Black Friday, similarly, has been brought to Vietnam through some companies’ promotion race for a few years ago, and soon enough, this term becomes a smash in the viral media. The customers realize that they can purchase consumer goods with a 10% to
Vietnam has always been well-known for its traditional culture which has had millennia to develop its core values. However, thanks to the long-term globalization, citizens in this nation have willingly accepted the exotic tendencies, making the culture become one of the most opened cultures in the world. Celebrating Lunar New Year which is indigenous to China, using measurement system imported by French, having parties on Christmas Eve like a genuine Westerner, are only a few examples for their keeping up with the outside world. Especially for entrepreneurs who always attain a sharp business sense, they, in the quickest way, come up with the most prevailing trends and permit them to improve their marketing campaigns.
Black Friday, similarly, has been brought to Vietnam through some companies’ promotion race for a few years ago, and soon enough, this term becomes a smash in the viral media. The customers realize that they can purchase consumer goods with a 10% to 50% discount on this day while retailers believe it is a “black” day for increasing sales revenue, as “black” means the positive number in the old-form balance sheets. Therefore, Black Friday presents not only a huge potential for business promotion and growth but also a revolutionary change in consumption habits. In this article, there come seven obvious impacts, that any of them can be a threat or also opportunities for many retailers in Vietnam.
1. The price war is coming
Basically, a price war is known as a fierce competition where retailers cut prices in an attempt to increase revenue in the short-term, or as a longer-term strategy to gain market share. As soon as Black Friday become popular in Vietnam, there are more and more companies attempt to join the war.
When the fiscal year of 2018 comes to its end, many retailers have already achieved their aim of business (such as total profit, sales revenue) which is set up a long time before. However, they still remain tons of products in the inventory; and the idea of “selling as many as they can” becomes completely significant. The reason for this is quite simple because every product which they can sell will directly be recorded to the profit statement. Therefore, cutting down the price is a beneficial movement for retailers and also customers. The impact can be reported through the chart as below:
It is clear that CPI (Consumer Price Index) in Vietnam has increased for almost the whole years of 2018. Especially in February, there was a remarkable growth of 0.73%, due to the noticeable rise in the price of medicine and health care service. By contrast, it is predicted that the CPI growth rate will reach the lowest point of -0.32% in November, thanks to the Black Friday price war.
2. The increase of advertising
Along with reducing the price to attract more buyers, retailers also rocket their advertising, as it can boost brand recognition and sales. They obviously understand that one of the most fundamental principles of the retail sector is to attract people's attention through their eyes. An eye-catching banner or video sometimes is more effective than a whole marketing campaign. As a result, some extra-large retailer in Vietnam namely Big C (EB), Vinmart (Vincommerce), Co.op Mart, invest millions of dollars for searching Black Friday Ads 2018 in order to benefit from this golden opportunity.
3. The need of improving supply chain
According to the research conducted by VietnamCredit, there are two dynamics for the modern retail industry in Vietnam. Firstly, Vietnam has the second largest urban population in ASEAN (the urban population of Vietnam was 31.5 million people in 2017) and this figure is still increasing rapidly. Secondly, the GDP growth rate is stable at around 6.7% - 7.3% and consumption growth in 2017 is 7 % (recorded in the Government's annual report 2017).
Even Vietnam has a huge potential for developing a better retail system, it is notoriously difficult to meet the customers’ demand on Black Friday. The urbanization rate of Vietnam was at 34% while in the CLMV group (the four least developed countries in Southeast Asia including Cambodia, Laos, Myanmar, and Vietnam), this figure is only higher than that of Cambodia (21%) but lower than the figure for Laos (40%) and Myanmar (35%). Similarly, the retail density of Vietnam is worse than that of other countries, reported through the chart as below:
4. The quality paradox
The quality paradox is a new term provided by the VietnamCredit team of professional analysts. This is a description of a situation when a company has no further effort in increasing the quality of products. Therefore, the company leaders face more and more business problems and they decide to spend more time on firefighting, which means they come up with many temporary solutions in order to promote branding and sales. However, they have even less time and labor force for improving quality, which actually supposed to be their most consideration.
This term has totally implicated the status of Vietnamese retailers on Black Friday 2018. Obviously, many of them have only focused on their marketing campaign but ignored the fact that the quality of their products has no development for a long time. Consequently, they create a paradox called the vicious cycle of the quality:
5, The important of customer focus
The orientation of an organization toward serving its clients' needs. Having a customer focus is usually a strong contributor to the overall success of a business and involves ensuring that all aspects of the company put its customers' satisfaction first. Besides, having a customer focus usually includes maintaining effective customer relations and service program. Due to the compelling reasons above, Black Friday 2018 is one of the best periods of time that this strategy can be launched.
6, The changes in consumption habits
The emerging Black Friday trends are giving analysts a glimpse of what the Vietnamese economy of this decade could look like and the immense changes that consumption habits will undergo. As with any change on the horizon, this brings with it both intriguing possibilities and cause for concern. Changes in consumption habits have a substantial effect on business models, employment and ultimately our society. Consequently, retailers are quickly moving forward to ensure they are incorporating new operating models and ways of addressing consumer needs and expectations with the new marketing campaign.
7, The online experience
Online shopping has become a new type of retail shopping and it has now been adopted all over the world. Even this shopping method is still not as well known or accepted as in many other developing countries, the knowledge of online shopping in Vietnam is now beginning to increase rapidly. Thanks to the influence of Black Friday, customers in this country can access the most convenience modes of shopping and obtain many good deals from some national largest e-commerce companies:
- The biggest e-commerce websites in Viet Nam: Lazada which has strong parent company (Alibaba) backing it.
- The local firms that are already familiar with Vietnamese customers such as The Gioi Di Dong (Mobile World), Sendo, Tiki, Vat Gia, FPT Shop, Dien May Xanh, A Day Roi and Nguyen Kim.
To conclude, though Black Friday has emerged in Vietnam for a few years, its impacts on the economy and society still play a vital role for businesses, especially retailers. The impacts can be advantages or disadvantages, but those depend on how entrepreneurs see the world.