Perspective of Retail Sector: An approach from new consumption trends

Meat and egg consumption: From “wet market” to “supermarket”

Thanks to the improvement of income and the supply of meat, meat and egg consumption of Vietnam has clearly increased in recent years (according to data from the General Statistics Office, the rural consumption increased by 0.6 kg/person/month in urban areas rose while about 0.2 kg/person/month compared to 10 the year before). However, meat consumption in Vietnam is about 34 kg of meat/person, ranking fourth in the ASEAN region but still lower than the world average (42 kg/person/year), shows the market potential is still very potential.

Two regions consume more meat and eggs in the country include the Red River Delta and the Southeast region, thanks to large cities nearby with two economic centers of Hanoi City and Ho Chi Minh City, where the work force is young, modern, dynamic and easy to adapt to new consumer trends.

Traditionally, Vietnamese consumers prefer fresh meat transported directly from the slaughterhouse to the market. These products are not stored for long periods or frozen and no packaging, labeling or quarantine.

Most consumers still buy meat and eggs from traditional markets. Survey results the of Agriculture and Rural Development Information Centre shows that 90% of consumers still buy meat at traditional markets (including wet-market, temporary market) and some consumers used to check the sealed quarantine of the meat. This consumption habit may be regarded as current barrier to frozen products imported from other countries, but only in the very short term. In fact, with the increasingly strong penetration of foreign products, forecasted trends imported meat consumption will increase in the future, for people with high incomes will focus on the meat group Premium beef as Australia, Japan, for consumers low or affordable will focus on imported frozen meat group from TPP member countries.

Meanwhile, meat without food safety guarantee imported in Vietnam through smuggling channel is raising the worries of consumers on food safety in the meat market.

Along with the active participation of the media, consumers pay more attention on food safety and require more on the origin, food safety and hygiene.

Rice Consumption: Far from supermarket?

According to the Vietnam General Statistics Office, the average rice consumption in Vietnam is about 9 kg/person/month. Consumers increasingly tend to choose high-quality rice, branded and safe. According to a survey conducted by the Institute of Policy and Strategy for Agriculture and Rural in 2014, in Hanoi City, the most preferred rice brand is Bac Huong (29.2% of the interviewees in Hanoi consume this rice brand), followed by Tam Hai Hau rice (18.8%), Tam Dien Bien (14%), Tam Thai rice (11.8%), rice imported from Thailand (9.03%). In Ho Chi Minh City the preferred type of rice are completely different with Tai Nguyen rice (43.6%), followed by Lai Suarice (14.8 %), Taiwan rice (8.72%), rice imported from Thailand (6.04%), Nang Xoan rice (5.4%).

Increasingly awareness of consumers about the variety of rice that they consume, with its own brand and identity, suggests that in the near future, the seller could not mix high and low price rice to gain illicit profit. Demand for branded rice with packing increases along with willingness to pay higher prices for high quality products. According to our survey, most consumers of rice use both packaged branded rice and non-branded one, but the percentage of consumers using packaged and branded rice in Ho Chi Minh City is higher than in Hanoi City. This also partly is explained by the development of modern distribution channels in the Ho Chi Minh City.

Regarding the location, most consumers buy rice at rice shops (71%), the second location is the supermarket (12.6%). Consumers select buying locations basing on some main criteria including reliability, origin, guarantees, followed by convenience in traffic and the diversity of rice varieties.

More and more consumers move from traditional market to supermarket

Until now, most people still keep habits of buying food in traditional markets but more and more consumers tend to move from the temporary market where food safety is not ensured into the modern retail distribution, especially when there is a strong participation of the major distributors in the modern retail segment.

According to the General Statistics Office, as of late 2014, there were 8,568 markets, of which 236 are grade 1,932 are grade 2 and 7,400 are grade 3. The number of market in Hanoi and Ho Chi Minh City are 426 and 240 respectively.

The country has nearly 770 supermarkets, of which 100 are in Hanoi city, nearly 20 in Haiphong and 200 in Ho Chi Minh City.

According to surveys on food habits in Hanoi and Ho Chi Minh City, shops specializing on a kind of food (rice vegetables/meat) are most popular retailers. But in Ho Chi Minh City, the number of consumers in the Ho Chi Minh City tends to buy food in supermarkets is much higher than in Hanoi City. There are two main reasons for this difference, including the vibrant rhythm of life of young people and the more dynamic business of retailers in Ho Chi Minh City. Percentage of online shoppers also tends to increase, primarily focuses on young and modern consumers.

According to a Nielsen’s survey on shopping behavior in the supermarket, the Vietnam market is potential for convenient stores and supermarket. About 73% of consumers are willing to pay for products with better quality. About 57% of Vietnam's population is under 35 years old. The urbanization in Vietnam is about 30% with annual growth of 3.4%/year. The awareness of consumers about the quality and safety of products, as well as the ability to adapt to the distribution channel and modern payment system will promote new retail trend in the coming period.