Vietnam's rural market holds great potential for the consumer industry, a new study has found.
The2014 Nielsen Vietnam Rural Study of 700 rural consumers nation-widesaid the rural community, which accounts for 68 percent of the country's90 million population, is investing in education and enjoying similarincome growth as its urban counterpart.
Vaughan Ryan, managingdirector of Nielsen Vietnam, said, "There is increasing interest fromthe local and multinational business community alike around Vietnam'srural consumers."
Rural consumers account for half of thedomestic spending on Fast-Moving Consumer Goods (FMCG) – products thatare sold quickly and at relatively low cost goods, yet they are not justpurchasing the cheapest offering but looking for value for money, hesaid.
The rural consumer wants more and wants it fast, he said.
"Theywant their kids to live a better life than they did and they aspire forthem to have more choices. They see education as a key vehicle tomaking this happen as more of them have regular incomes."
Thestudy found that traditional channels continue to play a pivotal role inrural regions though the number of modern retail outlets is increasing.
Wetmarkets are the most popular retail channel in rural Vietnam with aperson making 16 visits per month on average, followed by fairs andstreet vendors.
Modern outlets such as grocery stores experiencebetween six and nine visits a month on average, while supermarkets trailbelow at just one visit every two months.
A shopper spends655,200 VND (31.2 USD) a month on average at traditional outlets andonly 175,000 VND (8.3 USD) at modern outlets.
Shoppers tend tobuy items such as personal and household care products, beverages,seasoning, and dairy products from modern trade outlets and fresh foods,seasoning, and some household items from traditional outlets.
Thestudy also found that retailers' recommendations are a powerful brandendorsement as 90 percent of retailers recommend products to shoppersand 31 percent of the latter follow the recommendations.
Withrural consumers' aspirational outlook and fascination with urbanlifestyles, there is opportunity for growth in categories that appeal tothe desire for progress and lifestyle changes, in particular health andbeauty and household cleaning products, according to the study.
Ruralconsumers also show a thirst for new products – 77 percent want to trynew products and 95 percent appreciate having a wide range of productsto choose from.
The study also pointed out that television isthe key to reach and connect with rural consumers as 99 percent watch TVon a regular basis and 69 percent claim to obtain product informationfrom this source.
Television viewing accounts for 88 percent oftotal media consumption.Vaughan said more and more consumers werewilling to buy Vietnamese-made and -owned products. The perception ofquality remained for certain internationally made products, but eventhis was changing, he said.
"The real concern for ruralconsumers is more around products imported from within the region withunclear origins and low quality, which are perceived to be far inferioror even a threat to the health and safety of their families."
Fakesand copies are rife in Vietnam, with one in four rural consumers havingexperienced fake and low-quality products, and as a result beingcautious about their purchases.
The study, carried out fromJanuary 1 to 18 this year, was aimed at providing an overall picture ofVietnam's rural areas for firms who have been or are going there,research consuming habits, and measure the purchasing capacity of peoplethere. It used qualitative (interview) quantitative (questionnaire) andretail methods (watch on retail market at rural areas).-VNA