After Parkson, Vietnam’s retail landscape shifts in favor of new-style shopping malls

Vincom Mega Mall Smart City in Hanoi is a "new generation" commercial facility, unlike Vincom Retail's 80 retail complexes and other commercial centers. At the unveiling of the 68,000-m2 commercial center, Vincom Retail’s General Director Tran Mai Hoa remarked that this is a pioneering move for the Vincom system in developing a destination to capture the shopping trend.

This business center's artificial river and crowded booths amaze many visitors. Nearby, a 14-meter high-tech rainbow waterfall, dyed multi-colored, cascades from the 3rd floor to the 1st level, creating a lovely and romantic area.

Outmoded mall

Vincom Mega Mall Smart City's multi-experience Life Design Mall model is popular worldwide. American Dream, Mall of America, King of Prussia (USA), Central World, Siam Paragon, IconSiam (Thailand), Aeon Mall Mean Chey (Cambodia), and others have at least 50,000 m2 to build colossal areas.

Francesca Nicasio, retail expert, and Vend content strategist, proposes creating an experience to draw customers to the mall. Consumer engagement and enjoyment necessitate technology in multi-experience retail establishments.

As the difference between online and physical commerce narrows, several shopping centers have established more digital versions and operate on both platforms, like Westfield Mall in Australia.

Life Design Mall models are popular in Vietnam after Parkson Vietnam went bankrupt. Parkson's malls fell behind rivals' multi-use malls. Parkson struggles with premium and near-premium clients.

Parkson's annual studies found retail centers getting busier. New models are helping Vincom, Takashimaya - Saigon Center, Crescent Mall, and Aeon Mall increase market share and customers. The market also remarked that Bitexco and Diamond need improvements. “Bitexco must renovate and upgrade to meet customer demands for the shopping experience,” said Brian Cannon, Deputy Managing Director of Bitexco Financial Tower.

Retail expert Vu Vinh Phu said Parkson offers high-end apparel. This 10-year-old model will fall behind. Pickier consumers. Large commercial centers sell clothes, shoes, food, and entertainment, therefore people love them. Mr. Phu said Parkson departed Vietnam due of delayed reform.

Competitors learned from Parkson's failure. Savills Vietnam Retail Leasing Manager Tran Pham Phuong Quyen stated large-scale commercial center expansions are no longer important. They serve other companies, offering Vietnamese buyers more alternatives.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam, added: “Business strategy is key to mall developers’ success. Business planning, brand positioning, tenant positioning, marketing mix tools, product diversification...

According to a Jones Lang Lasalle Vietnam survey in Ho Chi Minh City, customer-focused retail complexes like Aeon Mall (Tan Phu) and Thiso Mall (Thu Duc) fill up to 92%, while others only reach 60%.

Increasing consumer demand is seen as a driving force for many brands to participate and invest. Photo: Quy Hoa

Multi-experience reigns

Japanese retailer Aeon is a typical multi-experience shopping mall investor in the new race. Aeon researched the Vietnamese market for six years (2008–2014) before opening Aeon Tan Phu Trade Center. Aeon Tan Phu was remote from the city center and evolved into a retail mall while other commercial centers followed the traditional style. Aeon names it Mori (family) next to Kaze Mall (teens) and Outlet (cheap items).

Aeon, one of Asia's major retail trade organizations, entered Vietnam. After 10 years in Vietnam, Aeon has invested over $1.18 billion in 6 trade complexes. Aeon Group Executive Chairman Akio Yoshida plans to build 20 commercial complexes in Vietnam, focused on supermarkets and entertainment.

Thai investors dominate Vietnamese retail. According to Euromonitor, Thai retailer Central Retail Corporation (CRC) has the biggest hypermarket market share with the Tops Market brand (almost 62%). This group just invested $1.45 billion to grow in Vietnam. In the next five years, Mr. Olivier Langlet, General Director of Central Retail Vietnam, wants to quadruple the number of hypermarkets in Vietnam to over 70 and develop its shopping complex business.

The World Bank estimates that GDP per capita at current prices will reach $27,000-32,000 by 2050. Brands spend due to rising customer demand. Vietnam and Thailand are two rising countries focusing on rapid growth due to good economic improvements, an increase in high-income individuals, and attitudes and habits. youthful middle-class luxury shoppers.

Nick Bradstreet, Savills' Asia-Pacific Retail Manager, believes the Vietnamese market may outperform Singapore and Thailand. These markets have the most multinational brands. They have 5-6 outlets in Singapore and Bangkok, selling H&M, Zara, Louis Vuitton, and Dior. These brands have built 1-2 locations in big Vietnamese cities. Shopping malls can erupt under innovative business concepts.

Aeon continually pursues innovative business strategies despite the estimates that investing in shopping facilities in Vietnam may take 10 years or more to pay off. Aeon Mall Hue, with 8.62 hectares and a total expenditure of about $169 million (beginning in February 2023), will become the largest commercial hub in the Central region.

Under new pressure, in the first quarter of this year, the market recorded a number of commercial centers that actively closed for renovation and upgrading. “Customers will prioritize shopping centers with reasonable tenant allocation, well-known investors in commercial center development, and know how to operate. Who are the groups of brands along with them. Trade centers refresh, change business strategies, and seize new business opportunities. That is also a good sign for the market,” commented Ms. Trang Bui, General Director of Cushman & Wakefield Vietnam.