Retail Market 2024: Quite Optimistic but Cautious

There are many bright spots

The results of Sapo Technology Joint Stock Company's annual survey of 15,000 customers show that the average revenue in 2023 of most stores decreased by more than 30% compared to 2022 (accounting for 28.5%). However, in the difficult and volatile economic picture of 2023, there are still many optimistic bright spots.

Retail Market 2024 is Quite Optimistic But Cautious

The biggest bright spot for the retail industry in 2023 is the shift to a more sustainable business model. Some retailers have shifted from individual (unregistered) models to individual or corporate business models (down from 35% in 2022 to 29% in 2023).

The second bright spot is that the group of sellers with average revenue in 2023 at 500 million to 1 billion and over 2 billion increased by 3% compared to 2022. Although the average order value showed signs of decline (commonly below 300,000 VND/order), the group with high revenue in the retail industry increased. This shows that some sellers have successfully applied the strategy of expanding their business, selling new products and shifting to customers with better spending ability.

The third bright spot, a business model that is becoming a highlight is the billiards. In fact, business people have invested heavily in facilities for billiards in the direction of entertainment complexes, creating programs that closely connect with young customers, and creating creative and trendy content.

In addition, Sapo's survey data also shows that the trend of expanding multi-channel sales is still clearly evident: 55.4% of sellers are doing business on at least two channels - in-store and some online channels. E-commerce platforms continue to be the most used online sales channel in the retail industry.

“ Multi-channel sales are identified as a “salvation” in a volatile economic situation, with rental prices in major cities fluctuating erratically, tightening regulations on major e-commerce platforms, and changes in algorithms on social networks - affecting the marketing and product offering process of the retail industry ,” Sapo's report stated.

In addition, the trend of cashless payment is dominating the retail industry. Transfer via bank account number is the top 1 preferred payment method for sellers on social networks, websites and multi-channel sales.

Trend 2024: Optimistic but Cautious

Among the sellers participating in Sapo's survey, 75% of sellers expect the market to recover and grow in 2024.

In the retail industry, the most common plan of sellers is to expand sales channels (29.37%) to social media channels such as Facebook, Zalo (27.07%); followed by e-commerce platforms (21.96%) and TikTok Shop (20.66%).

Experts say that in the context of unpredictable world politics and unfavorable factors in the domestic economic situation, the retail industry is suffering heavy impacts. However, with the efforts of the business community and sellers across the country, along with the continuous development of supporting technology in the fields of management, payment, and transportation, the retail and FnB (food and catering industry) industries have recorded positive signs since the fourth quarter of 2023; many sellers have expressed positive confidence in the business situation in 2024.

Taking into account the opinions of sellers, Sapo predicts three trends that will lead the retail industry in 2024, including: First , expanding sales channels, bringing products to many different business platforms, and leveraging the power of online sales channels.

In recent years, multi-channel sales have shown advantages in terms of revenue efficiency and marketing costs. Following the general trend, sellers will promote the expansion of sales channels to reduce cost pressure on a single channel.

Second , shoppertainment & Edutainment (shopping, shoppers and entertainment) is an indispensable trend in the retail industry. Shopping integrated with entertainment experiences, creating digital content of an educational nature will go hand in hand with product marketing. Consumers increasingly need to consider shopping as an entertainment activity. Sellers not only convince customers to spend money thanks to product functionality but also rely on creative, attractive and engaging marketing forms. On the other hand, product marketing content increasingly needs to increase the intellectual content, be educational in nature and provide useful information to consumers.

Third , QR code payments will increasingly account for a high proportion of cashless payments. Technology companies like Sapo will work closely with the retail sector of commercial banks and financial institutions to keep up with market payment trends, providing comprehensive support solutions for sellers and buyers.

In 2024, it is forecasted that potential risks from the global economic environment will still exist and continue to negatively impact Vietnam's economic growth recovery prospects. Retail and FnB are among the few industries that can maintain growth momentum thanks to the Government's trade policies and promotion of domestic consumption. The favorable factors of the retail and FnB industries need to be proactively promoted by sellers to achieve the highest revenue efficiency.

Taking advantage of the strengths of each sales channel, being sensitive to the market, keeping up with trends, and applying technology to save human resources and costs... are ways to support retailers to continue growing their business next year.

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