Cautious spending among consumers is leaving a mark on the fast-moving consumer goods segment, according to Kantar Worldpanel.
Vietnam’s economic growth continues to exhibit positive signs and CPI remains under control at 0.9 per cent, according to the latest report from Kantar Worldpanel.
“Although financial capacity has improved, Purchasing Konfidence in Quarter 2 found that urban consumers are now more cautious and even cutting their spending in the fast-moving consumer goods (FMCG) market,” said Mr. David Anjoubault, General Manager of Kantar Worldpanel Vietnam. “They have especially cut down in ‘nice-to-have’ categories.”
He added that this indicates the current market is yet to completely meet consumers’ demands and expectations. “We therefore see no lack of opportunity for growth but manufacturers and retailers need to quickly adapt to consumer changes, moving quickly towards consumer trends and actively stimulating consumer needs in the near future,” he said.
Accordingly, Purchasing Konfidence in Quarter 2 continued to fall, to 6.4 points, compared to 8.3 points in the previous quarter; its lowest point in the last two years. Urban consumers are now more conservative and cost-conscious in grocery shopping and leaning more toward savings, especially those in Hanoi.
A downtrend was more readily seen in Hanoi. The report shows that Hanoi people react later than those in Ho Chi Minh City, as the market slow-down began in the latter at the end of 2013 but around mid-2014 in the capital. Hanoi consumers even seem to be more price-sensitive and more cost-conscious now, which also happened earlier in Ho Chi Minh City, in 2013.
Overall market growth follows a “new normal” trend - moving at a sluggish pace. Yet in the short term Urban market growth is getting its momentum back in both value and volume while Rural growth is stable, in single digits.
The hot FMCG categories enjoying big increases in the 12-week period ending July 12 were canned fish in Urban and floor cleaner in Rural, achieving incremental growth in volume, mainly driven by reaching more new buyers.
Street Shops and Modern Trade have struggled while Specialty and Mini stores are emerging in Urban. In Rural, Street Shops preserved its dominance in market share and keeps growing.