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Viet Dragon Securities identifies consumer megatrends

Released at: 19:10, 17/06/2019

Viet Dragon Securities identifies consumer megatrends

Photo: Viet Tuan

Three major trends in Vietnam's consumer market to 2030 detailed in latest research.

by Minh Do

Three major trends in Vietnam’s consumer market to 2030 include a desire to experience more, connected consumers, and premiumization, according to the latest research from the Viet Dragon Securities Company (VDSC) released on June 14.

Vietnam’s consumer market has always been attractive due to supportive demographics, economic growth, and a high urbanization rate. As Vietnam’s real GDP will likely grow by 91.4 per cent during 2019-2030, consumer expenditure will also rocket.

By 2030, 46 million urban consumers will spend some $169 billion while 61 million rural consumers will spend $173 billion.

More importantly, the middle class - the foundation of consumption - is rising fast. In 2030, 49 per cent of households will have an annual disposable income of $5,000 to $15,000, an increase of 33.8 per cent against 2018. This creates huge opportunities for companies that can adapt to market changes.

The following are some major trends in Vietnam’s consumer market, according to VDSC.

1/ Experience more: People nowadays do not want to go to stores just to buy stuff, as they can do it online. Instead, they choose offline over online for an experience online shopping can’t offer. For example, enhanced products and services, creative in-store experiences with arts, and in-depth consulting from staff, among others. Though price-sensitive, Vietnamese are still willing to pay more for an experience.

% of consumers saying they prefer to spend on Experience over Things

2/ Connected consumers: Consumers, especially young people, are attached to mobile devices and social media and are adapting to online purchasing. With over 50 per cent of the population having access to mobile internet, social media plays an important role in promoting products in Vietnam.

Moreover, search and reserve platforms such as “food delivery” and “house-keeping services” can help companies acquire potential clients and enhance customer convenience.

On the other hand, Vietnamese still prefer shopping online only for low-priced items, since e-commerce platforms are not yet developed. As such, omni-channel retailing, which combines flexibility between channels, is an optimal means for companies to maximize sales.

3/ Premiumization: The rising affluent class (estimated to reach 10 million in 2020, compared to 2.6 million in 2012) has also boosted huge demand for “Premiumization”.

Consumers increasingly need to express themselves and want to be distinct from others through “personalized” products. This demand is not only limited to the luxury segment with high-income consumers - companies that can provide “premium” or unique products and services at affordable prices will also benefit from this trend.

For example, Xiaomi created a Mi ecosystem for Mi fans, including high quality products at low prices, while The Coffee House chain offers a “premium-feel” coffee space at reasonable prices.

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