The Covid-19 pandemic’s impact on employment will lead to Vietnamese consumers optimizing spends and looking for better bargains, according to Mr. Richard Thomas, Director of Intelligent Analytics at NielsenIQ Vietnam.
| Vietnamese shoppers seek economic or premium goods for Tet. Photo: Vingroup |
Lunar New Year, the biggest festive event in Vietnam, is a banner event in Vietnam’s fast-moving consumer goods (FMCG) calendar. Normally, its sales are 12%-15% higher than non-festive periods and close to 20% of total FMCG sales of the whole year.
Given that the country’s economy is dependent on exports and tourism, the adverse impact on the key sectors have resulted in job losses and a rise in constrained consumers in the country.
Despite toned-down celebrations, Tet will still boost FMCG sales, Ms. Didem Sekerel Erdogan, Senior Vice President, Intelligent Analytics, APAC & EEMEA at NielsenIQ, predicted. “Local manufacturers and retailers have a unique opportunity to help consumers continue their beloved festive traditions during the pandemic by anticipating and adapting to changing consumer needs,” she said.
Vietnam’s retailers and manufacturers, when planning their promotional strategies for the Lunar New Year, should focus on offering free gifts and direct discounts as the most sought-after promotions in Vietnam, according to NielsenIQ.
Impactful promotions
| A local consumer is shopping at Big C Thang Long supermarket. Photo: Thanh Hai |
According to NielsenIQ, local retailers and manufacturers invest heavily on promotions and price reductions during banner festive events such as Lunar New Year. These promotions, which are among the most effective ways to drive sales, can sometimes result in “promotional wastage” - where brands lose money because of ineffective promotions.
“There is no one-size-fits-all approach when it comes to promotions, as consumers respond differently to deals across different categories,” Ms. Erdogan said and suggested that, in order to capitalize on festive sales, brands and retailers must rethink their promotional strategies and ensure they are promoting the right products using the right mechanics and at the right price to better meet the needs of Lunar New Year shoppers.
In addition, local manufacturers and retailers should also offer special promotions on premium gifting categories such as abalone, chicken essence, bird’s nest and liquor as insulated spenders may have additional budgets to spend due to scaled down parties, open houses and celebrations.
Ms. Erodgan believes that these time-tested Lunar New Year traditions will continue during the pandemic, but they will take different forms and be smaller in scale. “We expect a rise in home-cooking, for example, as families avoid crowded restaurants for the reunion dinner,” she explained. “Smaller-sized social gatherings may also impact the sale of alcoholic beverages - with consumers choosing quality over quantity, thereby favoring premium brands.”
Spending habits will differ between constrained consumers (consumers who have been financially impacted by the pandemic) and insulated consumers (those who have been shielded from financial impact), according to NielsenIQ.
Constrained consumers will gravitate towards economic pack sizes, attractive promotions and deals, while insulated consumers may choose to indulge even more in anticipation of a more positive Year of the Buffalo, thus seeking more premium items.
