Despite a significant decline from 126 to 117 points compared to the first quarter of this year, Vietnam is still among the most optimistic countries globally, surpassing the Philippines and Indonesia to become the world's second most optimistic county.
A combination of deteriorating job prospects, growing anxiety about short-term personal finances and a lack of willingness to spend were the culprits of the sharp drop in consumer confidence in Vietnam in this quarter. All three factors driving consumer confidence, including job prospects, personal finances and spending intentions, experienced a significant decline, with 5%, 4% and 7% respectively.
As Covid-19 has spread globally, social distancing, businesses operation suspension and increasing unemployment have reduced consumer confidence and their willingness to spend. Vietnam has successfully overcome the first wave of the Covid-19 pandemic and is in the recovery phase. However, in general, consumer confidence has weakened as the epidemic has affected their lives as well as their future.” said Nielsen Vietnam General Director Louise Hawley.
In the second quarter of 2020, Vietnamese consumers continued to rank job stability (45%, +5 compared to quarter I / 2020) and health (44%, -5% compared to the first quarter of 2020) as their two biggest concerns. Notably, there has been a sharp increase in consumer anxiety about the economy (31%, + 10% compared to the first quarter of 2020) and this is also a record high since Q2. / 2014.
According to Ms. Louise, these trends are largely predictable because Vietnam was one of the first countries to control the first wave of Covid-19 pandemic and enter a recovery phase. Therefore, health is no longer the number 1 concern of Vietnamese people in the second quarter.
However, the pandemic will have a long-term impact on the economy and consumer confidence, leading to feelings of job insecurity and hesitation in spending.
This quarter, life-work balance dropped a notch in the list of concerns with less than a quarter of consumers indicating that this is what bothers them. Meanwhile, despite trying to manage the spending of electricity and water, due to staying at home all the time, consumers are forced to pay more attention to the increase in utility bills (8%, +2 % compared to the first quarter of 2020).
Globally, consumers in the Asia-Pacific region are true money savers. In the previous quarter, with a slight increase (69% to 72%), Vietnamese people were regarded as the most economical consumers in the world, followed by Hong Kong (68%) and Singapore (65%). In the second quarter of this year, Vietnamese admitted that they spent less than the previous quarter.
Plus, it is not surprising that Vietnamese consumers spend less on travel (-6%) and outside entertainment (-6%) than in the previous quarter.
Social distancing to prevent the Covid-19 pandemic has created a domino effect, with businesses such as hotels, bars and restaurants stopping operation temporarily or permanently. At the same time, consumers' purchasing power is also declining because there are fewer spending opportunities than before. In addition, the consequences of staff cuts and job instability have increased concerns about income as well as finances of households.
Ms. Louise Hawley explained: “Even if we have all seen a rebound in recent months, consumer demand remains low and the further effects of a decline in spending will be more and more apparent in the coming weeks. In addition, the fact that consumers are reducing the frequency of visiting stores, restaurants and many other offline locations, combined with financial concerns is the cause of limited spending on things like entertainment, new clothes and eating out”.
Going against the trend, new technology products occupy third place in the list of things consumers choose to spend their spare money on (37%, + 1% compared to Q1 / 2020). "Having more time at home and technology playing an essential role in everything like education, work and entertainment, have created a high demand for new technology products." Ms. Louise added.
>> A glance at Vietnam’s consumer behaviors amid COVID-19 outbreak