Vietnam’s potential future market - More exciting, fast growing and challenging

Vietnam future market will be driven by the optimistic, but value conscious consumer base. Rural consumer base is another key driver for the future economy of Vietnam as the urban market is becoming more saturated.

Consumer behavior

Vietnam consumers are at the transition phase between traditional and modern, technological savvy lifestyles, giving opportunities for e-commerce and modern retail businesses. Vietnamese consumers remain optimistic of the future, despite the increasing cost of living. Consumer confidence index record the highest level in Q1, 2016.

However, although optimistic, Vietnamese consumers remain conservative in their spending and focus more on spending that help securing the well-being of their families. Vietnamese consumers on average spend 10-12% of their salary on children education, and the pharmaceutical industry records 20% year-over-year growth, as well as household products also see an upswing in spending as reported by 50% consumers.

FMCG is becoming saturated at 2-3% annual growth.

Retail landscape

Convenience and Modern Trade will see tremendous growth in the coming years as preferred shopping places (300% convenience channel growth). The growing awareness in food safety & hygiene will make consumers become more cautious in choosing shopping places and consequently switching to safer channels.

Promotion is likely to remain a big factor affecting consumer buying decision. Comparison among supermarket operators show that Saigon Co.op and BigC stands together as having best offers for consumers, while VinMart and FamilyMart has the best offers among operators in the convenience channels.

Consumer media usage

Consumers are spending more time on smartphone and internet devices than on television and traditional media. As 77% survey respondents have used smartphones and 57% of whom spend 3-4 hours/day using smartphones.

However, although consumers are watching less TV, annual TV advertisement spending remains high at 1.7 billion USD (90% total advertising spending, with 10% year over year growth). The underlying reason for the high TV advertising spending as speculated is that advertisers and companies are still unfamiliar with digital advertising and is spending on habit. But the inevitable trend for advertising in the future will be digital as the younger generation move up and become the majority in the consumer base.

E-commerce in Vietnam

To touch on the e-commerce sector, it is highlighted that although there are many challenges and issues with the e-commerce sector in Vietnam, the future will be positive.

Vietnamese consumers have strong wish for value for money, variety of choices, shopping experience, but generally lack of trust in products. Trust is very low for e-commerce in Vietnam, similar to the USA 20 years ago. But there has been significant increase of trust in the last 4 years. Price is still the key drivers for e-commerce shopping, while convenience is not yet a key driver as it should be.

E-commerce businesses are looking at how to serve rural consumers better, as they see that rural consumers will be the one that get the most benefits from e-commerce as they will have more options and accessible to products otherwise not available to them. The development challenge for e-commerce businesses is how to fully sync the shopping flows (buy anywhere, return anywhere). Delivery-wise, motorbike with the high flexibility and suitability to the urban landscape will continue to be the main type of delivery vehicles.

Rural market development

The importance of the rural market is also paramount, and as the current speed of rural development is too slow for e-commerce, many e-commerce businesses have to develop their own logistics network spanning key provinces and cities in Vietnam, and perhaps much more in the future.

Experts also agreed that rural areas will be more and more important for Vietnam. Large companies should be the pioneers to invest and build the market in the provinces.

By : Mr Julien Brun, General Director at CEL Consulting

Saigon New Day - Thanh Nien Publishing House

Từ khóa : Thị trường tương lai,Julien Brun,CEL Consulting