Vietnamese Consumers Shift to Foreign Goods as Income Improves
Aug. 29 – The sales of local Vietnamese products have dipped by five percent year on year despite inflation while the sales of imported goods have risen by as much as 20 to 30 percent.
As living standards improve, Vietnamese are now willing to pay a premium for imported products that are better designed and packaged.
In June 2008, United States consulting company, A.T. Kearney ranked Vietnam as the the most attractive retail investment market in the world, unseating India from the top spot a year earlier
"Despite slowing economies in developed countries, the retail opportunity in emerging economies is more compelling than ever as less than 10 percent of the retail market in these countries is organized," said Hana Ben-Shabat, a partner with A.T. Kearney in a statement. "These markets will provide the engines for continued growth and profits for global retailers as sales in their home countries turn sluggish."
The company’s annual Global Retail Development Index cited Vietnam’s GDP growth, changes to regulatory structure favoring foreign investors, and increasing consumer demand for modern retail concepts as its winning traits. It went on to say that while India, Russia and China still remain attractive destinations, real estate costs and growing competition have decreased profitability and forced investors to look for opportunities in tier II and III cities.
According to market research company, TNS World-panel Vietnam, there are about 60.6 million consumers in a country of 86 million people. Those aged 20-29 years old making up 16.9 million of the population.
A recent survey by the company concluded that the country’s new consumers tend to be younger, more demanding and sophisticated. They also prefer to spend more on convenient products that cater to their health while also preferring to shop in a safe and conducive environment.
It is estimated that the number of Vietnamese consumers will increase by 70 million in 2018.
Nguyen Huy Hoang, director of TNS Worldpanel Vietnam’s high-end customer department, says more than 3,000 new products are launched annually in the country and that more people have become more brand-conscious.
Market research company, Nielsen, says that retail stores compose 7 to 10 percent of Vietnam’s retail system and their share will continue to rise. Vietnam's retail market is valued at nearly US$40 billion per annum.
For 2008, Nielsen estimates the percentage of consumers with an average monthly income of VND10 million and above, VND7-10 million and VND4-7 million will rise by 11%, 12% and 54% respectively.
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