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Domestic goods retain retail advantage
Viet Nam News spoke to Singaporean International Trade Alliance Inc director Amy Wee about her survey of the Viet Nam retail market.
What are the latest products to hit Viet Nam’s supermarket shelves?
The market in Viet Nam is in an upsurge, with many imported and locally-manufactured products making their way onto supermarket shelves. Unfortunately, the products that penetrate into Viet Nam are often of the same types, but with various brands. Viet Nam’s supermarkets are crowded with brands but not types, restricting Vietnamese consumers to limited choices of products.
This problem, from my experience working in Vietnamese supermarkets for some years now, is local buyers’ limited exposure to new product information and product trends. Buyers need to understand what local consumers need and study the possible products, and then make efforts to bring in those products.
For instance, with the H1N1 flu affecting global health, we could expect demand for health-related products to rise as people become more cautious about preventative healthcare.
In your opinion, made-in-Viet Nam products make up how many per cent in supermarket?
There will always be a greater demand for Vietnamese products by the Vietnamese. They’re produced by the Vietnamese for the Vietnamese and are definitely priced lower than imported products, as imported products incur import taxes and other administrative costs.
The products currently in the supermarkets are 70-80 per cent of Vietnamese-manufactured products. Sales of Vietnamese products account for 80-90 per cent. But, due to the influx of foreigners into Viet Nam and the fact that the Vietnamese are becoming more affluent, imported products are slowly but surely occupying more shelf space in the supermarkets.
With the existing economic woes globally, many importers are also concerned about bringing in new products for market trials. Though Viet Nam has lowered the import tax on some categories of goods, importers and distributors do not see a direct result in sales, because the pattern of consumptions has shifted to "buy what is really needed" while impulse buys like snacks and novelties, as well as unknown brands and products, need time for trials.
Thus, we expect to see a very slow influx of foreign products, until the economy takes a turn recovery, which I am expecting as early as August this year. Also, by the normal retail cycle, many products will be exported to serve the festive season, which normally starts in late October and runs through January.
Vietnamese manufacturers should take advantage of the current times to build a loyal body of customers by exploring more of the local market with existing or new products before imported products take over the supermarket shelves. It is crucial to keep prices low until the middle of next year as I expect the prices of imported goods to remain rather competitive.
Can Vietnamese products really compete with imported products?
The Vietnamese market is divided, with the majority of consumers still earning only an average income and buying only necessities. Competition here would be between brands and products in the same market pie. With economic woes restricting many imported products from taking the shelves, we will still see Vietnamese products leading in sales, and they may even take up more market share between now and next year.
New Vietnamese products are constantly being manufactured and new Vietnamese brands are constantly flooding the local market. But most of these products don’t achieve the desired market reach and sales due to limited promotion and advertising and ineffective sales techniques. Many Vietnamese marketers may not have sufficient knowledge of the products to convince or educate consumers.
Many supermarkets also lack the knowledge to display products in the proper categories to catch the interest of consumers, while imported products or foreign-owned brands frequently have very strong sales kits and systems to ensure market reach.
In the trend towards a more affluent Vietnamese consumer, imported products and internationally-accepted brands will become more competitive in the Vietnamese market, giving Vietnamese manufacturers a run for their money. Imported products are expected to stay competitive in pricing, so there could be a dangerous drop in demand for Vietnamese produce should Vietnamese companies not exercise stricter controls, especially in packaging and sales.
The biggest disadvantage of imported products is price. Imported products that have already established good brand names can demand a higher price as people trust these brands and consumers don’t mind paying more (maybe 5-10 per cent more). I would reiterate to Vietnamese manufacturers: there are many ways to monopolise or capture a big market share in your own market if you control product quality, manufacturing costs and, very importantly, your sales teams.
The greatest advantage for Vietnamese manufacturers is that you understand what Vietnamese consumers want and like. You can connect easily with your market and educate your consumers on your products, as there is little or no communication barrier.
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