Online shops declare war with traditional shopping malls

VietNamNet Bridge – The existence of shopping malls has been threatened by the rise of online shops.

JC Penney and Macy’s, two large retail chains in the US, have announced they will close some of their shops. The robust development of e-commerce in the digital era is believed to be the reason behind the retailers’ decisions.

In China, Li Ning, the sportswear manufacturer, is expected to take a loss for the third consecutive year. It has closed 1,000 shops since 2012. Anta Sports has also shut down many shops, partially because of e-commerce.

The collapse of the traditional retail model?

In Vietnam, analysts say, shopping malls have also been threatened by online shops. According to CBRE, a real estate service provider, 25 percent of polled consumers said they plan to shop less at traditional shops, while 45 percent said they would shop online more regularly in the next two years.

Older people tend to like doing their online shopping more than younger customers, with 69 percent of consumers aged 55-64 planning to buy more non-food goods through their smartphones and tablets.

The 2014 e-commerce report released by the Ministry of Industry and Trade (MOIT) showed that the total revenue of 217 e-trading floors in the year reached VND1.662 trillion, a twofold increase over 2013.

However, this means that every trading floor gained VND7.7 billion on average only, a very modest figure, which shows that online shopping in Vietnam is in its early development stage.

A survey by Google and MOIT showed that there are 35 million internet users in Vietnam, 56 percent of whom have bought goods online, while 34 percent are willing to buy online.

Direct online sales to continue

Though admitting the strong rise of e-commerce, which has become a formidable rival to traditional retail, analysts believe it is still too early to talk about the “doomsday” of the traditional retail model.

A branding expert noted that “seeing is believing” is a principle that all Vietnamese consumers follow. They would rather go to shops to select goods themselves rather than stay at home and place orders through computers.

He believes that it would be a wise move for retailers to boost sales through both traditional and online shops.

Duong Thuy Dung from CBRE Vietnam noted that though prospects for traditional commerce are still optimistic, retailers have begun spending money to develop online sales.

Vingroup, a multi-field group, after jumping into the retail sector, has set up VinE-com, to create an online retail channel which distributes Vingroup and its partners’ products. The Gioi Di Dong, the largest mobile phone distributor, has also said it would try to increase online sales.

Duy Anh

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