vietnam shoes market

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Understanding Market Trends and Consumers in Vietnam

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VIETNAM

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Vietnam Demographics – Population Distribution

9% 8% 2% 3%

78%

Population Distribution

Ho Chi Minh Hanoi Hai Phong Nghe An Vinh Others

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Vietnam

x 1

00

00

Population Size

7,681,700

6,844,100

1,904,100

2,952,000

480,000

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

Ho Chi Minh Hanoi Hai Phong Nghe An Vinh

Population size: Major Cities of Vietnam

From a total national population of 88 million, approximately 22% are concentrated across 5 major cities – where HCM and Hanoi primarily accounts for 17% of the overall population.

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Per Capita Annual Disposible Income, Spending and Saving

Savings: Income Source: Euromonitor

• The general trend exhibits that the population is getting more affluent on an annual basis, supported by high employment rate in the cities (below 4% unemployment rate).

• Given this scenario, this demonstrates that there is a promising growth in the domestic consumption market.

Source: GSO 2012, World Bank


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Vietnam Income Band by Age (2011)

Source: Euromonitor

Good target for mid to high end products

Good target for mass market products

• There are 2 distinct group of people with different level of income. • There is a large group of people within the age of 20 – 30 that have significantly lower income than those in the

30 to 59 age range. (These 2 groups makes up about 50% of the population.

• Highest income earners are mostly those in their early 40s.


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What does all these mean?

• Growing market size coupled with growth in consumerism.

• Majority of the more affluent reside in the cities.

– Most of the affluent are age 35 to 59 years old. Target for premium brands and products.

• Market potential lies in the major cities – HCM and Hanoi (17% of overall population).

• Relatively positive outlook on spending (consumer confidence Index = 95, same as Singapore)

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Vietnamese Consumers

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Some Key Characteristics of Vietnamese Consumers

• Vietnamese Consumers are generally “Ethnocentric” – loyal to country’s brands and products.

• 71% believe that local products are of high quality

• 80% prefer domestically produced garments

• Consumers are easily convinced to make purchases due to

– Price Discounts

– Free Gifts with purchase!

• Rise in number of working women.

• More women taking up senior positions

• Women want to share more responsibilities in life’s decision.

• 90% feel that their role is changing for the better


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Where they shop for essentials: FMCG

424

23

365

Supermarkets Hypermarkets

mini-marts

636,158 Grocery outlets

• Retail outlets are growing at a rate of 1.2%

• Out of home consumption has reduced; while In-Home enjoyment has increased.

Source: Euromonitor


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What are the common areas where money is spent?

Education, Healthcare, F&B products and Personal care are key areas of expenditure.


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What are major “fear” in the minds of Consumers?

Likely concerns are ….

Fruit Juices 46%

Soy Milk 44%

Beans/Peanuts 37%

Cholesterol-Reduced Cook oil 35%

Liquid Milk 31%

Yogurt 18%

Volume Growth

Top Regular consumption

Economy

Job Security

Health

Rising Food prices


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Functional food and Drinks becoming popular

Yogurt with Collagen

Vitamins in Beverages

Nutritional Drinks

• There is a growing trend in functional food • There was an increase in number of functional products from

400 (2000) to 1000 (2012) in the market • 56% and 48% of residents in Hanoi and HCM respectively

consume functional food.

60

1718

0

500

1000

1500

2000

2000 2012

Total players

Source: Euromonitor


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Focus on In-Home Enjoyment

Maggi: Encourage cooking at home

Several FMCG brands are convincing cost conscious Vietnamese that their outdoor lifestyle can be transferred in home.


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Purchasing patterns of FMCG

• Urban consumers are more busy.

• Perception of 2/3 housewives:

“ I will buy bigger pack size because it is less expensive”

• It is not the visual, 56% of consumers do their maths ($ per kg) – smart shoppers

Source: Kantar World Panel


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• Lower income consumers down-size from bottle to sachets to fight inflation.

• Common with Shampoo and detergent. • Some trade downwards – switching to house brands or local

brands.


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• Consumers are often attracted to product innovation.

• New product lines or brand extension have potential to invoke interest.

Source: TNS


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Luxury and Premium Products: Are there Opportunities?

Versus

“I don’t feel much different. I don’t feel the impact of the economic crisis on me”

“Too much stress, the worry always sticks in my mind, we don’t even have time to feel worry of relaxed”

Source: TNS

Income >USD 70,000 Income : USD 1,500 to 10,000 per year

• The affluent do not feel the impact slower economy, still maintain affluent lifestyle

• In 2011, only 14% of population had bought a luxury/premium item in a year.

8.2 mil

19% of urban population


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How is their luxury lifestyle defined?

http://en.wikipedia.org/wiki/File:Golfball.jpg


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What is consider premium / luxury products to the affluent?

Premium Quality

Premium Price

Country of Origin

Used by Famous people

Unique Design

Exclusive/ Hard to find

Price > VND10,000,000

http://www.google.com.sg/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=_mmZ49jhL86RpM&tbnid=Szo5lYI14tETSM&ved=0CAgQjRw&url=http://www.kaskus.co.id/thread/5085a3a51a7608bf64000015/rajawatches--rajanya-jam-tangan-original-kw-terlengkap&ei=fl41VKT8LYSUuATpu4HADQ&psig=AFQjCNGbXxXTjXLGSHwXVLWJL_l5G8xETg&ust=1412870143025283


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Popular sought after premium / luxury brands in Vietnam

Close to 2 in 3 affluent consumers are willing to pay premium prices for technology related items

Source: TNS


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CASE EXAMPLE:

FOOT WEAR MARKET IN VIETNAM


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Overview: Vietnam Footwear Market

25% Foreign brands US$1b

Market value

US$300m Unorganized

Market

US$700m Organized Market

Market size Distribution Structure

75% Local &

unbranded

Brand Domination

17.90%

65.10% 20.30%

18.90%

20.10%

9.10%

41.70%

7.00%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Organised mkt Unorganised mkt

Low Price Value Mass Premium Premium

Price distribution

75 million Pairs/ year


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• Over the forecast period of 2013-2018, projected CAGR of 8%.

• Footwear market is dominated by unbranded products from neighbouring countries,

especially from China.

• However the average spending is low compared with other countries with just 1.5 pairs value

at US$10.7 per pair

Overview: Vietnam’s Footwear Market

Other provinces,

48% HCM, 32%

Hanoi, 20%

Sales of Footwear by Region


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Social Class & Age: Spending on Footwear

Makes up of approx 66% of population. Spends 2% of their disposable income on footwear

Makes up of approx 9.3 % of who often purchase luxury brands. Spends approx 5% of income on footwear

Social Class A are individuals with a gross income over 200% of an average gross income of all individuals aged 15+. Social Class B are individuals with a gross income between 150% and 200% of an average gross income of all individuals aged 15+. Social Class C are individuals with a gross income between 100% and 150% of an average gross income of all individuals aged 15+. Social Class D are individuals with a gross income between 50.0% and 100% of an average gross income of all individuals aged 15+. Social Class E are individuals with a gross income less than 50.0% of an average gross income of all individuals aged 15

Makes up of approx 25% of Middle income that spends 3-4% of their income on footwear

Age

% D

istr

ibu

tio

n b

y So

cial

Cla

ss

Legend

• The market for mid-range footwear would cater primarily for those falling into the Social Class of D and E. They make up approximately 66% of the population which will provide an ample market size for mass footwear brands.


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Footwear Market Sales by Segments

Children 7%

Men 36%

Women 57%

Children 15%

Men 28%

Women 57%

Sales distribution by volume Sales distribution by value ($)

• Sales of women footwear accounts for more than half of all footwear sold in Vietnam, double of what men purchase in a year.

Diagram 13 Diagram 14


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Branded vs Unbranded by Region

70% 61%

9%

30% 39%

91%

HCM Hanoi Other Provinces

Branded Unbranded

• Consumers in HCM and Hanoi tend to be much more brand conscious than those living in other

provinces when it comes to purchasing footwear.

• With higher disposable income, the consumers in these 2 cities are better able to afford branded

footwear as opposed to those living in other provinces.

.


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Distribution of Popular International Brands

HCM Hanoi 500 Store Outlets

40 stores

40 stores

6 stores*

Top 3 Total Sports Stores

109 Stores


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Distribution of Popular International Brands

HCM Hanoi 500 Store Outlets

40 stores

21 stores

15 stores

Top 5 Total Casual/ Office Stores

99 Stores

14 stores

9 stores


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Local brands (E.g. Biti’s)

Unbranded Footwear

International brands (E.g. Nike, Clarks, Nine West)

Made up of middle income consumers who wants quality, reasonable design and affordable price

Consumers who want social status and with reasonable disposable income.

Consumers seeking fast fashion, makes frequent purchase – particularly women or low income consumers

Competitive Landscape: Unbranded vs. Branded Footwear

Premium/ Niche Market

Mid Market

Mass Market

The Competition

Vietnam Footwear Market

The following illustrates how the competition for the Vietnam footwear is structured based on the different types of competitors and the market segments they target.


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Sports

Office Casual

Ananas

Competitive Landscape

Price range

< VND 1 mil

VND 1 -3 mil

> VND 3 mil

http://www.google.com.sg/url?sa=i&source=images&cd=&cad=rja&uact=8&docid=Y2rlG-xYobrKkM&tbnid=ItyPJwSMQYHp9M&ved=0CAgQjRw&url=http://www.ranklogos.com/fashion-brands-logos/levis-logo/&ei=671TU4S3HMPOiAeDqoCoCA&psig=AFQjCNH-BpRTBluVcSGfgss3iyv0AVSpyA&ust=1398083435523909


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Major Market Trends in Footwear

Burgeoning demand for

footwear

Heightening demand for

Women’s Footwear

Newer segments: Men’s and

Children’s Footwear

Men’s Sports Footwear gaining

popularity

Increasing unit price of shoes

Stronger presence from

International Brands

• Population is growing • Ratio of footwear to population is 0.77

• Getting more fashion conscious with exposure to foreign media

• More are working and making their own decisions

• Needs to shoes for different occasion to fit lifestyle • Higher birth-rate

• Footwear steadily increased by 6% • Affluent customers in cities driving price up.

• Getting more active and require shoes specialised for sports activities.

• Mid to high income getting more social status conscious – drive demand for international brands.


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In Summary …

• Consumerism is growing primarily in key cities supported by growth in disposable income.

• Opportunities lies in:

Mass Consumers

– Demand for Health related products and services

– Demand In-home enjoyment

Affluent Consumers

– More affluent consumers (10% to 19%) want more hedonistic and luxury experience.

– Social status consciousness among city dwellers: Premium and luxury brands

vietnam shoes market

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