Popular consumer goods see Q1 growth
Popular consumer goods see Q1 growth
Sales of fast-moving consumer goods (FMCG) grew 3.4 percent in volume and 4 per cent in value in the first quarter of the year compared to the same period last year in six key Vietnamese cities.
The growth was seen in Ha Noi, HCM City, Hai Phong, Can Tho, Nha Trang and Da Nang, according to the latest report from marketing research company Nielsen.
Beverages were the key category driving the growth recovery, but categories such as food and home care also showed signs of recovery in first quarter.
However, retailers interviewed by Nielsen remain cautious about the future, despite recorded growth.
The report also found that more than 80 per cent of FMCG sales in Viet Nam still come from traditional trade channels which include around 1.3 million FMCG stores across the country.
Only 30 per cent of the traditional stores contribute to the top 80 per cent category sales.
Therefore, to win in this traditional-trade dominated market, manufacturers must identify the right stores to target; not an easy feat in such a large, dynamic and ever-changing retail market, according to Nielsen.
In addition to the complexity and number of traditional stores, the power to make or break a brand or product lies with traditional retail store owners.
Just 70 cent of traditional retail stores comply with manufacturers request to stock their products.
Of the brands most supported by Vietnamese retailers, Hao Hao, Vinamilk & Coca-Cola are the top three supported brands by retailers, with more than half of store owners indicating they will stock these products more, and recommend the products to shoppers.
Nguyen Huong Quynh, executive director of Retail Measurement Services of Nielsen Viet Nam, said that "despite growth of FMCG, our own Retailer Confidence Index was only 71, which shows that retailers are still hesitant. Therefore, to win retailers' hearts is not easy at all."
"Retailers are mainly concerned about what directly impacted their business, such as extra stock, margin, and customer services support," he said. "It's critical therefore for manufacturers to completely understand those concerns, identify the right stores to target and ensure that retailer comply and stock their products in-store throughout the year. "
"This requires a combination of different strategies based on retailer and shopper understanding, to build a picture of success for sales to execute in the market," she said.
Faced with the challenge of winning retailers' hearts and loyalty, Nielsen suggests that manufacturers should focus on identifying the target stores and executing in-store (pricing, assortment, trade activity, in-store communication).
