Enterprises strive to boost consumer demand

It is only a few days left until the end of the first quarter of the fiscal year 2021, according to many enterprises, the purchasing power at this time decreased by an average of 15-20 percent compared to the same period last year. It is forecasted that the purchasing power in 2021 will not be better than that in 2020 because of many reasons.
Enterprises strive to boost consumer demand ảnh 1 Customers go shopping at a supermarket in Ho Chi Minh City. (Photo: SGGP)

Not meeting expectations

The year 2020 was a year full of difficulties and challenges for most Vietnamese enterprises due to the impacts of the Covid-19 pandemic, prolonged natural disasters on a large scale, which caused a decline in the purchasing power. To catch up with the purchasing power in 2021, enterprises have prepared a large volume of goods to supply the Tet market - this "golden month" accounts for 30 percent of the total revenue of enterprises, which can explain why enterprises put so much efforts and large investment for it.

At the end of the Tet production and business season, some key enterprises said that the consumption of goods only reached about 70-80 percent of the plan, much lower than expected. Mr. Truong Chi Thien, Director of Vinh Thanh Dat Joint Stock Company, shared that the entire reserve of poultry eggs has not been used yet. Right after the Tet holiday, the company has had to implement several solutions, such as intensifying processing and running promotions, to completely clear the inventory.

During the Tet business season, the revenues of Vissan's products merely met the plan and failed to reach the expected increase of 5-10 percent as the volume of goods prepared. Noticeably, after the Lunar New Year, even though it is a supplier of essential food products, Vissan could not escape the situation in which the purchasing power declined by 15-20 percent in all product groups. This situation has never happened before. Mr. Phan Van Dung, Deputy CEO of Vissan, said that although the Government had controlled quite well the spread of Covid-19 in some provinces, it still hurt consumers' sentiment, causing purchasing power to slump after the Lunar New Year.

From the perspective of retailing, the Tet market ends late and starts business early. There are many reasons why shop owners extend their opening hours. The most important reason of which is trying to sell lots of goods to both avoid inventory and cover costs.

In many supermarkets and stores in the market stabilization program, the market resumed operations since the morning of the second day of the first month in the lunar calendar to ensure a smooth supply of goods to consumers. Many supermarkets of FDI enterprises and convenience stores even open continuously to welcome customers. Distributors also simultaneously launched big promotions by reducing the selling prices to stimulate consumer demand. The most obvious manifestation was at electronics supermarkets where many items, such as televisions and rice cookers, were sold at cost, or reduced selling prices by 30-40 percent. The multi-category supermarkets also embarked on the promotional race with hundreds of items with a discount from 5 percent to 49 percent. Meanwhile, wet markets were poorly patronized.

Deploying many solutions synchronously

In general assessment of the purchasing power in 2021, many enterprises said that they are nervous and anxious because the nature of the problem is because of the objective factors of the economy, especially in the situation that the pandemic develops complicatedly, while there is still no vaccine for mass vaccination.

Mr. Phan Van Dung, Deputy CEO of Vissan, said that the year 2021 will be more difficult and more challenging than the year 2020. It is likely that from now to the end of the third quarter of this year, the purchasing power will continue to drop by 15-20 percent. By the fourth quarter, if Vietnam has more vaccines for the people, which is considered the “passports”, paving the way for the development of trade and tourism, then the purchasing power will be better.

Enterprises strive to boost consumer demand ảnh 2 Products displayed at Aeon Mall in HCMC. (Photo: SGGP)
According to Nguyen Anh Dung, Retail Intelligence Executive Director at Nielsen Vietnam, the picture of retailing is changing a lot, especially the portrait of consumers. This will continue to happen more strongly in 2021. The shopping of consumers will also be carefully calculated and selected. Products that ensure food hygiene and safety, have brand names and reputations, especially at reasonable prices, will continue to prevail. The survey of this unit shows that families with incomes of VND6 million per month downwards are forced to tighten their spending due to the impacts of the pandemic. Middle-class customers with incomes of VND8 million-VND20 million per month are also forced to adjust their spending, shifting from high-end products to more affordable ones, mainly in the group of food and beverage. According to Mr. Bui Ta Hoang Vu, Director of the Department of Industry and Trade of HCMC, this year, the city’s industry and trade has determined a common goal of developing industry and trade with a fairly good growth rate, contributing to the recovery of economic growth of the city. Of which, the total retail sales of goods will exceed VND835.68 trillion, an increase of 10 percent compared to last year. To do this, the department is building and implementing a master plan to promote the city's industry and trade in 2021, which focuses on programs, such as a conference to connect supply and demand of goods between HCMC and other provinces; updating, sharing market information, and introducing premises for HCMC-based retailers to develop points of sale. The year 2021 is the first year that HCMC has launched two concentrated promotional campaigns to create a boost in attracting domestic and foreign tourists to visit and shop. At first, the Department of Industry and Trade has been cooperating with the Department of Tourism to build shopping tours, promote promotions, lower prices, stimulate demand at supermarkets and trade centers, and actively support enterprises to open duty-free counters to serve tourists, step by step making HCMC become a shopping center of both the country and the world. The department has also developed a plan to contact and work with industry associations and enterprises to grasp the development situation, difficulties, and problems in the production and business process to propose the city have solutions to remove the problems timely. Besides, it is essential to carry out the connection program between banks and enterprises, and access investment stimulus programs to help enterprises to have resources to invest in innovation and creativity to improve the competitiveness of products in the market.

According to official data from the HCMC Department of Industry and Trade, the total retail sales of consumer goods and services in February (the peak month of the Tet business season) is estimated at more than VND110.67 trillion, up 4.7 percent over the same period last year. In the first two months of this year, the total retail sales of consumer goods and services are estimated at above VND228.91 trillion, an increase of 3.6 percent year-on-year. The retail sales of consumer goods alone are estimated at above VND144.17 trillion, accounting for 63 percent of the total retail sales of consumer goods and services in the city.