Retail evolution: Adapting to dynamic retail landscape

Post-Covid shift in consumer behaviour: less frequent purchasing and higher per-trip expenditures

The decline in purchasing frequency is one of the most notable changes in post-COVID consumer behaviour. This trend existed prior to Covid, but it accelerated during social limitations and continued post-Covid. In addition, it is observed in both urban and rural areas, indicating a nationwide shift in consumer preferences. As lifestyles become more hectic, consumers optimise their routines by shopping less frequently and concentrating on larger shopping excursions.

This presents retailers with both challenges and opportunities. Retailers can capitalise on this trend by concentrating on enhancing the overall shopping experience, thereby ensuring that each visit is valuable and memorable.

The evolving retail scene

Over the past five years, the retail landscape in Vietnam, particularly in urban areas, has witnessed significant changes. The contribution of traditional channels such as street stores, wet markets, and general trade outlets has decreased, paving the way for the expansion of modern trade and online platforms.

The penetration of online retail will increase from 2% in 2018 to 7% in 2023, representing a remarkable development. Certain channels have emerged as growth leaders within the modern trade sector, including minimarkets and specialty stores specialising in mom and infant or health and beauty categories, as well as pharmacy outlets.

In contrast, rural areas continue to be dominated by general commerce, with traditional channels playing a significant role. Modern trade and online platforms are acquiring traction, albeit on a smaller scale, as consumer preferences shift gradually. Consumers in both urban and rural areas are increasingly embracing modern retail formats and online purchasing options, indicating a potential for further expansion and transformation in the retail landscape of Vietnam.

Remarkable Consumer Habits That Are Changing the Retail Scene

1. Outstanding Consumer Behaviours Shaping the Retail Environment

Consumers are smarter and more demanding: When it comes to their purchasing experiences, consumers today have higher expectations.

However, rural and urban consumers choose a store for distinct reasons. In urban areas, they prioritise product selection, store accessibility, and store layout. In rural areas, shoppers are pursuing stores with a wide range of new product offerings.

In addition, the decision-making processes of consumers appear to take longer because they require more information about promotions, nutrition facts, and product origin prior to making a purchase. To meet these demands, both online and offline retailers are investing in the creation of extensive product information sources, such as constituents, origin, prices, promotions, and video demonstrations.

2. Shopper Disloyalty: No Ties to One Store

The loyalty of consumers to a store and a brand has progressively diminished. Shoppers no longer buy everything in a single location, but instead choose where to purchase various products. With the entry of foreign giants into the market, buyers are engaging in omnichannel shopping, resulting in the decline of the dominance of prominent MT retailers. Emerging MT retailers, e-commerce platforms, and specialty stores face intense competition.

3. Exposure to New Experiences

Rather than just being a passing fad, shopping online has become a significant cultural shift.

With a boost from the pandemic-induced accelerations, the use of online shopping has skyrocketed. Online shopping's popularity has skyrocketed, with its penetration rate reaching 50% among urban households and growing exponentially in rural areas.

Brands and retailers in Vietnam need to provide experiences that speak to the aspirations and values of the country's increasingly discerning and adventurous consumers. Retailers may thrive in the face of disruption and even take the lead in the new retail landscape if they adapt by adapting their strategy to match consumer preferences, improving their product lines, and adapting their customer experiences to a variety of media.