Is there too much retail space in Saigon – downtown Ho Chi Minh City – the commercial hub of Vietnam?
With more than 1.1 million sqm of retail space, it looks like the Saigon retail market is oversupplied. The closing of Parkson Paragon in the city’s District 7 last month only amplified such concerns.
But Cushman & Wakefield Vietnam GM Alex Crane begs to differ. He says demand is there if the retail formats are built to meet the market.
He believes with the population of 10 million, the city is far from overloaded with retailers. The main problem lies in the wrong location or design – and incorrect retail segments.
“I think the real test will show in the opening of shopping malls in the city center. Let’s just wait,” Crane said.
The malls he may well be referring to are the upmarket Japanese department store Takashimaya-anchored Saigon Center 2 under completion now in District 1 and The One opposite Ben Thanh market which will be connected to the underground rail network currently at easing stage prior to construction.
When these malls are operating, it will be easier to evaluate the real positioning of the retailers and the real demand of the market, says Crane, who is optimistic that it is not about the balance of population and retail space, but the practical demand.
To Sigrid Zialcita, MD of Research Department, the key for shopping malls is to have suitable retailers (for market demand) and logical space designs – as well as market-savvy managers.
“Joining WTO and TPP is turning Vietnam into a rising star in the retail market,” added Zialcita.
HCMC’s demand for F&B, household supplies and fast moving consumer goods remains high based on the young population. But retailers entering the market need to conduct careful research to ensure their positioning strategies meet the market.
While the retail market requires constant change and adjustment to customer demands, globally there is a continuing trend towards ‘one stop shopping’. Vietnamese are increasingly looking to go to places where they can eat, entertain and shop in a modern, air conditioned mall.
According to data from AT Kearney, Vietnam has been one of the top 30 rising retail markets for foreign investors since 2008. Retail and consumer merchandising revenue has increased considerably between 2011 and 2015.