Businesses within retail and consumer goods sectors prepare for challenging economic conditions ahead
In the face of increasing tariffs on Vietnamese goods, particularly in the textile and garment sectors, retail businesses in Vietnam are proactively adapting their strategies to maintain competitiveness.
Strong Recovery in Textile Sector
Vietnamese textile apparel producers saw impressive profit growth in the first quarter (Q1) of 2025, signaling a strong recovery in the sector. Despite concerns over tariffs, domestic consumer demand has remained resilient.
Masan Group's Strategic Shifts
Masan Group, a major player in the Vietnamese retail industry, is renegotiating interest rates on existing loans, expecting to save approximately $20 million in interest expenses over the next four years. The company is also restructuring its distribution network, shifting from reliance on major retailers to expanding direct access to small shops.
FPT Retail's Success and Expansion
FPT Retail, the retail arm of tech giant FPT Corporation, posted a 26.1% increase in revenue and a 239% increase in net profit year-on-year. The company is enhancing operational efficiency by reviewing store performance and using data analytics to improve forecasting and productivity. FPT Retail is also expanding its Long Chau pharmacy chain, investing in technology, and launching campaigns to strengthen consumer trust.
Localization and Value-Added Activities
Retail businesses in Vietnam are increasingly localizing their supply chains, particularly in key sectors like textiles and garments. The localization rate in fabric production and dyeing is expected to reach 45–50% in 2025, supported by substantial foreign investment in high-tech, eco-friendly textile manufacturing facilities. Companies are also moving away from low-value tasks towards more sophisticated stages like weaving, dyeing, and synthetic fiber production.
Supply Chain Flexibility and Diplomatic Efforts
Retailers and manufacturers are adopting a tiered and geopolitical risk-aware sourcing approach to cope with ongoing and potential future tariff uncertainties. Vietnamese leaders have sought discussions with US officials to manage the imposition of tariffs, aiming to reduce tariff burdens or delay increases.
Impact on Consumers and Importers
The increased tariffs have led to higher costs for US importers, resulting in price increases of up to 40% for shoes and 36% for apparel in short-term consumer markets. However, Vietnamese retail businesses are working with partners to ensure competitive pricing and stable supply, particularly for products vulnerable to tariff impacts.
Economic Growth and Challenges
Vietnam's industrial production surged 9.2% in the first half of 2025, marking its strongest growth since 2020 and reinforcing its role as a key economic driver. Amid global uncertainties, Vietnam is navigating both opportunities and challenges, with the total retail sales of goods and services approximating $136.7 billion in the first half of 2025, marking a 9.3% increase year-on-year.
In summary, Vietnamese retail businesses respond to tariff headwinds by advancing industrial localization, upgrading production technology and capabilities, redesigning risk-aware supply chains, and actively engaging in trade diplomacy to sustain competitiveness in 2025 and beyond.
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- To mitigate the impact of high tariffs on the finance sector, Masan Group, a significant player in the Vietnamese retail industry, is not only renegotiating interest rates on existing loans but also restructuring its distribution network, transitioning from relying on major retailers to expanding direct access to small shops, as a strategic move to saveApproximately $20 million in interest expenses over the next four years.
- As part of their efforts to adapt to the increasing tariffs, retail businesses in the textile and garment sectors are not only localizing their supply chains to reach a localization rate of 45–50% in fabric production and dyeing by 2025, but also moving away from low-value tasks towards more sophisticated stages like weaving, dyeing, and synthetic fiber production, with the aim of upgrading their production technology and capabilities.
