Vietnam Tipped To Be Asia’s Fastest-Growing Covenience Market - IGD
Vietnam is forecast to be the fastest-growing convenience market in Asia by 2021, followed by the Philippines and Indonesia, according to new data released today by international grocery research organisation IGD.
Asia’s grocery market is the largest in the world, with a predicted 6.3% compound annual growth rate up to 2021.
Its size is forecast to reach US$4.8 trillion by 2021, equivalent to Europe’s and North America’s combined.
In the convenience channel, IGD is forecasting high double-digit compound annual growth over the next four years in Vietnam (37.4%), the Philippines (24.2%) and Indonesia (15.8%), based on the performance of the leading convenience store operators in each market.
A Shift In The Market
Nick Miles, head of Asia-Pacific at IGD, says: “The retail markets in these three countries are gradually shifting from traditional to modern trade, and there are several factors driving this: a positive economic outlook; a significant increase in GDP per capita; deregulated markets encouraging more foreign investment; and rapidly changing shopper habits."
“Among all the bricks and mortar grocery channels, convenience shows the strongest growth prospects in Asia, thanks to rapid urbanisation, a growing young population and greater levels of disposable income”, Miles explained.
On the particularly strong growth tipped for Vietnam, Miles says, “convenience stores in Vietnam have become popular destinations for young consumers to shop and hang out, as the stores provide them with an air-conditioned environment, well-organised shelves and seating areas, high quality products and, in some stores, free Wi-Fi.”
Ripe For Growth
Vietnam, the Philippines and Indonesia share similar characteristics that make their convenience markets particularly ripe for growth, according to IGD.
These three convenience markets are predominantly driven by an increase in store numbers.
For example, the number of c-stores operated by the top five retailers in the Philippines has more than doubled in the last five years and retailers are gradually shifting their focus from the capital to more provincial areas for greater opportunities.
Asia’s convenience market has traditionally been dominated by Japanese retailers.
However, there have been more market consolidations and partnerships and most noticeably, domestic players such as VinMart in Vietnam and SM Retail in the Philippines have been scaling up their operations and establishing leadership in their local markets.
Neighbourhood mini-supermarkets are becoming more popular. Apart from the modern convenience store format, local operators have developed a successful neighbourhood mini-supermarkets model, which better caters to local needs.
These mini-supermarkets are typically c.150-300 square metres and are located in residential areas, with a focus on fresh food, top-up grocery and food-for-tonight.
“Across all the region’s key growth markets, we expect to see retailers and manufacturers increasing their investment in convenience, championing innovative new products and formats such as food-to-go, and above all, working collaboratively”, concludes IGD's Nick Miles.
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Gavin Ryan. Click subscribe to sign up to ESM: The European Supermarket Magazine