What do today’s Vietnamese consumers think?
Vietnamese consumers are changing their thoughts, perceptions and behaviours. So what?
Vietnam is one of the most dynamic countries in the world, in fact, it’s two key cities Ho Chi Minh City and Hanoi were last year named in a list of the top ten cities that have successfully embraced technological change for growth, according to JLL City Momentum Index 2017 and World Economic Forum.
With the rapid evolution of technology and the Internet, consumers are changing their thoughts, perceptions and behaviours. Today's thoughts will not be the same as yesterday’s ones; today's behaviours may be different from before. As such, current brands and products could find themselves obsolete and off the shelf if they don’t adapt and evolve too. Moving fast to understand and capture changes in consumer demands is crucial for any business to grow sustainably.
So, how different are consumers Today versus Yesterday? What should you be watching out for?
Let’s start by asking: “Where are Vietnamese consumers?” The answer is simple…Online!
According to Google, 8 out of 10 Vietnamese consumers are online at least once a day! (Google – The connected consumer survey 2015) making us all NETIZENs and this increased connection is arguably the biggest impact on consumers lives in Vietnam.
It is true that Internet accessibility has increased in Vietnam to include 94 per cent of urban households and 69 per cent of rural households. If the trend of internet accessibility in last five years continues in the next five years, nearly 100 per cent of Vietnamese households will be connected to the internet! Consumers, nowadays, increasingly depend on and spend more time online for various purposes such as connecting with others via social networks, listening to music, watching online videos and movies or studying.
Today’s Vietnamese consumers are also more familiar with shopping online especially among high-income group and Millennials, and online shopping is growing rapidly! With advertisers getting smarter with their use of programmatic targeting combined with an increasing digital agility and increasing trust in mobile platforms from consumers then we can expect E-Commerce to grow exponentially in the coming years. That said, E-commerce market in Vietnam is still at the very early stage of development and it needs the appearance of big players to bring the knowledge, know-how and expertise. Question is who will grab that opportunity?
Even before they make a purchase, consumers are using the internet for searching information on the products they are considering to buy - as a result, “smarter” is a suitable word to describe today's consumers in Vietnam.
Higher purchasing power breeds greater aspirations, but it does not mean that consumers will spend uncontrollably. Over time, we have seen that households tend to save a greater proportion of their total income for the future and with interest rates in Vietnam still relatively rewarding, it is understandable. Anyone selling any consumer good is now having greater competition, within a smaller pie and according to Kantar Worldpanel Vietnam’s latest Lifestyle Report, it is now harder than ever for new brands and products to gain consumers’ trust and be picked up from the shelf.
The spread of Internet means that today’s consumers can access to a wealth of information from numerous sources and catch up latest trends from different perspectives. Could this be the cause of the increased scepticism in the claims made by products, and the advertisements they see? Gone are the days when manufacturers TV advertising could be enough to sell their products. Building trust is paramount, but it is getting harder with now only around a third of consumers in Urban or Rural Vietnam stating they believe in benefits claimed by products, or that they like to buy and try out new products!
In store activations and even word of mouth is less able to convince shoppers to try something new. By being connected to the Internet via smartphones and other modern devices, people now proactively search, select and evaluate sources and product information by themselves. Just click! They can see the product, compare prices, and read reviews from reliable and trusted Key Opinion Leaders (KOLs) or even talk directly to shop owners to get their recommendations through chatbots before making their own decision. Furthermore, trial and product test by sampling or activation are also expected to help aid informed decisions. All this implies that assessing and investing on the most influential touchpoints is pivotal in building consumers’ awareness, first purchase and on-going loyalty. How do they differ for your categories, and your shoppers?
With rising incomes and a growing middle class, cross border shopping is another trend which is developing. A lot of international brands start to see the Vietnam market as a great opportunity for them to roll out their brands / concept and increase their sales. Today, this is happening in a lot of industries such as fashion with many international brands moving into Vietnam and in fast moving consumer goods markets (FMCG).
Today, more Vietnamese consumers prefer international and imported products. Most Vietnamese consumers claim that international products are generally of higher quality and they are willing to buying international brands if the price is the same as the local ones. Moreover, the country of origin is also an important factor to consider when they purchase international brands. This is not just a matter of perception, 2016 witnessed an impressive growth of imported products into Vietnam, especially from Asian countries such as Thailand, Korea, and Japan. Within FMCG, international Confectionery brands, international Dairy products or imported Personal Care products are more chosen by Vietnamese consumers, according to Kantar Worldpanel’s latest Brand Footprint study. Expect local brands to fight back!
More foreign brands can penetrate the Vietnam market thanks to the proliferation of foreign retailers who are entering the Vietnam market such as Emart, Aeon Mall and most recently 7-Eleven which drew out crowds of people for their grand opening. Each has their own plan to expand widely with more store openings that will make more international products more accessible. With more foreign products more accessible to the masses in modern trade but also in more traditional specialty stores, this represents a threat to the development of local products in Vietnam.
Above all else, health remains Vietnamese’s top concern! Consumers are getting more knowledgeable over time and “Health” today is not only about physical health, but also covers nutrition, food safety, hygiene and disease / sickness prevention especially amidst increasing levels of environmental pollution and food scandals. Consumers turn their concerns into actions with those shoppers caring more about their health purchasing more ‘healthy’ products like Isotonic Drinks, Fortified Biscuits, Calcium Adult Milk Powder, Sensitive Toothpaste, Hand wash, Shower Gel and household cleaning products and quickly moving away from brands and categories suffering from food scandals.
In addition, today’s consumers are more conscious about their appearance and weight. They choose more products with natural and safe ingredients or with no/ low sugar, fat, calorie, or cholesterol and do more exercises to keep them fit. There appears to be plenty of appetite for ‘nutritional’ products such as Soya Milk and Drinking Yogurt which we can expect to develop further in Vietnam.
“Vietnamese consumers raise a lot of talking points; brand owners find it hard to keep up with their modernized lifestyle, independent decisions and demand for product sophistication. Such complexity requires a prompt move in developing on-trend products, making a better call for action and talking to shoppers at prevailing touch-points.” Fabrice Carrasco – Managing Director of Kantar Worldpanel Vietnam | Philippines & Asia Strategic Projects Director commented.
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