Vietnam’s retail industry is expected to rebound in 2021 thanks to the recovery of consumer confidence and the dissemination of Covid-19 vaccines.
Major growth driver
Thanks to the rapid emergence and explosive growth of the middle class and increasing income, domestic consumption has become the main growth driver for the retail industry in Vietnam. This has been maintained in the past period despite the impact of the Covid-19 pandemic.
According to the General Statistics Office of Vietnam (GSO), retail sales of goods, which decreased by 21.9% year-on-year in April 2020 due to the impact of the period of social distancing, have strongly recovered since May 2020. Total retail sales of consumer goods and services in the first 11 months of 2020 increased by 6.8% over the same period.
According to The Conference Board and Nielsen, in Q2 / 2020, Vietnam’s consumer confidence index reached 117 points, the second highest in the world (following India with 123 points). Consumers’ confidence fell sharply mainly due to concerns about future work and increasing anxiety about financial health when Vietnam’s unemployment rate in Q2 / 2020 increased by 0.51% compared to the previous quarter, to 2.73%.
However, by successfully controlling the Covid-19 epidemic, the Vietnamese economy recovered in the third quarter of 2020 when the unemployment rate decreased by 0.23% compared to the second quarter, to 2.5%. It is believed that consumer confidence will recover at the end of 2020 and the beginning of 2021 when the vaccine is widely available.
The fact that Pfizer Inc. and BioNTech SE launched their vaccine for Covid-19 in December 2020 has raised hopes that the global economy could recover strongly in 2021. However, recovery will take longer when the impact of Covid-19 has had a heavy impact on employment, investment and business in the global economy.
At the same time, the well-controlled pandemic in Vietnam will be the factor that helps sustain growth in retail sales in 2021, before it grows sharply when the Covid-19 vaccine becomes available globally.
In 2021, consumption is expected to experience the pre-pandemic growth with total retail sales of consumer goods and services believed to increase by 8.5-9% over the same period.
According to forecasts by the Ministry of Industry and Trade (MoIT), by 2025, the added value of the domestic trade will contribute about 13.5% to GDP, and the total retail sales of goods and services will increase by 9- 9.5% per year for the period 2020-2025.
Assuming that the total retail value in 2020 is the same as that in 2019, it is estimated that the total retail value will reach nearly 350 USD billion in 2025, which is 1.6 times higher than in 2020.