(By Peter Pham) In recent years, Vietnam’s growing retail market has been attracting attention from foreign retailers. This includes several Thai corporations that see better opportunities in Vietnam than in their own country.

Thailand’s retail market has been contracting. The retail sector grew an average of 8% from 2002 to 2012, but in 2013 and 2014 it shrank 3%. Then last year it dropped another 1%. The primary reason is continuous contraction of household size in urban areas.

The upcountry consumers are regarded as conservative to brand awareness and still rely on income from agricultural activities for living, thereby not being a driver for retail sector. Therefore, besides maximizing existing customers at their homeland, several companies in this country are expanding their scope in other markets, particularly in those major cities that open new room of consumption.

Meanwhile, current domestic producers in Vietnam still inadequate to meet the increasing demand of the locals in terms of product range and quality. In addition, young generation in urban areas of Vietnam are receptive and open-minded to foreign products. Thai’s products are gaining preference from Vietnamese consumers for their high quality and appealing outlook.

Vietnam’s labor force and consumer population is young – the 15 to 64 age group accounted for over 70 percent of the population in the two-year period ending in 2016. This enviable demographic is helping to stimulate the economy, pushing the average retail growth rate for the same period up to eight percent.

vietnam population breakdown