Marketing Random

Vietnamese people spend more to drive growth


2017 was a remarkable year for Vietnam’s retail market. Excitement and optimism take place in every sector, from mergers and acquisitions, foreign capital inflows, to entry of international retailers, consumer confidence, or relative supply. hybrid, … promises a market with great potential in the coming years.

In 2017, Vietnam market rose to 6th, surpassing Singapore, Hong Kong, and Indonesia

In the Retail Development Index report by AT Kearney (Table 1), Vietnam’s retail market rose to sixth place, higher than some developed markets such as Singapore, Hong Kong and Indonesia.

This assessment is one of the proofs of the market’s growth potential. Despite being perceived as having a high level of risk and moderate current attractiveness, Vietnam is highly regarded for its low market saturation with good growth potential. Saturation is lower in both Hanoi and Ho Chi Minh City than in Southeast Asian cities like Jakarta, Kuala Lumpur and Bangkok. The aforementioned positive prospects urge foreign retailers to enter the market.

Over the past few years, Vietnam has welcomed many international brands in many different industries such as fashion, dining, entertainment, specialty stores, … of which a number of brands have achieved success. public and great echo.

Many well-known investors and investment funds also seek to enter the market through notable deals: Lotte and Aeon acquired land to develop a future commercial center in Hanoi, Blue HK fund invests 2 , $ 5 million into Beta Media and Central Group poured an additional $ 500 million for expansion.

The offering of shares (IPO) by Vincom Retail, a subsidiary of the largest investor in the country, Vingroup, in 2017 created a record of first-time sales on the domestic stock market by number. data from Bloomberg, contributing to pushing the HCMC stock index to the highest level since 2008.

What is the potential of Vietnam’s retail market?

With a population of more than 90 million people, of which 40% are under 25 years old and more than 45% are aged 25 – 54, Vietnam is one of the potential markets in the region.

With a growth rate of about 30% per two years of per capita income (GSO, 2016), Vietnam’s middle class is expected to reach 33 million by 2020 (BCG, 2013).

Moreover, these potential customers are also increasingly confident in their spending. In 2017, Vietnam achieved another remarkable milestone, which was the highest level of Consumer Confidence Index in the past 5 years, ranked 5th in the world according to Nielsen.

This index shows the potential of the retail market as well as the Vietnamese optimism and willingness to spend. In the regional context, the indexes of Southeast Asian countries are quite high, of which the Philippines is leading the world, while Indonesia is ranked 4th. This optimism is gradually turning into spending behavior.

Vietnam is forecasted to lead the Asian convenience store market by 2021 with CARG of 37.4%.

Vietnamese consumers are moving slowly from the world’s most savers to the most open-minded ones. Nielsen’s research also shows that only 63% of Vietnamese choose to save for their leisure money, 13% lower than the previous year. Lower savings mean spending on other items, including travel, new clothes, technology equipment, home improvements and outside entertainment activities, increases.

Recreational activities include dining at restaurants, going to the movies, performing musicals. This is also the consumption trend of generation Y, the pivotal generation to create the needs of the future, in Vietnam in particular and Asia-Pacific in general. This trend focuses mainly on the dining and entertainment categories. With the widespread development of the combination of shopping – entertainment and location creation, these two industries are no longer just complementary services to the traditional retail industry, but gradually become an indispensable factor in the Shopping centers, which contribute to creating an “all-in-one” destination, bring customers experiences.

Consumers value convenience, experience and health benefits

According to IGD Research, Vietnam is predicted by 2021 to lead the Asian convenience store market with a CARG rate of 37.4%, much higher than other countries in other regions such as China, Korea and Japan. Copy (CARG less than 10%). With a lower starting point, these figures show that Vietnam’s growth potential comes from a growing middle class along with a large young population that emphasizes convenience, modernity and comfort. .

The premise for this growth is the expansion of existing brands such as Circle K, which has spread rapidly in Hanoi while still having a strong presence in Ho Chi Minh City, the extensive network of nearly 900 Vinmart + stores. nationwide, or the introduction of new brands such as Bach Hoa Xanh chain. Other international brands have taken their first steps or are considering entering the Vietnamese market. The global chain 7-Eleven has opened its first store in Ho Chi Minh City in mid-2017 and the Korean chain store, GS25, will also launch in early 2018, signaling further growth in the market. this.

The retail war is increasingly fierce. Photo: Ngoc Duong / thanhnien.vn.

Besides, experience factors play an increasingly high role in consumers’ shopping decisions. Currently, customers tend to learn about products in advance on the Internet, social networks or from influencers (KOLs – Key Opinion Leaders) and then go to the store to experience.

Therefore, retailers and rental units need to combine many different channels, both online and offline to attract customers. Furthermore, in order to ensure both convenience and experience while achieving high economic efficiency, the strategy of establishing a store network is becoming more and more selective, with a handful of flagship stores in beautiful locations to bring experience to customers while promoting and enhancing brand awareness. These flagship stores are limited in number, supported by an extensive network of satellite and pop-up stores, leading to convenience and accessibility for consumers.

Another consumer trend is the increasing interest in health (exercise, health care, healthy eating). Vietnamese consumers have the highest social awareness in Asia – Pacific (Sustainable Business Report by Nielsen). This report shows that nearly 86% of Vietnamese are willing to pay higher prices for products and services from businesses committed to positively impacting the environment and society, compared with an average of 76% for the region. field. The survey also shows that sustainable development factors have a major influence on Vietnamese purchasing decisions, including high quality products (79%), healthy products (77%) and products made from fresh and natural ingredients (77%).

The Tran
* Source: Young intellectuals

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