Aeon's Vietnam Gambit: A Retail Power Play for 2030 and Beyond

In a bold move to capitalize on Vietnam’s booming consumer market, Japanese retail giant Aeon Co., Ltd. (8267.T) has unveiled an eightfold expansion plan to transform its retail footprint in the Southeast Asian nation by 2030. The strategy, anchored in a mix of large-scale "super-supermarkets" and smaller-format stores, positions Vietnam as the crown jewel of Aeon’s overseas growth ambitions—and a critical test of its ability to scale in one of Asia’s fastest-growing economies.

The Numbers Behind the Play

By 2030, Aeon aims to boost its network of large-format stores—general merchandise outlets and super-supermarkets—from 12 to 100 locations, while expanding smaller grocery stores to 200 nationwide. The super-supermarket model, exemplified by its new 45,000 sq m Xuan Thuy store in Hanoi, combines groceries, dining, and entertainment into a one-stop shopping destination. This format is designed to cater to Vietnam’s youthful, urban population, which drives 8% annual retail growth (reaching VND4.92 quadrillion in 2024).

The financial underpinnings are equally striking. Over the past decade, Aeon has poured US$1.5 billion into Vietnam, making it its top Southeast Asian market and second-largest globally after China. Its 2024 results underscore the potential: Aeon Mall Vietnam posted a JPY4.23 billion (US$29.6 million) profit on JPY17.3 billion in revenue—a profit margin just 10.7% below its Chinese operations, despite Vietnam’s revenue being a quarter of China’s scale.

Why Vietnam? And Why Now?

Aeon’s push isn’t just about chasing growth—it’s a strategic countermove to rivals like Thailand’s Central Retail Corporation, which has aggressively expanded in Vietnam. The company’s leadership, including former Vietnam head Yasuyuki Furusawa, argues that 100 stores are the "minimum threshold" to remain competitive in a market where consumer preferences shift rapidly.

The retail sector’s health is bolstered by broader trends. A 2024 Japan External Trade Organization (JETRO) survey found 60% of Japanese firms in Vietnam were profitable—the highest rate in five years—with 56% planning further expansion. This reflects Vietnam’s dual appeal: a young, urbanizing population (60% under 35) and a government eager to attract foreign investment.

The Case for Caution—and Opportunity

While Aeon’s strategy is ambitious, risks loom. Vietnam’s economic growth has slowed to 5.9% in 2024 from 7.6% in 2022, raising concerns about consumer spending. Competition is fierce: local rivals like VinGroup and Lotte have entrenched footprints, while global players like Walmart and Alibaba-backed Shopee are digitizing the market.

Yet Aeon’s approach mitigates these risks. Its focus on hybrid "super-supermarkets"—blending physical and digital experiences—aligns with Vietnam’s tech-savvy shoppers. The company’s emphasis on sustainability, such as the VNĐ1.18 trillion (US$45.6 million) Hải Dương Shopping Centre project, also taps into government priorities for green infrastructure.

Bottom Line: Aon’s Vietnam Play is a Win-Win

Aeon’s Vietnam expansion isn’t just about stores—it’s a bet on the country’s trajectory as a regional economic powerhouse. With 100 stores and 200 smaller outlets, Aeon could capture a significant slice of Vietnam’s US$300 billion retail market by 2030. The company’s financial discipline—posting double-digit margins in a nascent market—suggests it’s already winning.

For investors, Aeon’s Vietnam push offers a dual opportunity: exposure to a high-growth economy and a proven operator in Southeast Asia. While risks like inflation and competition exist, Aeon’s profit resilience and strategic focus on urbanization make it a compelling play. As Vietnam’s middle class expands, Aeon’s gamble could pay off handsomely.

In short, Aeon’s Vietnam strategy isn’t just about retail—it’s about building a legacy in a market poised to shape Asia’s economic future.