What: Vietnam's retail market is set to reach USD 350 billion in 2025, driven by a young demographic, expanding middle class, and significant infrastructure development across traditional and digital retail channels.

Why it is important: Vietnam's retail evolution demonstrates the increasing importance of Southeast Asian markets in global retail strategy, particularly as young populations and rising middle classes drive demand for modern retail experiences.

Vietnam's retail sector is experiencing remarkable growth, with retail sales increasing by 9.3% year-on-year in Q4 2023. The country's demographic advantage, featuring a median age of 32 and a population of nearly 100 million, is driving this expansion. Shopping malls dominate the retail landscape, accounting for 63% of total retail space supply, with significant developments underway including Aeon Xuan Thuy and Thiso Mall Hanoi. Major global brands such as Flying Tiger Copenhagen, Genki Sushi, Franck Muller, and Victoria's Secret are either entering or expanding their presence in the market. The luxury retail segment is gaining momentum in key shopping districts of Hanoi and Ho Chi Minh City, with brands opting for standalone flagship stores to create immersive experiences. Additionally, Vietnam's digital economy is among Southeast Asia's fastest-growing, with e-commerce platforms like Shopee, Lazada, and Tiki expanding their operations. However, the sector faces challenges including legal complexities, workforce shortages, and the need for improved recruitment and retention strategies.

IADS Notes: Vietnam's retail landscape is undergoing a significant transformation, as evidenced by recent market developments. In November 2024, MM Mega Market's USD 20 million investment in Danang demonstrated international retailers' confidence in the market's potential. This move aligns with broader regional trends identified in January 2025, showing Vietnam's emergence as a key player in Asian retail growth. The market's attractiveness is further highlighted by February 2025's expansion of Korean retail giants Lotte and Shinsegae, who are implementing multi-format strategies to capture market share. However, the sector faces regulatory challenges, as shown by December 2024's suspension of Temu and Shein operations, indicating Vietnam's careful balance between digital trade growth and local market protection. Despite these challenges, retailers like Central Retail continue to adapt their strategies, focusing on tourism-centric locations and innovative retail concepts, reflecting the market's evolution toward a more sophisticated retail ecosystem.

What retailers need to know about Vietnam’s potential and challenges for 2025