Vietnam is considered one of the region’s most attractive markets for foreign investors with a steadily increasing GDP and booming foreign direct investment, a pattern that is forecasted to remain stable in the upcoming years. Nominal GDP in 2018 is estimated to reach €208.1 billion, recording a nominal year on year growth rate of 6.7%. The country’s nominal GDP is forecasted to attain €248.8 billion in 2020.

Since Vietnam joined the WTO and allowed 100% foreign-owned retailers, the country’s retail market has become increasingly lucrative. Traditional retail will remain Vietnam’s dominant retail channel in the near future, currently accounting for 68% of the retail market. However, the country is witnessing a shift from traditional retail to modern retailers such as convenience stores, supermarkets/hypermarkets, and shopping centres. While the shopping centre and the supermarket/hypermarket segments are growing at a gradual and steady pace, with a CAGR of 4.7% (2013-16) and 6.2% (2013-17) respectively, the convenience stores chain segment is vigorously booming in the recent years, with an outstanding CAGR of 66.2% from 2014 to 2017. With Vietnam’s increasing effort to open up its trade policies and its strong participation in FTA agreements, including the EVFTA agreement, the market is just at the beginning stage of its development and offers numerous opportunities for investors.

Some investors choose to enter the Vietnamese market although franchising, especially in the F&B industry. With an increasing income per household, Vietnamese people spend more on the F&B goods and services. In addition, with an increasing fondness for Western products and concern for health, in addition to clearer government requirements, franchising is expected to grow steadily in the next few years.

First, this report will look at the potential for growth of Vietnam’s retail market over the next five years focusing on four segments: traditional retail, convenience store chains, supermarkets/hypermarkets, and shopping centres. It will also provide an overview of Vietnam’s current franchising landscape, and assess what impact the EU-Vietnam Free Trade Agreement (EVFTA) has had on the industry.