Parkson Retail Asia Ltd. announced on April 28 that Parkson Vietnam, an indirect subsidiary of the company, had filed an application to the People’s Court of Ho Chi Minh City for the commencement of voluntary bankruptcy proceedings. According to the statement, Parkson Vietnam has historically been operating at a loss, with the issue being compounded lately due to the challenging business environment.

Parkson Retail - illustration photo

“As such, the group has assessed and determined that it is not commercially feasible to continue its operations in Vietnam and the Board of Directors at Parkson Vietnam decided that it will be in the best interests to file the application,” it added.

In particular, the announcement cited lack of support from Parkson Vietnam’s landlord, such as the negligible rental rebate and reduction during lockdown periods which adversely impacted the company’s financials. “The high land tax imposed by the local government also added to the financial difficulties,” claimed Parkson Retail Asia.

After 18 years of operation, Parkson went from 10 retail centres in its heyday to just one operating centre left - the Parkson Saigon Tourist Plaza, located in District 1 of Ho Chi Minh City.

Parkson Saigon has recently been attracting customers thanks to the presence of Uniqlo and Muji. However, the other floors are often empty. Local Kieu Oanh said she often watches movies at the opposite Vincom Centre Dong Khoi instead of Parkson because the latter does not have enough food and beverage (F&B) courts.

Meanwhile, Bitexco Financial Tower, one of the more iconic buildings of Ho Chi Minh City, has been closed for renovations. At the end of 2022, the quiet Icon68 shopping centre inside the Bitexco Tower was a widely discussed topic, while favourite brands gradually left.

“In the past, young people used to visit Bitexco almost every month to watch movies, then go down to the second floor for hotpot. But after the pandemic, cinemas and some fashion brands have gradually left, so there is nothing to entice us to go there now,” said 27-year-old Minh Tam.

Icon68 was formerly known as a centre for top brands. Fujifilm based its first Vietnamese shop there, while Samsung set up a creative showcase covering 1,000sq.m.

Bitexco was also home to the first store from cosmetics retailer Watsons, and hotpot restaurant chain Haidilao. The attraction of this shopping centre brought along a series of international fashion brands such as Mango, Pedro, Charles & Keith, Warehouse, Adidas, and Topshop.

However, in the past few years, brands have gradually had more choice. Bitexco has heavy competitors such as Vincom Dong Khoi and Takashimaya (District 1), Cresent Mall (District 7), Van Hanh Mall (District 10), Aeon Mall (Tan Phu), and now Thiso Mall in Thu Duc city. For example, Watsons moved its flagship store to Vincom Dong Khoi.

Even Saigon Skydeck, located on the 49th floor of Bitexco, is facing competition from SkyView at Vincom Landmark 81.

A representative of Bitexco said that the rate of visitors to Saigon Skydeck’s observatory has almost reached pre-pandemic figures, receiving an average of 1,000 people per day. However, this number of visitors is not saving the building as a whole.

This is not the first time that the retail market in Ho Chi Minh City has seen a popular shopping mall fade away. The sluggish situation of both consumers and tenants causes many shopping centres to find ways to renovate and upgrade.

The latest makeover is Diamond Plaza in District 1. After a year of renovation in both interior and exterior in 2022, many international brands have come here to open their first store in Vietnam, such as the high-end British perfume company Jo Malone, or the Beauty in the Pot restaurant.

This is also the next destination for Chanel, Lilliput, and coffee chain %Arabica. Currently, F&B brands are competing for positions in the terrace area of Diamond Plaza.

Meanwhile, Vincom Center Dong Khoi opposite Parkson Saigon is attracting more customers thanks to its spacious area and the appearance of many cosmetic, fashion, and F&B brands. On average, the centre’s management said, brands spend up to $135 per sq.m monthly to rent space.

A recent report from Savills said that a few other developers are also planning to renovate and change the tenant structure in 2023, such as Vivo City (District 7), Pandora City (Tan Phu district), and the Lotte Mart chain. This year, new supply from 16 projects will provide a total of 193,000sq.m of leasable space. By 2025, 23 projects will provide over 286,000sq.m of leasable area, of which about 86 per cent will come from non-central business district areas.

According to Le Thi Huyen Trang, head of Research and Consulting at JLL Vietnam, the retail market has not yet reached its full potential. Although Vietnam is projected to be in the top 10 countries with the fastest middle-class growth in the world this decade, and is expected to be the main driver of consumption growth in Asia, the retail per capita is still the lowest in Southeast Asia.

“A clear divergence of demand among tenant profiles has been shown. International retailers and F&B brands continue to lead demand with new leasing activities focused on prime malls with high footfall, while domestics retail brands shrunk their leasing sizes or closed inefficient stores to maximise profits,” Trang said.

Playgrounds were the main driver of the market with many reopened stores and a new 2,300sq.m Funny Kids playground in Vincom Mega Mall Times City in Hanoi. Meanwhile, furniture, bedding, and electronics contracted their leasing demand due to the growing online consumer base for these product categories, Trang added.

Renovation and customer experience improvement are trends among shopping malls, especially long-standing malls with solid footfall, to compete with the growing online shopper base.

“Indochina Plaza Hanoi’s renovation is now in its finishing stage and will welcome high-profile tenants in their new green retail space this summer. Vincom Center Tran Duy Hung and Vincom Center Pham Ngoc Thach have also installed a new rest area for shoppers and a play zone for children instead of small kiosks,” Trang said.