Viet Nam's middle class set to double
|Shoppers inspect clothes at a Co.op Mart store in HCM City. With higher incomes, consumers are tending to choose higher-value products, creating opportunities for high-end brands, according to a recent study. — VNA/VNS Photo Thanh Vu
HCM CITY (VNS)— The middle and affluent class (MAC) in Viet Nam will double in size between now and 2020, from 12 million to 33 million consumers, a survey of the Boston Consulting Group has found.
Aparna Bharadwaj, project leader at BCG, said MAC consumers in Viet Nam, whose income is from VND15 million (US$714) and above a month, are not just growing in numbers, but also spreading out to other provinces and cities.
Companies need to increase their distribution systems to other provinces and cities instead of just focusing in big cities like Ha Noi and HCM City, she said.
About 80 per cent of MAC consumers shop for groceries in hypermarkets or supermarkets at least occasionally.
But traditional market and modern trade formats will continue to compete for customers for many years.
These dueling channels will force companies to develop new skills to enable their products to develop in both channels.
With higher incomes, consumers tend to choose higher-value products, which open opportunities for high-end brands, she said.
The survey shows that by 2020, Viet Nam's MAC population will be two-thirds the size of Thailand's MAC population. Average per capita income will rise from $1,400 to $3,400 a year.
Tuomas Rinne, partner and managing director of BCG, said along with Myanmar, Vietnamese consumers were among the most optimistic in the world, even more than their counterparts in China, India, Indonesia and other fast-growing emerging markets.
More than 90 per cent of consumers in Viet Nam expect to live better than their parents and expect their children to live better than themselves, he said.
Despite short-term worries about the economy, the majority of polled consumers believe that the situation will be better and 80 per cent of them said they want to make more purchases than they did the year before.
The survey pointed out that Vietnamese consumers, of all incomes, enjoy the hunt for deals, discounts and promotions, more so than consumers in Thailand and Myanmar.
In order to project the growth of consumers and their spending in Viet Nam, BCG's Centre for Consumer and Customer Insight analysed population and income trends in nearly 1,400 areas and surveyed 2,000 urban consumers in the country.
BCG is a global management consulting firm and advisor on business strategy. It expanded its presence in Southeast Asia by opening a new office in HCM City last week, its fifth office in Southeast Asia and 79th in the world. — VNS