Vietnam’s government has set an ambitious goal of increasing annual retail sales and service revenue by 10%, by bolstering economic growth and expanding trade.
Vietnam’s retail sector is showing signs of strong growth, making it lucrative for investments, as domestic consumption has been on a consistent rise. Figures indicate that the modern retail and consumer goods industry is geared to outperform the others, with investors looking for sustainable growth sectors.
Despite global insecurities caused by escalating trade wars and supply chain disruptions, Vietnam has witnessed increased disposable incomes, a ballooning middle class and changing shopping trends; all of which have ultimately contributed to the considerable expansion of the retail sector.
According to the country’s General Statistics Office, in the first two months of this year, total retail and revenue growth increased by 9.4% year-on-year (YoY) exceeding the growth of the same period from last year, which was recorded at 8.4%. This growth is a result of strong market momentum, that makes consumer stocks attractive to domestic and foreign investors.
The government has set an ambitious goal of increasing annual retail sales and service revenue by 10%, by bolstering economic growth and expanding trade. While the results of this growth are evident now, the seeds for this expansion have been sown over the past year. In July 2024, the government’s decision to raise the base salary pulled up the purchasing power index.
Along with more money, the sprouting up of more modern retail chains and e-commerce companies has also made shopping more convenient. Increasing urbanization and digital payment portals are also facilitating the change from traditional markets to modern supermarkets and convenience stores. However, while the overall retail market is growing, consumer behaviour remains selective.
According to a recent PwC survey, 64% of Vietnamese people prioritise food expenditure and 48% prioritise healthcare and wellness. On the other hand, 30% of individuals prefer to reduce their expenditure on non-essential and luxury items. This growing demand for pharmaceuticals, food and other essential products can have a positive impact on large retail chains, particularly supermarkets and convenience stores.
Companies which intend to fuse physical stores, and online services can also gain a large share of consumer spending. Vietnam’s food retail industry is also expanding, and the rising middle class, which is projected to double from 13% to 26% in 2026 is the primary reason for this growth. Along with this demographic influence, the growing preference for branded foods and the improving supply chain logistics have bolstered this sector.
Asian markets are gearing up for the devastating effects of the Trump tariffs, and Hanoi too is preparing to shield itself from the US President’s protectionist policies. Foreign investors increased the sales of Vietnamese stocks in the past weeks, dashing the country’s prospects of a valuation-increasing market upgrade later this year.
Trade-related risks prompted these accelerated stock sales, as the export-dependent Southeast Asian country had a record trade surplus with the US in 2024 and also imposes higher import duties, putting it on Washington’s radar as the Trump administration has set out to correct what it believes are trade imbalances.
Despite these higher import duties, customer preference for imported goods makes it a good opportunity for international brands to enter the domestic market. Along with foreign brands, the wave of quick-commerce platforms can also support the country’s transition to modern grocery shopping.
The Vietnamese pharmaceutical and healthcare retail market is also set for strong growth, with healthcare spending estimated to jump by 7% this year, as the ageing population will touch the 17% mark by the end of 2025. There is also a growing demand for over-the-counter medication and other health-related products, which has led to pharmacy chain expansions.
Analysts are confident that Vietnam’s upgrade to an emerging market later this year will attract foreign investments, particularly for consumer-related stocks. Domestic tourism and increased consumer confidence have also helped jolt the retail sector, and this improvement will soon be reflected in the stock market as well.
