businesses do not seize the opportunity, they will fall behind other businesses doing business with them. However, this pressure also motivates businesses to create development.
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| Illustration: Can Dung |
GDP growth and growth in total retail sales of goods and consumer services revenue have a similar relationship. Normally, the growth rate of service trade and retail sales is about 1.5 times higher than GDP growth.
From 2021-2024, the contribution of retail sales of goods and consumer service revenue to the country's total GDP will average about 55-60%. In Ho Chi Minh City alone, this figure will reach over 65% (66.2% in 2024). This shows that if we set the issue of GDP growth for the whole country at over 8%, the growth of total retail sales of goods and services must increase by at least 12%.
In fact, this target is not high compared to the strategy of "Domestic trade development until 2030, vision to 2045" in Decision No. 1163/QD-TTg dated July 13, 2021 of the Prime Minister .
Accordingly, the strategy sets specific targets for the 2021-2030 period, with the added value of domestic trade achieving an average growth rate of about 9.0-9.5% per year; contributing about 15.0-15.5% to the country's GDP by 2030; total retail sales of goods and consumer service revenue (excluding price factors) achieving an average growth rate of 13.0-13.5% per year.
The question is, is it difficult to achieve a total growth rate of 12% in retail sales of goods and consumer services revenue this year? I think there are both advantages and disadvantages. Regarding advantages, modern trade currently accounts for more than 60% in Thailand, nearly 40% in Malaysia, 95% in Singapore, while in Vietnam this figure is only 24%.
This shows that modern commercial enterprises in Vietnam have a large space to develop, enterprises are in a context of not competing with each other but cooperating to improve the development of the Vietnamese commercial market. Transforming from traditional trade to modern trade and at a higher level.
- Growth in total retail sales of goods and consumer service revenue is an important factor driving GDP growth. So, from the perspective of retail businesses, what will be the driving force to achieve double-digit growth, sir?
Mr. Nguyen Anh Duc : From the perspective of a commercial service and retail business that wants to grow, the first factor it needs is consumer trust.
First, it is the confidence of individual consumers. Vietnam used to be the country with the highest consumer confidence in Southeast Asia, but now we do not achieve this index. The impact on consumer confidence, from my personal perspective, comes from the income of workers. This ensures that consumers have enough confidence to promote general consumption.
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| Mr. Nguyen Anh Duc - Chairman of Vietnam Retailers Association |
We have a concept of minimum wage but we do not have a concept of living wage. Living wage will help increase consumer confidence. One person can work enough to support 3-4 people, then consumption will develop.
Second, it is the perspective of business-to-business consumption, or in other words, the health of businesses, which is also a factor to ensure that businesses are confident in consumption. Currently, the number of businesses established is high but also many are closing down. The strength of each business in the market will contribute to domestic consumption growth. The impact on business consumption has the factor of synchronous connection between different industries and departments. Besides, there is direct support from the state to ensure that this consumer confidence index increases higher in the near future.
On the business side, there also needs to be solutions to promote. We do not just use old solutions, businesses need to restructure their business operations, then businesses can reduce costs, increase revenue and have higher efficiency.
Restructuring the retail industry
- What solutions are needed to restructure the retail industry, sir?
Mr. Nguyen Anh Duc : In this restructuring process, there are 3 things to do. First , it is necessary to restructure the traditional retail sector. Because currently, traditional trade accounts for 76%, modern trade accounts for only 24% of the total retail sales of goods and service revenue.
However, traditional commerce is currently experiencing a major stagnation, the reason being that this sector has not yet thought about restructuring. In many traditional markets, many traders have closed down, and traders want to transfer their stalls and market spaces, but they cannot. Because market stall real estate has been formed for a very long time, transferring a stall means that people get back the money they paid 20-30 years ago, so the transfer value is very high and no one is buying at this time.
Therefore, restructuring traditional trade is what needs to be done now to contribute to the overall growth of the entire industry, and we cannot force traditional trade to continue to grow like this.
Second, for modern commerce, we also have to restructure to create a push, in which, emphasizing e-commerce. However, e-commerce is currently being personalized, individualized for each object, so taking shortcuts and getting ahead in this structure is very important.
Third, in the common values related to the supply chain, the value chain must also be structured. This restructuring depends on a large plan, a large strategy of the state management and administration agency.
Regarding pioneering solutions, it is necessary to fully utilize innovation as set forth in Resolution 57-NQ/TW dated December 22, 2024 of the Politburo on breakthroughs in science, technology development, innovation and national digital transformation.
According to Frost & Sullivan’s statistics with the world’s top 500 retail businesses, innovation and new factors will help businesses generate 30% of sales and 30% of profits. Therefore, businesses need to proactively grasp and fully utilize innovation in terms of finding new markets, new formulas, new customers, new fields, etc. to create their own value for their business, thereby creating newness in the way people buy and consume.
Reports also show that 30% of the revenue of the world's top 500 companies comes from developing new products, the figure in Asia is 20%, while Vietnamese enterprises have only achieved 10%. This means that the potential for increasing revenue from developing new products of domestic enterprises is still very large.
Along with that, businesses need to take shortcuts and be ahead in digital applications related to artificial intelligence (AI), thereby creating higher retail sales boosts in the coming period.
Thank you!
| Over the past 10 years, the scale of modern retail in Vietnam has increased 10 times, from 2.6 billion USD to 26 billion USD. However, the market share of modern retail only accounts for about 24% of the total market share, compared to 95% in Singapore, 65% in Thailand, and nearly 40% in Malaysia. Compared to other countries in terms of market penetration, modern retail in Vietnam is still considered lagging behind. A positive sign is that Vietnamese retailers are facing a great opportunity to innovate, develop new products and take advantage of the high use of mobile devices among consumers to diversify sales methods and increase revenue. |
Source: https://congthuong.vn/nganh-ban-le-chuyen-minh-de-but-toc-trong-ky-nguyen-moi-381106.html
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