Vietnam market research chronicles consumer trends

A 15 minute read.

Cimigo, the leading market research company in Vietnam, chronicles changes in consumer marketing environment with 10 major trends.  The results were presented at the Viet Capital Investment Conference and can be downloaded here.  Vietnam has changed immensely since 2005 and this Vietnam market research chronicles how that change has impacted the consumer marketing environment with 10 major trends.

10 Vietnam market research shows trends impacting purchase priorities

  1. Vietnam high income households doubled, economy tripled.
  2. Vietnam life stages are maturing.
  3. New retail chasing share before profits in Vietnam.
  4. Coffee, beer and fast service chains grow in Vietnam.
  5. Vietnam consumer health consciousness translates into action and spend.
  6. Vietnam conspicuous consumption has always been mobile.
  7. Keeping up with the Nguyen’s with consumer finance in Vietnam.
  8. Self expression is far easier and immediate now in Vietnam.
  9. Mobile drives internet penetration and habits in Vietnam.
  10. Experiences beyond ownership, now key to fulfilment in Vietnam.

Vietnam market research shows high income households doubled, economy tripled

300% economic growth over the past 11 years can be attributed to high income households and urban growth.  Between 2005 and 2016, spending on advertisements has increased 648% to US $2.0 billion, GDP per person has increased 279% to US$2,019, and the economy has increased 323% to US $186 billion.  However, there a few important statistics that explain the root cause of this economic growth.

All the Vietnam population growth has been urban

The overall population of Vietnam has grown 12% to 91 million ibetween 2005 and 2016.  However the rural population has only grown by 747,000 in that timeframe, while the urban population has grown 40%.  Currently 34% of Vietnamese population is urban.

Vietnam market research shows high income urban Vietnamese households double

Urban Vietnamese households with over US $500 per month increased 111% over the past 11 years.  That growth is less than the advertising spend growth, the GDP per person growth and the economic growth over the past 11 years.  The reality is that many households have been left behind and watched the economy being developed around them.  High income households, representing the upper and middle class, have doubled over the past 11 years.  Overall the economy has progressed at light speed, only globally matched by the exponential growth in China in the 1980’s.

Vietnam market research highlights opportunities as life stages are maturing

Vietnam is still a very young population with the largest population group being Young Single at 36.8 million or just over 40% of the population in 2016.  In 2005, the three largest population groups were Young Single (45% of the population), Young Married With A Child Under 10 Years Old (22% of the population), and Young Married With No Kids (11% of the population).  However all of these population groups experienced negative growth from 2005 to 2016 and are expected to decline into 2025.

Vietnam market research highlights how kids are setting less consumer shopper priorities

From 2005 to 2016, the three fastest growing population groups in Vietnam were Old Singles at 75%, Empty Nesters at 64%, and Married With Their Youngest Child Between 9 and 20 Years Old at 36%.  By 2025, these population groups are expected to grow 78%, 54%, and 61% respectively.  In 2005, 33% of Vietnamese households had no children; that number increased to 45% in 2016.  The Empty Nester group represents couples whose children have left the home; they have no dependents in the house and more disposable income.

In Vietnam, these empty nesters are likely be in their early 40s because people have children much younger in Vietnam than in the west.  The biggest long-term opportunity will be wealth in households that no longer have dependent children. It is amongst the silver haired over 40s in urban Vietnam, where the biggest opportunities lie over the next 15 years.

Vietnam market research challenges the changing retail environment 

Since 2005, there has been a dramatic shift in the retail environment.  From 2005 to 2016, the number of modern convenience stores has exploded from 135 to 2100, and the number of supermarkets has skyrocketed from 47 to 1035 in the same time frame.  Despite the rapid growth in outlets the modern trade share of retail sales in Vietnam, has grown only 3% from 2005 to 2016, moving to 18% share of retail sales in Vietnam (off course absolute sales have grown dramatically). Ecommerce now represents 2% of sales with traditional retail stores, largely family owned, still accounting for 80% of all retail sales.

Vietnam Ecommerce in 2005 was limited, but profitable, Vietnam ecommerce looked very different, for example Vinagame, providing scratch cards to consumers for Internet cafes or Internet games.  In 2016 ecommerce still relies on cash on delivery; however money is not yet being made on what is largely venture capital fuelled e-commerce land grabs.  Just look at Lazada’s losses and their sale to Alibaba.

Retail stores and ecommerce in Vietnam are on a land and share grab; they are hoping that staking a claim now will enable them to make good money once the consumer in Vietnam has caught up.    Providers are buying sales and transactions to gain transactional growth because they need to overcome the traditional multi-generation family business.

These family businesses know their customers and their customer’s families, have their customer’s trust, offer home delivery and maintain low overheads as they live above their stores.  Most shoppers in Vietnam do not need to get of their motorbike at traditional stores to make their desired purchase.  These traditional stores are already super convenient.

Juxtaposed with a modern convenience store in Vietnam that is well….not so convenient.  Shoppers must park, find and select their own goods. The shopper has no relationship with the store staff and will get no personal recommendation nor personal greeting.  The modern retailer is also competing for prime rental real estate, does not know the preferences of every customer, has high staff turnover amongst low paid poorly trained service staff.

The modern convenience store is not solving a shopper problem in Vietnam, they are more expensive and less convenient. Many convenient stores are morphing into fast food outlets serving drinks and empty calories to teens and young adults as they seek ways to increase basket size.  Yet most of these shoppers are snacking on the go, enjoying a seat with wifi and air conditioning, with purchases limited to two or three low value items.

Vietnam shopper behaviour is stronger in traditional retail store, multi-generation family  owned businesses, offer advantages over the modern trade.

Market research tracks rise of cafe, bar and fast service chains growth in Vietnam

The past 11 years has seen a lot of growth for hotels, restaurants and cafes.  In 2005, there were the franchises of Trung Nguyen cafes and the chains of cafe Highlands; in 2016 there are 8 cafe brands and over 160 outlets.  In 2005, beer gardens were the hot thing and the Vietnamese were drinking an average of 6.6 litres of beer per person; in 2016 multi brand beer clubs gain popularity and average Vietnamese beer consumption per person jumped to 41.24 litres.

Vietnam market research confirms health consciousness translates into action and spend

Among the top concerns of Vietnam consumers, right behind money and economic health, is health.  In 2005 consumers were concerned about food safety, ingredient content, and product content.  Consumers also had growing concerns about pollution, infrastructure stress, school capacity, and healthcare capacity due to urbanization 11 years ago.

In 2016, food safety is still a concern, but food concerns have also evolved to a popularity in organic foods, bringing back traditional Vietnamese herbs and spices, farm to table sourcing and using traditional remedies.  Organic products like Vinamilk are making statements as brand names, and stores like Vinmart have been investing in farm to table sourcing.

Vietnam market research stresses that traditional remedies and healthy lifestyles are on the rise

Pharmaceuticals have grown massively in Vietnam, being one of two Fast Moving Consumer Goods that grew in 2017.  Vietnam advertising and spend on traditional remedies has been extraordinarily high.  Most of these traditional medicine companies are Vietnam based with very long R&D funnels and products yet to be launched.  60% of healthcare spending is going to traditional remedies.

There are now more than 140 stores from 6 Vietnam pharmacy chains, including Pharmacity and Phano .  Health lifestyle businesses have also increased; there are over 120 branded gym chains that did not exist in 2005, and there are more than 150 branded health and beauty stores like Medicare, Guardian, and GNC.

Vietnam market research confirms conspicuous consumption has always been mobile

Vietnam conspicuous consumption is about status and showing off what you bought, this translates into investing in the purchases that are with you all the time. In 2005, conspicuous consumption was focused on the motorbike that you drove. In 2017, conspicuous consumption has jumped to the mobile phone that you own. In 2005, The Gioi Di Dong (Mobile World) had opened their fourth store; today they have 1,000+ stores nationwide. Other mobile phone retail chains that have expanded include FPT , Viettel and Viet Thong A. The replacement cycle for mobile phones has decreased dramatically as they become the new signal of social status.

Vietnam market research on the influence of rising consumer finance

The past ten years have seen an increase in consumer finance. In 2005, consumer finance reached 3.6% of GDP at US$1.6 billion in consumer loans; in 2015, it was an estimated 9% of GDP at US$16 billion. This growth in consumer borrowing has continued into 2017, with large consumer purchases supporting conspicuous consumption. In 2005, 6000 new apartments were sold in Vietnam, while in 2017, 59,000 new apartments were sold. In 2005, just over 25,000 new passenger cars were sold. In 2017, just over 179,000 new passenger cars were sold.

Quick approval processes for unsecured loans have fuelled the growth in consumer financing. Home and improvements account for approximately 40%, home appliances and electronics 30%, and motorbikes and cars 15%. Keeping up with the Nguyen’s is made far easier with this easy access to unsecured consumer finance in Vietnam.

Vietnam market research shows consumers spending US$700 million on US education

However, keeping up with the Nguyen’s is no longer just about the things you buy, it’s also about education. Education means getting ahead and taking advantage of the opportunities in the market.  In 2005, there were 14 premium private English language centers in Vietnam. In 2017, there are 115. In 2005, 3,000 students went to the US for education. In 2017, that number reached 21,000 students who contributed nearly $700 million dollars to the US economy.

Vietnam market research discusses the influence of social networks on consumer trends 

The rise of social networks has made self expression much easier for consumers in Vietnam. In 2005 self expression on social networks was present on Yahoo blogs, karaoke, and through football mania. In 2017, Facebook was the largest site for self expression, followed by Zalo and Instagram. The growth in internet, social media and instant messaging applications is enabling 46 million consumers in Vietnam to express themselves with emoticons, stickers, selfies and status updates.

Vietnam market research on drivers of mobile internet penetration and habits 

Changes are happening in media consumption as mobile drives internet penetration. Nationally, 54% of the population is accessing the internet in 2017; in 2005 13% of the population had internet access. Frequent online access is higher in urban areas reaching 82% and 20% frequent access in rural areas in 2017. Smartphone’s have also experienced a huge growth with up to 48% usage in Vietnam.

Mobile access to the internet is changing the habits amongst online consumers in Vietnam. Smartphone usage now accounts for 34% of online page views. For many consumers in Vietnam their first online experience is via mobile, having leapfrogged other devices.

Market research on how experiences now trump ownership in Vietnam

The final Vietnam consumer market trend shows a shift in consumer fulfilment from new brands to new experiences. In 2005, fulfilment was focused on the purchases of new brands and new durables. In 2017, consumers in Vietnam are seeking new experiences, places, and adventure particularly those which can be socially validated and shared to provide a sense of actualization.

This trend is demonstrated through leisure travel and tourism habits. In 2005 there were 16 million domestic travellers, however, in 2017, there were 57 million. International travel increased as well, with 230,000 Vietnamese going to Thailand in 2005, and 830,000 in 2017. The main drive to this trend is personal fulfilment and social validation.

10 Vietnam market research shows trends impacting purchase priorities

  1. Vietnam high income households doubled, economy tripled.
  2. Vietnam life stages are maturing.
  3. New retail chasing share before profits in Vietnam.
  4. Coffee, beer and fast service chains grow in Vietnam.
  5. Vietnam consumer health consciousness translates into action and spend.
  6. Vietnam conspicuous consumption has always been mobile.
  7. Keeping up with the Nguyen’s with consumer finance in Vietnam.
  8. Self expression is far easier and immediate now in Vietnam.
  9. Mobile drives internet penetration and habits in Vietnam.
  10. Experiences beyond ownership, now key to fulfilment in Vietnam.

We hope you feel more confident in your knowledge of consumer trends In Vietnam, stay tuned for more cutting edge Vietnam market research from Cimigo.

Richard Burrage
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