ASIA: Vietnam To Be Region’s Fastest-Growing Convenience Market – IGD

Vietnam is expected to be the fastest-growing convenience market in Asia by 2021, followed by the Philippines and Indonesia, according to new data released by IGD.

Asia’s grocery market is the largest in the world, and is forecast to reach US$4.8trn by 2021 at 6.3% CAGR, making it equivalent to Europe’s and North America’s markets 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.

Nick Miles, Head of Asia-Pacific at IGD, said: “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.”

The IGD report said Vietnam, the Philippines and Indonesia share similar characteristics that make their convenience markets particularly ripe for growth.  These characteristics include:

  • Store expansion: The three markets are predominantly driven by an increase in store numbers, e.g. the number of c-stores operated by the top five retailers in the Philippines has more than doubled in the last five years;
  • Local players are gaining a stronger foothold: Asia’s convenience market has traditionally been dominated by Japanese retailers. However, there have been more market consolidations and partnerships and 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 such as Indonesia’s Indomaret and Dairy Farm’s Wellcome format in the Philippines have developed a successful neighbourhood mini-supermarket model – typically c.150-300 sq. m., located in residential areas, with a focus on fresh food, top-up grocery and food-for-tonight – which better cater to local needs.

Miles added: “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 to ensure they are making the most of these exciting growth prospects.”

Asian convenience market growth forecast by country 2017-2021 

Country CAGR to 2021 (%)
1 Vietnam 37.4
2 Philippines 24.2
3 Indonesia 15.8
4 Malaysia 10.5
5 India 10.3
6 South Korea 8.4
7 China 7.1
8 Thailand 6.6
9 Japan 5.5

Source: IGD Research, IGD Datacentre

NAM Implications:
  • With this combination of scale and growth your global operation are undergoing a major shift in emphasis…
  • …or should be…