Modern trade stores show growth but tough times ahead

HCMC - Vietnam’s retail market has seen a modern trade evolution this year as sales through this channel grew 45% last year compared to the previous year, according to a Nielson report.
The annual Vietnam Grocery report provides a comprehensive overview of the retail market from 2006 up to now by integrating information from the full range of Nielsen research services and statistics and the Vietnamese Government.
Sales through modern trade stores contributed to total Fast Moving Consumer Good (FMCG) sales across Vietnam at 10% by the end of last year.
Asha Phillips, manager of communications and marketing of the Vietnam-based Nielsen Company, said all supermarkets, both local and international, had increased their store coverage dramatically over the last year.
“There are 394 modern trade outlets in Vietnam, up to 22% from last year. Meanwhile, the frequency of visiting supermarkets has increased in the past few years, with 43% shoppers in HCMC visiting supermarkets weekly,” he said.
The survey shows more shoppers visited supermarkets in any month in 2007, up to 3% from 2006.
Supermarkets now remain the most important channel for personal care and household products. Currently, personal care categories in particular seem to be increasing their importance in modern trade with sale contribution from 14.6% in 2007 to almost 18% this year.
According to Nielsen’s research, store accessibility is the key driver of store choice and is a key driver of Co.opMart’s success while Metro Cash & Carry is renowned for its lower price offering.
According to the survey, the traditional trade continued to play a key role in the everyday lives of Vietnamese consumers, accounting for 68% of total grocery sales. Due to Vietnamese cuisine, fresh food dominates the monthly grocery budget at 70% or US$168 per month.
Phillips said Vietnamese shoppers still see the wet market as the best outlet for freshness and price for their daily essentials. Thus, they saw shoppers using the wet markets almost daily and the supermarket fortnightly.
Nielsen said the current economic crisis in the U.S. and the global stock market uncertainty had led to consumer confidence dropping dramatically worldwide in the latest quarter in 2008.
In Vietnam, consumer confidence has also dropped to the lowest level of 96 ever since Nielsen’s Global Consumer Confidence survey that begun tin Vietnam in 2005. That compares to a global consumer confidence record low of 88.
The survey shows that due to inflation and economic burdens, around 77% of consumers claimed they have changed their store choice because of the rising prices. Consumers said they were shopping less at modern trade stores than traditional markets