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Trends in retail market
As many consumers, because of the current economic situation, attach importance to practical demands, new consumption trends have appeared.
Practical shopping
At a recent workshop on consumption trends, reports revealed that the priority in household shopping in the first half of 2008 was given to basic goods like food, milk, detergent, etc.
As a result, revenue from fresh and processed food and detergent at all supermarkets grew by 40-50%. Turnover from other household wares like kitchen tools, garments, etc. increased or declined slightly.
Familiar brands no longer attracted loyal customers, but low-cost products. Consumers also curtailed their spending on luxurious products like perfume, cosmetics, high-grade fashions.
Supermarkets, hence, have made changes in the displaying of goods on their shelves, by giving more space to practical and basic goods. For example, they give priority to chicken rather than pork and beef since the price of chicken hasn’t increased as much as those of pork and beef; egg and low-cost seafood instead of expensive canned food, etc.
For chemical and cosmetic products, supermarkets devote more space to popular products like detergent, soap, dishwater while narrowing the space for face cream, body lotion, etc.
Chu Hoang Thai, manager of Parkson Saigontourist Plaza, said inflation has partly influenced Parkson’s income.
“Parkson targets fairly-high-income and high-income earners and among products sold in Parkson, some still see satisfactory growth, so in general, our income has declined, but negligibly,” he said.
Imported commodities favoured
Canned food from France, confections from America, jam from Italy, etc. are displayed in special stalls inside supermarkets in HCM City’s centre, Phu My Hung and new residential areas where there are many foreigners.
Supermarket managers say the ratio of Vietnamese products sold in supermarkets has fallen by 5% year on year while those of imported products has increased by 20-30% and will increase further at the year’s end.
Explaining this fact, Ngo Van Hai, business manager of Citimart supermarket chain, said the advantage of locally-made products – low price – isn’t an advantage over foreign products anymore, since they can’t compete with foreign goods in terms of designs, variety, especially as the incomes and living standards of Vietnamese people are rising.
According to Hai, standards about price, lifespan, quality sometimes are not as important as design, colour, etc. of products when consumers choose goods.
The shopping habit of Vietnamese consumers is the reason for the flooding of foreign goods in the local retail system. Moreover, the potential of the Vietnamese retail market is also attractive to foreign goods.
In 2007, the US’ A.T Kearney consulting company ranked Vietnam’s retail market 4th position in the world for attractiveness. This year, Vietnam, with over 60 million consumers, is first.
The $50 billion pie
Nielsen, a reputed market research company, said modern retail shops account for 7-10% in Vietnam’s retail system and this rate will quickly increase. On average, consumers in Hanoi and HCM City go to supermarkets once or twice a month. The most popular products that they buy there are shampoo, toothpaste, cleansing milk, food and fresh milk.
Dinh Thi Loan, Vice Chairwoman and Secretary General of the Vietnam Retailers’ Association, said the Vietnamese retail market is very attractive to giant retailers like Tesco, Wal-Mart, Lotte and Carrefour.
“Vietnam has a large population, young consumers and a yearly retail turnover of nearly $40 billion, plus the top position in purchasing hi-tech products. Our retail market will surely see the coming of many big groups after January 1, 2009,” Loan said in a recent workshop in Hanoi.
She said in the first half of 2008, the total retail turnover of goods and services in Vietnam reached VND450 trillion ($28.125 billion). According to experts, by 2010, Vietnam’s retail turnover will exceed $50 billion.
For this reason, Duong Thi Quynh Trang, PR manager of Big C system, said regional and international retailers are trying to access Vietnam’s retail market with new products with diversified designs and competitive prices, plus promotions and preferential payment conditions for distributors.
The retail market in Vietnam is in the initial period of development and it will see fast development in the near future, following the trend of countries in the region.
There are some changes in shopping behaviours and subjects. In late July, Parkson C.T Plaza was opened in HCM City, targeting high-income earners in the districts of Phu Nhuan, Tan Binh and Go Vap districts as well as passengers in and out of Tan Son Nhat Airport.
According to Tran Kim Chung, Chairman and President of C.T Group, under the modern shopping trend, shopping centres must go with entertainment, culinary services, etc.
Nielsen recently released its analysis of Vietnamese consumers. Accordingly, the number of consumers who have average monthly income from VND10 million upwards accounts for 11%, from VND7-1 million – 12%, VND4-7 million – 54%. Meanwhile, the numbers for 2007 were 8%, 9% and 39%, respectively.
The $50 billion pie is now being eyed by giant foreign retailers, and they will especially be salivating over it after January 1, 2009 when Vietnam completely opens its retail market under WTO commitments.
VNN
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