Tuesday,  Oct 23, 2018,17:44 (GMT+7) 0 0
Consumers’ fast-changing needs, expectations challenge local FMCG sector
By Thanh Thom
Monday,  Jul 16, 2018,18:33 (GMT+7)

Consumers’ fast-changing needs, expectations challenge local FMCG sector

By Thanh Thom

A shopper walks past the canned milk section at a store in HCMC. The main challenge to the growth of the fast-moving consumer goods (FMCG) industry is the rapidly changing needs and expectations of consumers - PHOTO: THANH HOA

HCMC – The main challenge to the growth of the fast-moving consumer goods (FMCG) industry is the rapidly changing needs and expectations of consumers, stated market research firm Kantar Worldpanel Vietnam in a new report.

The report noted that the retail sales of consumer goods kept growing steadily at a double-digit rate. The local demand for consumer goods, the performance of the industry and service sector and exports have been the main contributors to economic growth during the first five months of this year.

However, in line with the global trend, achieving growth in the FMCG industry is becoming more difficult, the report revealed, adding that the FMCG market is growing slowly in both urban (Hanoi, Danang, HCMC and Can Tho cities) and rural Vietnam, posting modest growth.

The frequency of shopping by consumers has reduced, with fewer categories of products in their shopping basket, which has led to a lower volume of in-house consumption.

Personal care and beverages are leading the growth in both urban and rural areas. Other sectors have experienced a negative performance, including dairy, the sector with the most potential in rural areas, following flat growth in this area.

However, even with a more challenging environment, two trends still prevail: convenience and health. Both of these present opportunities for future growth. Despite the slowdown of the entire FMCG market, categories capturing these two trends can sustain growth, such as rice soup, cream desserts and boxed tissues.

In the four main cities, liquid detergent continues to remain popular by adding incremental buyers to its customer base. The liquid detergent segment has become polarized as one group moves toward low-cost products, while the other group is inclined toward high-priced products.

Therefore, Kantar Worldpanel forecasts that the pricing strategy will play an important role for brands in winning over their target consumers within this format. Rural areas present a major opportunity in paper products, especially table napkins. More and more consumers are expected to make purchases in this category, thanks to its convenience and hygiene function.

Meanwhile, 2018 seems to be another year of speed, experience and value for money, which fits the concept of modern trade, with a growth rate of 15%, according to the market research firm.

However, the supermarket format has witnessed a slowdown. This may be explained by its competing position with mini stores and online shopping in terms of speed and convenience and with hypermarkets in terms of good deals and shopping experience.

Online shopping, especially in the health and beauty sector, has grown exponentially from a small base as new shoppers continue to be added. Vietnam’s retail sector promises many changes in the near future.

The report further explained that consumers today are not only focusing on their basic needs but are also moving toward new goals. They have the tendency to cut their budget for grocery expenditure to divert funds to non-FMCG items. People are getting busier and go shopping for FMCG less often.

As a result, there are now fewer occasions for categories and brands of products to be picked up off the shelf.

However, the growth opportunities are still prevalent, with more “real” innovations in the FMCG market, secondary cities and rural areas; the fast-changing retail landscape; and new retail formats in Vietnam, according to global experts in shoppers’ behavior.

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