Vietnamese family businesses optimistic about growth prospects

The Vietnamese retail sector is valued at USD 170 Billion in 2020 and is projected to register CAGR more than 10% during the forecast period, 2021 to 2026.

Vietnam’s effective control of the pandemic has led to recovery of retail sales of consumer goods and services in the final months of the year.

The growth rate, while remaining lower compared to the 12.7% recorded the previous year, was an encouraging sign for the business community amid global retail market suffering plunge in revenue during the pandemic.

A high growth rate in retail sales by year-end was due to retailers and shopping malls offering sales promotion programs to stimulate domestic consumption.

Vietnam is seeing ongoing urbanisation and evolving demand trends amongst young urban consumers drive strong growth in modern retailing channels such as convenience stores, as well as the rapid expansion of e-commerce.

Vietnam is seeing ongoing urbanisation and evolving demand trends amongst young urban consumers drive strong growth in modern retailing channels such as convenience stores, as well as the rapid expansion of e-commerce.

Indeed, the growing influence of such factors can be seen in the emergence of formats such as mini supermarkets, which target demand for grocery shopping that fits into the flow of busy urban lifestyles.

One key factor involved in Vietnamese consumers choosing to shop in traditional markets is that they can buy ingredients in smaller portions.

Vietnam’s disposable income per capita is expected to grow quickly and reach USD 3,062 in 2023 . Vietnam’s total consumer spending is growing at the highest rate in the region ore than 8% a year— rising from USD 118 billion in 2013 to USD 185 billion in 2019.

Vietnam’s urbanization rate is still low when compared across the region, at 36.63% of the population, compared with rates between 47% and 76 % in other Southeast Asian countries.

However, family business and family entrepreneurship are still under-researched subjects in the literature of economics and management in both developed and developing countries.

In recent years, there has been a growing interest among economists in empirical
analysis of the role of management in enterprise productivity, growth, and longevity,
and a resurgence of an interest in industrial development in the international
development cooperation community.

The lack of the digital tools and capabilities that are needed for a rapidly changing world will present significant challenges to family businesses in protecting their legacy.

Moving faster along the digital journey will require more than just bridging the technology gap. Transformation must be a part of a cultural shift that is supported by highly engaged leaders, as well as a commitment to upskilling the workforce.

Vietnam is a strong contender for business investment when considered alongside other
major Southeast Asian economies such as Indonesia, Malaysia, the Philippines, and Thailand.

Vietnam’s private consumption rate of 68 percent of GDP is the second highest
in the region. Although Vietnam ranks last among these Southeast Asian economies on
urbanization, there is considerable future growth potential.

To succeed in Vietnam’s retail market, companies will need to embrace three key trends. First, consumers are increasingly loyal to brands—especially local brands.

To reach Vietnam’s consumers and win their loyalty in an increasingly competitive marketplace, it is necessary for retailers to invest in building scale across a broad network.

Vietnam has benefited from a program of internal modernization, a transition from its agricultural base toward manufacturing and services, and a demographic dividend powered by its youthful population.

With a population soon expected to reach 100 million people, Vietnam has a large domestic market and a growing middle class. Many Vietnamese are digital consumers, spending approximately seven hours a day online.