COVID-19: Vietnam's consumer changes & retail movements

On 12 March 2020, COVID-19 was officially declared a pandemic, which is defined as a worldwide spread of a disease,  according to WHO. This is the first pandemic caused by a coronavirus. COVID-19 has now spread to 114 countries with more than 153,500 confirmed cases including 5,700+ deaths globally (according to WHO’s updates up to March 15th, 10am CET) and will greatly affect the global economy.  

For Vietnam, where it’s been more than one month since the first official announcement on 1^st February, it enters  the 2^nd phase of COVID-19 outbreak since the most recent, 17^th case. Hopes for 2020 were that the country would maintain and continue the strong GDP growth of 7.02% in 2019, however it is now less likely with the unexpected COVID-19 pandemic.

In the first two months of 2020, CPI increased by 5.91%, the highest rate over the past seven years! As a result, domestic demand on consumer goods posted a weaker performance than the same period last year with an increase of 9.8% compared to 14.4% in 2019, the lowest growth rate since 2014, according to The General Statistics Office of Vietnam.

Within fast-moving consumer goods (FMCG) industry, the widespread COVID-19 is disrupting FMCG businesses but not all categories and retailers will see a negative impact. Kantar is closely monitoring the impact of COVID-19 on FMCG categories across different shopping channels to shed light on how consumers’ behaviors are changing, to help  brands and retailers to respond to them in this VUCA (volatile, uncertain, complex, ambiguous) time.

1.    More stocking up and less socializing

Based on Worldpanel data, Vietnam’s FMCG market growth shows a slowdown in the first two months of 2020 despite 2019’s optimistic picture. Dairy, Packaged Foods and Personal Care sectors have managed to sustain growth while Beverages has suffered a decline despite this being high season (Lunar New Year aka Tet). It’s possibly explained by the lower numbers of parties and celebrations as Vietnamese people avoided socializing and gathering in a bid to reduce their exposure amid the widespread COVID-19.

In order to deep dive into the impact of COVID-19, which started from the week right after Tet Eve (the 1^st day of Lunar New Year), we have realigned the reporting period based on the lunar calendar to make the data really comparable. By looking at consumer purchase behaviors in the 4 weeks after Tet 2020 (post Tet period) compared to the same period last year – 4 weeks after Tet 2019, we are now able to see how COVID-19 has initially affected Vietnamese consumers’ FMCG spend and purchase behaviors.

*Blue line: Data period 4 weeks ending 23 Feb 2020 vs 4 weeks ending 3 Mar 2019

Vietnamese consumers in Urban 4 key cities show a tendency to stock up three groups of categories. Firstly, they spend more on categories that offer personal and family hygiene in order to remain clean and kill germs. Hand wash, bar soap, household cleaning products are all seeing double- and even triple-digit rise. Secondly, convenient foods and cooking aids also surge during the outbreak, probably due to the fear and anxiety amid the increasing number of confirmed cases as well as the extended home stay of children who haven’t been at school. Frozen food, canned food, instant noodle and cooking oil are a few categories enjoying impressive growth. The other group of categories that consumers seek for during this time is immune-boosting and nutrition products, especially for seniors and kids who are at higher risk. Therefore, specialty milk powder and drinking yogurt are more favored to stay healthy.

On the other hand, consumers are cutting down celebratory categories from their basket during the spread of coronavirus. Beverages including both alcoholic drinks and non-alcoholic categories suffer the most in this period. Beer and carbonated soft drinks are, in particular, experiencing a sharp decline.

2.    Channel movements

There are changes not only in consumers’ basket but also in their channel choice during the virus outbreak. Online shopping prevails and booms significantly thanks to the increasing number of transactions as forecasted previously. We witness more people shopping online than usual, accelerating the growth of online FMCG spend to a triple digit rate in just one month since the official announcement in Vietnam. This trend is expected to continue in the coming months especially when there has been advice  from  local authorities to shop online in order to avoid the crowds and physical contact.

With the surge in demand for protection masks and hand sanitizers among Vietnamese these days, it’s no surprise to see the robust growth of consumer spend in pharmacies and drugstores including Medicare and Guardian. More purchases of hygiene products were made in these channels as consumers’ priority for now is to protect and enhance their safety.

As the number of affected people swells, this results in panic buying among Vietnamese in some areas, especially where there have been confirmed cases. It drives demand for stock-up, leading to the notable growth of major modern retail formats including hypermarket, supermarket and minimarket which offer hygiene, product variety, and lots of epidemic supporting programs such as home-delivery, stable-price masks and hand sanitizer, farmer supporting sales, etc. Within big retail format, Big C – one of key retailers achieved the strongest performance, driven by increasing both footfall and spend per trip in its stores. MM Mega market (cash-and-carry retail model) also picks up during this time despite its downturn in recent years.

Meanwhile, shopping places most commonly used for daily needs are losing traffic as shoppers preferring “less physical contact” have fewer shopping trips but with a bigger trip size. As such, street shops – key shopping channel, and convenience stores are seeing a short-term impact caused by the COVID-19.

Food for thought

The unexpected virus outbreak remains on-going with more people affected. Economic activities and business operations have been continuously disrupted. Below is some food for thought to stay safe and strong during challenging times and to be well-prepared in the post pandemic period.

The VUCA (volatile, uncertain, complex, ambiguous) situation has been escalating very quickly in the last two months, posing challenges for all of us. In order to understand how this context may impact purchase behaviors and how brands may be able to mitigate associated risks, we are continuing to closely monitor the impact of COVID-19 pandemic across FMCG categories and retailers, on a monthly basic.

Contact us to discuss on what we can support you to deal with the crisis.

Notes to editors:

*The analysis is based on Worldpanel data, household panel in Urban Vietnam 4 key cities (Ho Chi Minh City, Ha Noi, Da Nang and Can Tho), total FMCG excluding Gift for in-home consumption.

Data period: 4 weeks ending 23 February 2020 versus 4 weeks ending 3 March 2019.