Modern Vietnam’s Economy: The Rise of the Retail Chain

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HO CHI MINH CITY – Yoga students have to pass blue-green iguanas and hummus jars at the entrance to get to Hanna Nguyen’s home studio. Nguyen began offering training classes by converting the first floor of their home into a shop while the family lives upstairs. Vietnamese have been doing this for centuries – working on one floor, sleeping on another – but the 21st century has brought new competition: retail chains.

Nguyen competes with Elite Fitness, California Fitness and Yoga, and other major gym brands that almost non-existent a decade ago.

Your home is divided into work and private, old and new. Below she sells homemade kombucha and smoothies to yoga practitioners. Upstairs is her teenage son who has no interest in the family business and prefers the syrupy smoothies that are sold in 24-hour stores.

“I prefer cozy, homemade, and local,” said Nguyen on a bright afternoon by the pool, teaching aqua yoga.

But like her son, tastes are changing across the country of 98 million people.

National and international franchise companies have gained a foothold in Vietnam and are bringing uniformity to grocery stores, dentists, car washes – even street food.

To name an important indicator, the explosion of minimarts displacing mom and pop shops is one of the most striking signs of Vietnam’s changing consumption patterns. According to market researcher Nielsen, the number of people who recently said they had recently been to a store like 7-Eleven or Circle K rose to 57% in 2020, up from just 6% in 2016. In contrast, the use of traditional stores decreased from 2018 to 2019 by 2.5%. Nguyen sees this as part of a lifestyle for young people like her son. They hang out at air-conditioned mini-stops, go to Starbucks to see and be seen, or take selfies in Vincom malls.

Customers have chosen brands for their familiarity and consistency in all markets, from Zara clothing in Spain to Singapore’s Crystal Jade restaurants.

It’s far from the old way of doing business in Vietnam. Locals used to set up a business by renovating their living room or renting a low storefront nearby. They would put up signs naming the new business by their address or their own first name, and soon they would be the neighborhood cafe, pharmacy, or clothing store.

But corporate brands are replacing these old family businesses, a transformation that took decades. Today, in this communist country that long ushered in capitalism, there seems to be a corporate chain for every kind of business under the sun: Co.opmart is crowding out wet markets, Kofi Kai coffee and Nha Trang sandwiches are parked their sidewalk carts no- Name Wagen, and Kim Dental competes with general practitioners.

Call it the concatenation of Vietnam.

“The Vietnamese market is the promised land for retail chains,” Nielsen’s senior manager Le Hoang Long told Nikkei Asia. He said the chain store trend is remarkable because it encompasses so many different sectors, from maternity clothes to health products.

“No other market in Southeast Asia is as dynamic,” he said.

Each country has seen the rise of the franchise at a different time and at a different pace. The moment has come for Vietnam. The country that fueled consumption has seen the highest economic growth per capita among the six major economies of Southeast Asia since 2017 Asian Development Bank Data released in April.

With more incomes, Vietnamese people demand better and more consistent quality of products and services, said Vi Ton, founder of Beyond Creative Agency, a marketing and design company.

“Even if the price is a little higher, people are willing to spend money,” she said.

Inequality is growing, but those who can afford it seek companies that are responsible about workers, the environment and product safety, she added. In particular, suspicions about food safety have increased in recent years when locals discovered banned chemicals in their instant noodles, coffee, or shrimp.

Facebook said in a 2020 report covering the six major economies of Southeast Asia that brand preference is highest in Vietnam, where 54% of people tend to buy more established brands, up from 45% in Malaysia and 43% in Thailand.

“People tend to [be] willing to try and switch, “said Ton.” They want to make sure that when they pay more, it pays off for the environment and society. “

Big brands may be a sign of the times, but yoga instructor Nguyen hopes there is still room for local stores where shopkeepers know the names of customers or don’t mind if they’re sometimes short of bills.

At her home, customers buy handicapped-made tote bags and call Nguyen for random neighborhood tips, such as a notary public.

“The reason we do yoga at home is because we want to feel at home,” she said, serving her guest a peach-colored kombucha.

She avoids mass-produced goods such as ice cream and smoothies made from syrup. However, Nguyen understands why her son and many others in his generation consume them: even she admits the smoothies are tasty and convenient.


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