Latest report from market researcher identifies purchasing and sales behavior manufacturers should take note of.
Traditional trade is the largest channel in Vietnam both by number of stores and by sales contribution, according to Nielsen’s “Shoppers vs. Retailers - Who Should I Focus on Instore?” report released on April 9.
Five key insights were identified in the report.
First, the store front is the golden gate
There is little browsing activity in grocery stores. “97 per cent shoppers only stand outside of the store due to limited space and 98 per cent shoppers ask shopkeepers to get the products while they are waiting outside,” according to the report.
Therefore, any brand exposure such as product display or Point-of-Sale Materials should aim to land at the store front to maximize visibility, because only 55 per cent of shoppers notice images on sign boards and 53 per cent notice images on visible coolers.
Second, shoppers are gone in 90 seconds
The report shows that three out four transactions take less than two minutes. “The majority of shoppers are gone in 90 seconds, with first 10 seconds being spent on ordering, the next 60 seconds waiting for the products they have ordered, and the last 20 seconds on the cash payment,” the report calculated.
Things happen pretty fast but there’s a whole minute to capture a shopper while he or she is idle, so this 60-second period is when opportunities arise for both manufacturers and retailers, opening up all sorts of interactions, Nielsen suggested.
Third, promotions are not communicated to shoppers by shopkeepers / store owners
Only 2 per cent of consumers recognize promotions when going to traditional trade stores and just 1 per cent of retailers recommend promotions to shoppers when they come. “This should be seen as an opportunity to train and educate retailers on how to influence the shopping experience of their shoppers and maximize the shopping basket when consumers are in store,” Nielsen recommended.
Fourth, there are few retailer recommendations for shoppers
On average traditional trade is out of stock of 8 per cent of its goods every day of the year, which Nielsen estimates causes lost sales of over $500 million for manufacturers. Furthermore, only 10 per cent of retailers offer another alternative when a shopper asks for a brand that is out of stock and only 10 per cent of retailers talk about new items when shoppers are in store, the report said.
“In this case, most retailers are letting shoppers go and losing money that they should have made,” according to the report. “The concept of cross-selling is not widely utilized by retailers and needs to be shared from manufacturers’ best practice.”
Fifth, 95 per cent of purchases are planned
About 95 per cent of purchases are planned but manufacturers have a chance to increase shoppers’ basket size by partnering with usually-purchased categories, which vary from men to women.
The report said that the Top 3 most-purchased categories for men are cigarettes, food (instant noodles and snacks), and beverages (carbonated drink, beer, liquid milk), which appear 48 per cent, 36 per cent, and 31 per cent, respectively, in men’s transactions. For women, food (instant noodles and fish and soya sauce) accounts for 60 per cent and beverages (liquid milk, ready-to-drink tea) 38 per cent.
With products that are already part of destination categories, it is more critical to protect stock levels and ensure trading compliance from retailers, the report advised.
“In a market with over 1.3 million traditional trade stores, the challenge to get your products into stores is incredibly difficult. For the most part, many manufacturers have considered Vietnam’s traditional trade as one that will diminish as the market continues to evolve. However, in 2015 traditional trade fought back and in fact grew faster than modern trade for the first time in a decade, and now accounts for over 85 per cent of sales, equivalent to nearly $10 billion in the fast-moving consumer goods sector. This has turned all eyes back to traditional trade and forced manufacturers to take a step back.”
Mr. Vaughan Ryan, Managing Director, Nielsen Vietnam