After three years of presence in Hanoi, Japanese fashion brand Uniqlo opened another three stores for the autumn/winter season of 2022. Kicking off the campaign, Uniqlo opened its fifth store overall in Vincom Centre Ba Trieu, bringing the total number of its stores to 15 nationwide.

Covering an area of 2,000 square metres across three floors, the store conveys a contemporary spirit in line with the lifestyles and living pace of Hanoians, from interior decoration to product display.

Osamu Ikezoe, general director of Uniqlo Vietnam, said that the company gives top priority to meeting the needs of customers with the strategy of opening stores in the right locations, and in seasons that customers desire the most.

Competitors like Zara, H&M, and Mango often also appear in places like Vincom Centre Ba Trieu despite having the same target customers and high traffic of shoppers.

Luxury retail spaces have become increasingly scarce in terms of both quantity and quality in the major localities in Vietnam. As a result, acquiring premises in these strategic locations distinguishes world-famous fashion brands. It took Uniqlo two years to secure the location for its first store at Parkson Saigontourist Plaza, in Ho Chi Minh City’s District 1. The delay in the grand opening was partly because rental prices were skyrocketing in Vietnam.

Along with Uniqlo, other major retail chains like Muji, Haidilao, and Central Group have ramped up their expansion in Vietnam.

According to high-end premise brokers, foreign retailers remain upbeat about the potential of Vietnam’s real estate market in 2023. Some luxurious and high-end brands like Berluti, Cartier, Victoria’s Secret, and Urban Revivo have also penetrated the market.

However, the most enduring challenge for foreign retailers is to find premises in a suitable location; it also takes time to apply for licences. In addition, amid current global uncertainties, investors need to closely watch the spillover impact of the global economy on Vietnam in the next 2-3 years.

In addition to the penetration and expansion of foreign brands, local brands also post a strong increase and deepen their footprint in the market. Take Trung Nguyen Legend for example – in the second quarter of 2022 alone, the brand launched 10 stores in the Vincom chain.

A representative of Trung Nguyen Legend said the opening of store chains at strategic locations is a testament to the sustainable development of the group. The move also contributes to promoting and raising the brand awareness of the Vietnamese coffee brand in local and foreign markets.

In addition, the market has also welcomed a new brand in Nova Commerce, a subsidiary of Nova Service. The event marks a step forward for Nova Commerce to expand its retail chain across the country. Under the plan, the company wants to open 2,000 outlets by 2025.

Tran Mai Hoa, general director of Vincom Retail, said that many major customers have plans to open stores at Vincom. “We have been in negotiations with entertainment and food and beverage brands about their plans to open stores in the next 1-3 years,” Hoa said.

The race to expand

Before investing in shopping malls, operators always consider the efficiency and the development of the retail market. In 2023, Vincom Retail has a plan to open six new shopping malls, including Vinhomes Grand Park, with an area of 44,000sq.m in District 9 of Ho Chi Minh City.

After securing a strong footprint, Vincom Retail will focus on developing the new-generation Vincom Mega Mall to become a destination for the young generation with their modern and dynamic lifestyles. The company plans to add another three million sq.m of floor space for lease, including some 1.4-2 million sq.m of space in the 2022-2026 period and the remaining space after 2026.

Vincom Shopping Mall is the first choice for any international brands entering the Vietnamese market and has become the leading name in leasing shopping mall space. Over 80 Vincom-branded shopping malls have been built across localities under Vincom Centre, Vincom+, Vincom Plaza, or Vincom Mega Mall.

According to Viet Capital Securities Company, in 2021 the total number of shopping malls from Vincom Retail surpassed that of regional peers in Southeast Asia such as SM Prime (76 locations in the Philippines), Central Pattana (34 locations in Thailand and Malaysia), AEON (12 locations in Vietnam, Cambodia, and Indonesia), Pakuwon Jati (10 locations in Indonesia), Parkson (41 locations in Malaysia, Indonesia, and Vietnam), and Lotte (65 locations in Vietnam and Indonesia).

They are all leading names in the retail sector with the strong backing of large corporations, and share the same ambition to quickly increase coverage in Vietnam. Japanese retailer AEON currently has about 200 stores in Vietnam, including six shopping centres and some supermarkets, mainly in major cities.

The Japanese retailer plans to triple the number of its shopping malls in Vietnam by 2025. In Hanoi, AEON plans to expand to 100 supermarkets by 2025, about 10 times the current figure.

Meanwhile, Thailand’s Central Retail sets a revenue target of $2.65 billion by 2026. The group also plans to spend around $790 million doubling the number of its hypermarkets.

Lotte Group of South Korea, meanwhile, intends to open more Lotte Marts in Vietnam. The group considers Vietnam its third key market after Japan and South Korea, after withdrawing from China.

Data by Cushman & Wakefield Vietnam shows that, for the first nine months of 2022, the occupancy rate of the whole market in Hanoi reached 89 per cent and the total accumulated supply of shopping malls, department stores, and commercial podiums reached 1.25 million sq.m. The average rental price was up around 1 per cent over the same period last year, and 75 per cent of future retail space will be allocated on the western and central fringes of Hanoi.

Meanwhile, in Ho Chi Minh City, the occupancy rate of shopping malls reached 93 per cent, with an average rent of $48/sq.m/month, up 5.6 per cent over the same period in 2021. Future supply will come from Thu Duc city, with large-scale and small-scale shopping centres serving the surrounding community. In District 1, the future supply is mostly medium-sized shopping centres.

While the housing segment reports shrinking sales, market observers see that the demand for retail and office spaces is rising after businesses pinpoint the opportunities to find locations with better rental prices.

According to Su Ngoc Khuong, senior director of Savills Vietnam, major shopping mall brands currently rely on large office and real estate projects to develop shopping malls.

“Thanks to the parent corporations’ strategy of developing outlets in prime locations, developers have targeted high-end commercial segments that are lacking in localities. However, the high traffic of visitors should be justified by the profitable performance for the project owner and the tenants. If there is no profit, the tenants may leave the shopping centres,” Khuong said.

In addition, business premises also need to innovate in a more flexible and modern way. Trang Do, manager of Retail Services at Colliers Vietnam, said that whether it is a new or familiar name, retail businesses need to grasp and anticipate the new demands of customers, thereby making the necessary changes to become more attractive and competitive.

“For example, with a cross-shopping strategy or a takeaway and delivery model, the layout and design of the premises need to be adjusted appropriately and conveniently to optimise the customer shopping experience,” Do said.

Vincom Shopping Mall is a top choice for international brands when penetrating the Vietnamese market