Factors Affecting the Competitiveness of Fashion Retail Small and Medium-Sized Enterprises During Digital Transformation in Vietnam

Abstract

The burgeoning fashion industry in Vietnam is escalating competition among small and medium enterprises, amplified by surging foreign investments. Despite comprising 97% of all businesses, small and medium enterprises encounter hurdles due to their limited technological capabilities, hindering their seamless integration into industry value chains. While digital transformation stands as a pivotal factor in heightening competitiveness, traditional and small-scale brands are sluggish in embracing it, thereby jeopardizing their potential for growth. This lack of consensus on the determinants of small and medium enterprises competitiveness in the fashion retail sector underscores the need for thorough research. Employing the Competence-based view (CBV) theory, our research delves into the dynamics of competitiveness for small and medium-sized fashion retailers amid Vietnam's digital transformation. Through indepth interviews with 12 managers and brand founders, a survey of 260 businesses, and data analysis using SPSS 26 software, six key factors were identified, ranked by their impact on competitiveness: R&D capability (0.266), Digital transformation (0.245), Service quality (0.215), Marketing capability (0.203), Business management capability (0.174), and Financial capability (0.15). Furthermore, our study scrutinizes how variables like scale, operational location, business age, and product segment impact competitiveness, unearthing disparities across enterprises of varying sizes. Consequently, we offer strategic recommendations tailored for small and medium-sized fashion retailers and governmental entities, aimed at harnessing the digital transformation landscape to bolster competitiveness.