Consumers’ confidence seen reduced: Nielsen Vietnam

Vietnamese consumers’ confidence is tumbling due to macroeconomic challenges and rising inflation, according to Nielsen Vietnam’s survey on the first half of 2011 announced on Friday.

This decline in confidence is also seen with the country’s senior business leaders who participated in Nielsen’s Vietnam Business Barometer survey – an online survey designed to gauge Vietnam’s business leaders’ sentiment. Topics include advertising spend and growth forecasts among other current hot topics.

The online survey is conducted twice-yearly and covers companies from various industries throughout Vietnam.

According to the survey, nearly two-thirds of big corporate respondents in various sectors said that business conditions were worse now compared to a year ago, and 48% fewer leaders expect to beat their targets as compared to a year ago.

Meanwhile, only one-third think that conditions will improve over the next 12 months, with the majority thinking that the status quo will prevail.

Inflation and recent devaluations of Vietnam Dong ranked as the top concerns of these executives who, nonetheless, claimed that they had managed to achieve their targets thus far, according to the survey.

Despite these concerns, the vast majority (90%) of business leaders in the survey still expect double-digit growth in their businesses. The financial services, telecom and pharmaceutical sectors seem set to continue to grow, while FMCG (fast moving consumer goods) is likely to be affected by consumers reducing spending in the face of inflation and will show slower growth.

However, most executives plan no reduction in advertising spending, and 43% actually plan on increasing spending over the course of the year to capture the increasingly value-driven consumer, according to the survey.

TV continues to be the top channel for advertising, followed by point-of-sale materials and in-store signage, while online continues to show promise.

According to the survey, the value-driven consumer is faced with steadily increasing prices, so they are increasingly saving their money when they can and buying more goods on promotion.

Almost two-thirds (64%) indicated that they would be looking for promotions, an increase from 51% in the second half of 2010. Half said they would do without some non-essential goods, up from 41% in the second half of 2010, while 41% said they would be trading down to less expensive products. Confectionary, health and beauty and beverages were deemed to be the categories most likely affected by changing consumer purchase patterns.

“GDP growth in Vietnam is set to slow this year, and macroeconomic challenges facing the country require business leaders to work even harder to achieve success,” said Darin Williams, managing director of Nielsen Vietnam in a statement.

“That means expanding into rural areas to capture growth, identifying new potential categories, and understanding their pricing and promotion mix better, and how much of a price increase can be passed on to customers. Understanding consumer price sensitivity is critical, and passing on price increases should only be undertaken with a solid understanding of your consumer and category,” he added. – SGT

Tags: Vietnam consumer confidence index