Financial pressure forces Vietnamese to pinch pennies
Financial pressure forces Vietnamese to pinch pennies
Vietnamese consumers have scaled back on dining at upscale restaurants and spending, opting instead to seek out discounted items given tighter financial constraints.
Many Vietnamese consumers tend to hunt for discounted items as a way to tighten their budgets. Photo: Nhat Xuan / Tuoi Tre |
In recent months, Mai Thi Chung, a 30-year-old real estate professional from Thu Duc City in Ho Chi Minh City, has been tightening her budget to manage financial pressures.
Chung recalled that she used to meet clients frequently and did not hesitate to buy branded clothing.
However, to cut costs, she now opts for discounted outfits purchased through live streams on social media.
Her daily coffee routine has also shifted in the wake of a reduced income.
Instead of visiting high-end coffee shops, she now enjoys her coffee at more modest, middle-class establishments.
“Owing to coffee addiction, I opt to savor the drink at an affordable shop instead of an upscale one to cut spending,” Chung said.
According to a recent report by market research company iPOS, Vietnamese consumers’ spending on coffee drinking dropped sharply in the first half of 2024.
Coffee cups priced from VND41,000-71,000 (US$1.6-2.8) each, rates acceptable in big economic hubs like Hanoi, Da Nang or Ho Chi Minh City, became more popular than higher-end coffee during the period.
The rate of coffee drinkers who were willing to spend VND100,000 ($4) or more on a cup of coffee fell to 1.7 percent from six percent between January and June.
Another market research company, NielsenIQ Vietnam, also reported the ongoing trend of a squeeze in Vietnam that began in mid-2023.
Some 16 percent of the respondents shrank their consumer spending, while as many as 50 percent of them said no to luxurious goods.
Local retailers and service providers might clearly feel the consumer squeeze among Vietnamese residents, especially the young.
A few days ago, Starbucks Vietnam announced the closure of its only Starbucks Reserve store in Ho Chi Minh City, effective from August 26, after seven years of its operation.
In the past, Starbucks Reserve Han Thuyen, known for its more premium and immersive coffee experience compared to regular Starbucks stores, was a familiar place for coffee connoisseurs and enthusiasts thanks to various high-end roasted beans.
In addition, tea and coffee chain The Coffee House unveiled the shutdown of all stores in Can Tho, a major city in the Mekong Delta, and in Da Nang City on the central coast in August.
As of the end of July, The Coffee House had been running 117 stores nationwide, compared to the 150 stores in late 2023.
However, not all coffee chains are facing a meltdown.
Statistics from Vietdata, which offers research and data on Vietnam's macro and various industries, indicated that apart from coffee and tea giants scaling down operations or facing stagnant business, many other brands such as Trung Nguyen Legend and Highlands have opened new stores.
In spite of the closure of many restaurants and eateries between January and June, the food and beverage (F&B) sector generated VND403.9 trillion ($16.2 billion), reaching nearly 70 percent of the industry’s whole-year revenue in 2023, according to iPOS’ report on the F&B industry in the first half of 2024.
The figures demonstrated that despite the hardship, the F&B industry is still thriving.
The positive growth was attributed to an increase in transactions following promotional programs and discounts at F&B stores.
Yet, some experts said that the industry is confronted by multiple big challenges.
Hoang Tung, chairman of F&B Investment, told Tuoi Tre (Youth) newspaper that many food and beverage outlets have shuttered due to cash flow problems and business inefficiencies.
The local market is experiencing a decline in spending, particularly on luxury products and services.
In contrast, middle-class restaurants, food kiosks, and stalls are gaining popularity, catering to the needs of a broader consumer base.
Experts predict that online sales in the F&B industry will continue to see significant growth, likely lowering the count of in-person outlets as rising rent costs make physical spaces less viable.
