VIETNAM RETAIL TRENDS - 2018 · VIETNAM RETAIL TRENDS - 2018 Infocus Mekong Research Ralf Matthaes - Managing Director

VIETNAM RETAIL TRENDS - 2018

Infocus Mekong Research

Ralf Matthaes - Managing Director

GENERAL TRENDS

IFM CONSUMER CONFIFENCE INDEX

79

68

5651

82

9286

92

2011 2012 2013 2014 2015 2016 2017 2018

IFM Consumer Confidence Index 18

N= 1,897 NATIONAL

VIETNAM IS NO LONGER …. Rural or Low income ▪ Vietnam is experiencing significant population shifts from rural to urban, and from poor to

middle income class.

18

29

40

82

61

60

1996

2016

2026

Urbanization

Urban Rural

82

50

35

14

40

45

3

10

20

1996

2016

2026

Middle income

LOW Mid High

LOCATION LOCATION LOCATION▪ Vietnam’s urban infrastructure is bursting at the seems, creating new opportunities, but reducing

productivity, while increasing cost

▪ Cost of real estate is a major Achilles heel to Vietnam

200,000 new cars

on the roads

every year & new

drivers!

TV = DOWN, MOBILE & SOCIAL UP

▪ Mobile as a source of Information, mixed with Social media, has seen the highest growth, dictating viral solutions

51 52 53 54 55 56

3238

4348

53

2932

3538 42

46

2015 2016 2017 2018 2019 2020

INTERNET

SMARTPHONE

PC

Source: GSO Hanoi

SOCIAL PLATFORMS KEY COMMUNICATION MEANS

▪ Social media is a form of self expression and connectivity

35 million users in Vietnam

Youtube Vietnam has become

(#1 in APAC) 5th largest in the world

TOP SOCIAL PLATFORMS %

29

25

25

20

15

11

FACEBOOK

FB MESSENGER

ZALO

GOOGLE +

SKYPE

VIBER

Series 1SOCIAL MESSENGER

▪ 70% plus spend more than 2 hours a day on their smartphones

PRESENT DAY RETAIL & SHOPPING

VIETNAM MARKET RETAIL SIZE & GROWTH 2008 – 2018

8.9

4.33.9

9.5

7.8

66.5

1

2008 2010 2012 2014 2016 2017 2018

EST. RETAIL SPEND 2016

=US $ 100 Billion

Fastest growing retail market in Asia

FMCG VALUE & VOLUME GROWTH %

▪ FMCG growth is up in Urban Vietnam in both value and volume but only marginally. ▪ In contrast, Rural Vietnam growth is down significantly, potentially due to saturation of

the rural market after years of almost double digit growth.

9.55

3.772.74

5.2

6.7

4.86

1.21.78

2.36 2.3

2013 2014 2015 2016 2017

Urban Value / Volume Growth %

Value % Volume %

FMCG growth

Best,

MODERN TRADE MYTH

Modern Vs Traditional Trade Value Growth %

73%

22%

5%

General Trade Modern Trade

On-line

Retail Market Sales

19

2

4.3

14.215

4.2

4.9

3.8

2012 2014 2016 2017

Modern General

▪ The past few years have seen a huge drop of both Modern & General FMCG value growth in urban Vietnam. However Modern trade boomed last year with a 14% growth

4%

22%

74%

On-line

ModernTrade

GeneralTrade

On-line Modern Trade General Trade

Retail Market Sales

US $100 Billon

Most popular future shopping method

PRESENT RETAIL MARKET SPLIT & FUTURE PROJECTIONS

Share of wallet

17%

25%27%

31%

Other Smartphone On-line Modern

RETAIL DISRUPTION

Ralf Matthaes – Managing Directorwww.IFMresearch.com

▪ Average 33% growth with anticipated US $10 Billion value by 2020

1

ON-LINE GROWTH / PROJECTED VALUE (US BILLION)

30%35% 37%

2012 2013 2015

YoY Ecommerce Market growth

2.5 3.004.32

5.18

7.41

10

2012 2013 2015 2016 2017 2020

Annual Ecommerce Market Size US Billion

Note: Figures below are highly overstated. IFM

survey indicated 2017 at just over US 3 Billion

KEY ONLINE MARKET PLACE KPI’S

90

70 6763

59

6

76

41 39 41

24

5

46

14 1520

3 2

Lazada.vn Tiki.vn Adayroi.com Shopee.vn Sendo.vn Other

aware off used last 6 months favorite

1

Leads the way followed by Leads followed by

A very competitive field which is growing daily

17

88%81%

76%

61%55%

24%

5%

83%

65% 62%

44%37%

9%

4%

80% 83%73%

41% 46%

5%4%

Retail (clothes,shoes, etc.)

Beautyproducts

Healthcareproducts

Electronics Books Vehicles/Motorcycles

Others

Ever purchased at stores

Purchased at stores in P3M

Purchased online in P3M

ON-LINE VS OFF-LINE CATEGORIES PENETRATION▪ Some on-line categories in Urban already out sell off-line

PREFERRED ON-LINE CATEGORY SHOPPING

53

50

47

47

42

Clothes

Baby & toys

Books / media

Electronics

Mobile accessories

1

▪ Half of all consumer purchase clothing & baby / Toys on-line regularly

1

SUMMARY

RETAILING FUTURE SUMMARY

1

▪ Continued demand and spend …

▪ Increased demand and competition

▪ Increased cost of retail space – Location will be key - convenience will also be key

▪ Traditional still play a key role – do not dismiss

▪ Product availability and Price will be critical

▪ Consumer confidence is high…

▪ Increased urbanization

▪ Increased demand for retail space

▪ Growth of modern trade

▪ Boom of Ecommerce

Cause Effect

Location will impact Category Mgmt, Selection & Price

= a change in shopping behavior

Ralf Matthaes Managing DirectorTel: +84-8 2262-7627Mobile: +84-903-949-531Website: www.ifmresearch.comifmpanel website: www.ifmpanel.com

Email: [email protected] Dang Huu Pho Street, Thao Dien, An Phu, HCMC, Vietnam

AGLIE – ACCURATE – ACTIONABLE

Note: All sources are from IFM research,unless otherwise credited.