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Who dominates Vietnam’s supermarket and hypermarket segment?

Who dominates Vietnam’s supermarket and hypermarket segment?

Tuesday 21, 07 2020
While the hypermarket segment has seen the dominance of foreign brands, Vietnamese brands have shown their influence in the supermarket segment.

Vietnamese prefer big and established brands

In addition to prioritizing household name products, consumers also tend to opt for alternatives when their desired products are not available. Among Southeast Asian countries, Vietnamese consumers are leading the trend of purchasing products from established brands (brands that are widely accepted for their long-time existence).

54% of Vietnamese consumers surveyed said that they would choose products from brands that have stood firmly in the market, especially in recent months. This is much higher than the rates in other Southeast Asian countries such as Malaysia (45%), Thailand (43%) or Singapore (40%), according to a recent report from Facebook and Bain & Company. This trend is driven by the fact that established brands have strong consumer trust and huge supply chain, ensuring that their products are always available.

The preference for popular brands is more clearly reflected in well-known supermarkets and hypermarkets. These are the two channels that have been more popular among consumers in the past few months as the Covid-19 epidemic broke out because of the availability of products, the price and the frequency of payment.

Vietnamese consumers go to supermarkets and hypermarkets more often

Prior to the Covid-19 pandemic, the supermarket segment in Vietnam had been stabilized in terms of number of stores as well as floor space. In 2019, sales of this segment decreased slightly by 0.2%, according to the report "Vietnam's retail industry: Fast shift to multi-channel sales model" of Deloitte Vietnam.

Prior to the Covid-19 pandemic, the supermarket segment in Vietnam had been stabilized in terms of number of stores as well as floor space.

One of the reasons for the decline is the location of hypermarkets, which is normally far from residential areas as this model requires large space while rents closer to residential areas are really high. Along with that, urban consumers often prefer supermarkets and convenience stores because of its more accessible location. Buyers often only go to hypermarkets when they need large quantities.

The key players in Vietnam’s hypermarket segment are mostly foreign brands, including Big C, Lotte Mart, AEON and E-Mart. In particular, Thailand's Big C currently holds the "crown" with 57.6% market share. Meanwhile, the supermarket segment is dominated by domestic brands such as Saigon Co.op and Bach Hoa Xanh, which held 43% and 14% market share last year, respectively.

According to Deloitte, the continuous growth of the supermarket segment over the past four years has come primarily from a deep understanding of the local market of local brands as well as their own branded products which have become more popular.

In the context of the Covid-19 pandemic, the development of large modern forms of commerce, including supermarkets and hypermarkets, has surpassed the traditional model thanks to the variety of products, brands and size. This makes it possible for consumers to buy everything they need in one place, reducing travel and exposure, thereby reducing the risk of infection.

In addition to in-store purchases, retailers are also seeing increased demand for other channels. For example, at Saigon Co.op, telephone orders have increased by 4-5 times while access to its e-commerce platform has increased by 10 times since January. This fact signals the shift of consumers to more multi-channel shopping, and this behavior is expected to continue even when the Covid-19 pandemic is under control.

According to Nguyen Tien Dzung, Senior Director of Retail Measurement Division of Nielsen Vietnam, there is no denying that there will be huge changes going on in certain fields as a result of the Covid-19 crisis. However, in the FMCG sector, although consumers may delay travel or movie tickets, they still need basic products such as toilet paper or carbonated drinks.

The FMCG represents common consumer behaviors. While there is a difference in the way consumers shop, the size of the goods, where they buy and where they store, the underlying needs and the way consumers use the product generally have not changed much, Mr. Dzung assessed.

The consumer confidence index in the first quarter of 2020 of Vietnam remained high, standing at the 4th position in the world, which indicates an increase of 1 point compared to the last quarter of 2019. This helps increase expectations on the rapid recovery of purchasing power.

>> Vietnam’s retail market 2019 in a nutshell

Source: theleader

Vietnam Economy

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