Customers go shopping at the newly-opened Big C supermarket in northern Ninh Binh Province. Total turnover in the retail sector last year increased 16 per cent over 2011, despite economic difficulties. — VNA/VNS Photo Anh Minh

HA NOI (Biz hub)— Domestic retail businesses should increase connections with producers and distributors to provide professional services as they prepare to face fierce competition from foreign brand names.

Statistics from the Foreign Investment Agency show that in the first four months of the year, wholesale, retail and repair work were third in the list of foreign direct investments (FDI) in Viet Nam.

There were a total of 49 projects worth a total of US$127.62 million, an increase of 1.6 per cent over the same period last year.

By the end of last month, Viet Nam had attracted 336 FDI projects in food and accommodation services with investment of $10.1 billion.

There were another 951 projects in wholesale, retail and repairing sectors involving capital of more than $3 billion.

Another report from the General Statistics Office said that total turnover in the retail sector last year increased 16 per cent over 2011, despite economic difficulties.

In the first four months of the year, total turnover of retail and social services reached VND850 trillion ($40.5 billion), representing an 11.8 per cent increase over the same period last year.

Dinh Thi My Loan, general secretary of the Viet Nam Retailers Association, said the retail market had seen fierce competition as both domestic and foreign brand names had striven to search for expansion.

Loan said Viet Nam's retail market had 21 wholly foreign invested businesses which had rapidly expand their market share.

In addition, modern retail channels, including hypermarkets, supermarkets or small self-service stores, accounted for only 20 per cent of the market, leaving big opportunities for businesses.

Viet Nam has targeted to increase the percentage of modern retail channels to 45 per cent by 2020. By the end of last year, the country had 130 commercial centres, 700 supermarkets and more than 1,000 self-service stores.

Many famous foreign brand names now have a presence in the country such as Big C, Metro and Lotte.

Last week, Singapore NTUC Fair Price Co-operative Limited (FairPrice), which accounts for 57 per cent of the Singapore retail market, announced a joint venture with Sai Gon Co.op to create a new chain of hypermarkets named Co.opXtraplus with total investment of VND200 billion. It plans to expand nationwide.

Nguyen Thi Hanh, general director of Sai Gon Co.op told Vietnam Investment Review the current trend in Viet Nam was to develop hypermarkets, shopping malls together with traditional supermarkets.

In many countries, hypermarkets accounted for a big proportion. For example, the model accounted for more than a half of modern retail channels in Malaysia and Thailand.

Savills Viet Nam said competition in the food and beverage (F&B) sector had significantly increased.

It forecast that retail demand would increase as several F&B brand names prepared to jump into Viet Nam. — VNS