Vietnam’s pre-lockdown period saw abnormal FMCG spending: Kantar

Shoppers inspect vegetables at a supermarket in Hanoi in April 2020. Amid the coronavirus pandemic, shopping behaviors among the Vietnamese people changed, with various retailers benefiting from this (Photo: VNA)

In the first stage of pre-lockdown, Vietnamese consumers cut down on spending in certain areas, such as out-of-home activities and luxury items, shifting their focus to basic needs, including fresh foods and essential packaged consumer goods.

Consumer spending in FMCG picked up strongly in the first quarter of this year, the consultant remarked, adding that this indicated some degree of stock-up behavior among Vietnamese consumers as social distancing measures were increasingly being reinforced to avoid exposure.

“While it may not be the same for all categories in FMCG, we can expect the market to return to single-digit growth when the pandemic is over,” reported Kantar.

Thanks to the ongoing development of large retail formats, urban consumers are making larger shopping trips, choosing more items to limit travel and contact.

Meanwhile, in rural areas where traditional channels remain important, consumers are making extra trips to pick up enough necessities to survive.

In moving toward the second stage, according to the consultant, the national lockdown resulted in the further reduction of shopping frequency given restrictions on shopping and transportation, though the volume of purchases or length of the trip might increase significantly.

Consumers focused on four main categories, with essential items, convenient foods and health-boosting and hygiene products, ranking the highest.

Besides health and hygiene products, the upsurge in cooking aids, snacks and meal replacements suggest that new habits may have formed as a result of more time being spent indoors.

Some areas of beauty care, particularly the skincare segment, have seen sustained growth as a result of flextime arrangements under stay-at-home campaigns.

Beverages continued to struggle in March. Beer, carbonated soft drinks and ready-to-drink tea were the most heavily affected categories amid the pandemic.

Channel dynamics require new retail strategy

With concerns of exposure battling against potential shortages of essential goods at home, Kantar has seen an impact on the way people shop, leading to changes in channel choices.

All channels have been achieving double-digit growth, which has not been seen for the past seven years. This implies that the omnichannel shopping trend strengthened during the pandemic.

In stocking up, consumers are frequenting supermarkets, hypermarkets and emerging channels, such as ecommerce platforms and minimarkets, while their larger purchases are made through traditional channels, including street shops and wet markets.

The consultant noted that by winning extra transactions, large modern formats, such as supermarkets, hypermarkets and even cash-and-carry stores, as well as emerging formats have outpaced traditional trade during this time of uncertainty.

During Covid-19, listing a wide variety of goods categories, brands and pack sizes can help attract shoppers to a store, as it makes consumers confident that they can get everything they need at a single store.

This became a major advantage for large retail formats, in turn driving the increase in footfall traffic. Consumers were visiting hypermarkets and supermarkets more often than ever before, with a purchase made every 10 days, on average, over the last four weeks ending March 22.

The pandemic also pushed the Vietnamese people to try new experiences. A significant number of consumers had not purchased FMCG products online or at minimarkets before and made their first transactions during this period.

As a result, both online shopping and the minimart format reached their peak in terms of shopper base versus any other four-week period.

“Though these channels had already shown good progress in Vietnam in recent years, this period presented a chance for them to further expand if new shoppers enjoyed their experience,” stated Kantar.

The firm added that understanding this and working to remove existing barriers would be key to the continued development of these emerging channels after the crisis.

Shopping behaviors are changing, with various retailers benefiting from this. Big C, Bach Hoa Xanh and Mega Market are physical retailers that saw an impressive surge during the pre-lockdown period, according to the consultant.