The Rise (or Fall) of Mall-Based Retail in Saigon
The history of shopping malls in Ho Chi Minh City is relatively brief. The country re-opened to foreign investment in the early 1990s, a time in history when inhabitants of numerous major cities in Southeast Asia such as Singapore, Kuala Lumpur and Bangkok were receiving their glutton-like shares of retail therapy via the introduction of mega malls. Investors eyed every possible inch of land in these metropolitan places, effectively holding citizens hostage by nurturing a mall-based retail culture that has, so it seems, never truly hit Vietnam, even until now.
Malls Take Over Valuable Real Estate in Saigon
The first modern ‘mall’ in Ho Chi Minh City, Diamond Plaza, opened its doors in 1999, superseding the antiquated Thuong Xa Tax on Le Loi street, built by French colonialists 136 years ago, as a retail pilgrimage spot for middle class and wealthy Saigonese. The establishment was, however, not very much different from its de-facto ancestor: effectively a departmental store with limited choices of food & beverage (F&B) establishments and recreational facilities such as an arcade, bowling alley and a billiards club.
Fast forward to 2013 where Vincom Centre began operations at the junction of Le Thanh Ton and Dong Khoi street. The arrival of a mall and office tower worthy of presence in even bigger cities signified a rather revolutionary change in retail trends in Vietnam: American apparel brands and fast food chains such as DKNY and Carl’s Jr featured as neighbours beside popular Vietnamese F&B chains including Pho 24 and Highlands Coffee. Between 2013 and 2018, numerous other notable malls such as Saigon Centre, Crescent Mall, SC Vivocity and The Garden Mall began taking over the most valuable plots of land in District 7, District 1 and District 5.
Image source: aeonmall-vietnam.com
A walk in these malls, however, easily sparks a common sentiment: most retail tenants in these places seem to be focused on F&B. In fact, this phenomenon has also sparked the birth of an indie-style retail culture in downtown Saigon, where several colonial-era residential buildings such as 42 Nguyen Hue and 26 Ly Tu Trong are now filled with independent cafes and fashion boutiques, many of which cannot afford the sky-high rental costs at larger malls.
Has the convenience of e-commerce and online shopping already beaten mall-based retail to its own game in Vietnam?
An article in April 2018 by the Financial Times stated that the Vietnamese are one of the largest sources of digital consumers, commanding a solid 35 percent of the total online population, compared to 24 percent in Thailand and a measly 3.2 percent in Singapore. Mr. Tran Ngoc Thai Son, founder of Tiki.vn, began with online sales of hard-to-acquire English language books in 2010 and has now expanded to a huge variety of products including electronics and promotional flight tickets. He shared that Vietnam is a “very young country going through a golden population period”. Incidentally, the youth are the most enthusiastic users of mobile devices in Vietnam, potentially the reason e-commerce could be a success here. Amazon is also set to enter the Vietnamese market shortly, competing directing with Lazada, the most popular e-commerce operation in the country. Chinese giant Alibaba owns 83 percent of Lazada, having injected another US$2 billion worth of investment into the company earlier last year.
Image source: Shutter Stock
However, tales of smuggled and pirated goods on e-commerce sites are not unheard of. An article by tuoitre.vn showed examples of household appliances by popular brands such as Panasonic and Philips being sold at less than 30 percent of their recommended retail prices on sites such as Lazada, Sendo and Shoppe. The origins of these items are hardly traceable. Could such problems spur consumers back to traditional shopping?
The Changing Architecture of Retail Zones
On the other end of the spectrum, the freedom to operate F&B and retail business from almost any property has turned entire residential enclaves into non-mainstream, open-spaced shopping complexes. The best example is the Thao Dien ward of Saigon’s District 2, known for its high density of villas, condominiums and international schools which mainly serve the foreigner and expat population in Ho Chi Minh City. Xuan Thuy street and its immediate surroundings at the heart of Thao Dien is now a respectable foodie haven; from an American burger bar, barbecue diner, craft beer bar to Hakata-style pork ramen, Danish sorbets and even a celebrity-level duck balut joint, a VND100,000 note suddenly becomes rather powerless in a country known for its cheap eats.
Image source: static.asiawebdirect.com
Huynh Van Banh street in Phu Nhuan district is another apt example. Known to young fashionable locals as a mecca for cheap apparel deals, one would wonder why these flamboyant youths would ever bother to sacrifice commuting convenience and low prices to shop at large and intimidating malls. One easily finds similarity to Bugis Street in Singapore, effectively a fashion bazaar built on a now-defunct street between two parallel lengths of old colonial buildings. A feasible strategy would be for the local authorities to designate certain areas in suburban Saigon for similar purposes. Nonetheless, locals may still remain skeptical unless rental rates and shopping can be kept affordable; it is unavoidable that any ‘night market’ or ‘fashion bazaar’ pop-up in Vietnam would quickly be disregarded when compared with highly successful fashion and food bazaars found in downtown Bangkok—potentially leading locals into yet another self-induced bout of inferiority complex.
Perhaps it is time for local mall operators to up the game by identifying the causes of discomfort and local aversion to physical shopping. The reliance on motorbikes as the main form of transportation is a key point that should not be ignored. Parking in malls can be intimidating to some locals; extended walking distances and searching for one’s motorbike in a large parking lot is an uncomfortable experience for many. The purchase of bulky items and groceries is also a challenge: uncomfortable and possibly dangerous.
Thank God for our hardworking ‘shipper’ guys who will stay relevant, regardless of whether malls are here to stay.
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