The consumption of essential goods including foodstuffs, soap and detergent has increased significantly while that of luxury goods has dropped as Vietnamese shoppers respond to high inflation.
At the same time, supermarket shoppers are willing to pay more for imported goods, according to data collected at supermarket chains around Vietnam in the first half of the year.
The information was presented at a recent conference on consumer trends held by the Center for Business Studies and Assistance (BSA) in Ho Chi Minh City.
Revenues from fresh and processed food and milk products increased by 40-50 percent and those of chemical products like soap and detergent rose by 30-40 percent.
Shoppers have focused more on basic goods like detergent, dishwashing liquid and soap rather than skin and body creams, says Nguyen Ngoc Hoa, director of Co.opMart supermarket chain.
Meanwhile, purchases of garment products rose insignificantly in many stores including Fivimart and Maximark while decreasing in Co.opMart by 2 percent.
Zen Plaza, a HCMC trade center that mainly sells branded perfumes, cosmetics and clothes, saw its first half revenues drop by 3 percent.
With consumers showing a preference for price-related promotion programs, many firms have cut down on other forms of marketing including advertising and PR events.
For the first seven months of the year, the consumer price index rose by 21.28 percent.
“Foreign”, a big draw
Another development that has been noted by the supermarkets is that the percentage of made-in-Vietnam goods on their shelves has decreased by 5 percent over the same period last year.
Meanwhile, the proportion of foreign products has risen by 20-30 percent and looks set to continue.
Ngo Van Hai, deputy head of Citimart’s business department, says the advantage of lower prices of domestic products has not deterred customers from enjoying higher living standards.
Besides, imported products are more diversified and more conveniently packed, he says.
A survey by US-based advertising agency, Grey Global Group, released in late July showed up to 77 percent of Vietnamese prefer foreign brands to domestic ones.
The average percentage in Asia was 40 percent.
The agency’s “Eye on Asia” survey launched three years ago was conducted in 16 nations and territories and about 25,000 people were interviewed.
The retail pie
The number of customers at supermarkets in Vietnam rose by 10-30 percent in the first half of this year, increasing their share of the retail pie to 20 percent from 16 percent at the end of 2007.
Vu Kim Hanh, head of BSA, feels that thanks to substantial reserves, prices of goods in supermarkets were more stable than those in other markets and small stores, attracting more customers in an economy marked by fluctuating prices and inflation.
In addition, merchandise in supermarkets, previously some 10-15 percent costlier than other suppliers, is only three percent more expensive at the maximum.
Some goods are even cheaper than at other distribution channels.
Dinh Thi My Loan, general secretary of the Association of Vietnam’s Retailers (AVR), told another conference last month that the Vietnamese market is a highly attractive proposition for foreign retail giants like Tesco, Wal-Mart, Lotte and Carrefour.
Duong Thi Quynh Trang, from the Big C supermarket chain’s external affairs bureau, said regional and international producers are trying to access the market with original products, diversified designs, competitive prices, promotions, and discounts for suppliers.
In the first half of this year, total retail revenue in Vietnam reached VND447.3 trillion (US$26 billion), a 30-percent year-on-year increase, according to the General Statistics Office.
Vietnam’s annual retail sales are set to increase by 13.6 percent on average between 2008-2012, according to multinational market research firm RNCOS.
This year, Vietnam has become the world’s top retail market, according to the Global Retail Development Index report by A.T. Kearney released in June.
It ranks nations based on their economic and political risk, per capita income, market saturation and market attractiveness.
Vietnam currently boasts some 140 supermarkets and 20 trade centers.
Among its 85 million population, the nation has some 60.6 million consumers aged 15-69, according to US-based marketing research firm AC Nielsen.
Vietnam will open the market to 100 percent foreign-invested retail and distribution firms early next year as part of its commitment to the World Trade Organization.
Currently, fully foreign-owned firms are only approved on a case by case basis.
A LOOK AT VIETNAMESE CONSUMERS, BY AGE GROUPS…
Source: TBKTSG, SGTT |
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