Vietnam retailers see margins squeezed as expansion masks loss-making units

Fragmented data and systems prevent leaders from seeing the full financial picture.

Rapid expansion in Vietnam’s retail sector is putting profits at risk, as growth across multiple brands and stores can hide which units are actually losing money.

Speaking at the Retail Asia Summit Vietnam -2026, Pratiksha Bhanti, senior manager of Transformation – Deals Advisory at PwC, said that whilst the market has experienced “tremendous growth, especially in modern trade, e-commerce and organised formats,” this expansion often comes with hidden costs.

Rising urban rental rates, logistics disruptions due to global conflicts, and fragmented operational systems are putting pressure on margins, particularly for mid-scale and niche retailers, she said.

“But one key thing that we are observing is that many retail groups are scaling much faster than what their data, governance and infrastructure can keep pace with,” Bhanti said. “This creates a lot of profitability blind spots, which means that the leadership does not have a clear view of which of their businesses are creating value and which ones are actually quietly destroying it.”

Through its engagement with various retailers in Vietnam, PwC has observed that even where groups manage portfolios with multiple brands, the majority of revenue is typically generated by only a small subset of those brands. "The brands with lower sell-through rate typically lead to inventory build- up, which locks up the working capital,” Pratiksha said.

She pointed out that the retailers subsequently rely on heavy discounting to clear aging stock, eroding margins and consuming management time in identifying liquidation strategies.

Cash flow visibility emerges as another critical issue. Different subsidiaries used varied enterprise resource planning (ERP) systems and multiple bank partnerships, requiring the finance team to spend days consolidating statements. "The leadership does not have a real time visibility into liquidity, and base their funding decisions on lagging information,” Pratiksha noted.

According to PwC, leading retailers are responding with targeted operational improvements rather than chasing large-scale technology overhauls.

“The leadership can now take important decisions like what to buy, how much to buy, what kind of promotions to apply for, which SKU [stock keeping unit] in an informed manner,” Pratiksha said, describing how integrated profit and loss data across channels and formats enables more disciplined merchandising and inventory management.

She added that retailers are also consolidating back-office processes, standardising workflows, and monitoring fewer but clearer business-linked key performance indicators to improve operational discipline. 

Simple digital solutions, such as treasury and cash flow visibility solution with AI-powered bank statement converters and automated reporting systems, have also helped retailers regain control over cash flow and operational visibility.

“Growth without cash flow visibility is fragile,” Pratiksha said, citing the need for real-time financial insights.

Pratiksha concluded that, in Vietnam, “the difference between a good retailer and a great retailer has rarely been the strategy. It has almost always been the execution, and any issue in the execution is almost always an operating model problem.”