A “belt tightening” policy is spreading among Vietnamese consumers, and signicantly reducing the market’s selling power.

Since the beginning of October, prices of many commodities, including both consumer and essential products, have dropped steadily.

In particular, gas prices slid from 282,000 VND per 12 kilo canister in early October to 200,000 VND at present. Meanwhile, the price of steel is down to 10 million VND per tonne, with an additional drop of 500,000 VND expected early November.

Prices for most consumer products, including processed food, decreased between 5 to 15 percent.

In spite of such sharp pricing drops, the market’s purchasing power has not improved, even continuing its downward trend, according to some independent market watchdogs.

A CEO of a cooking oil company said that sales of cooking oil products dropped by at least 20 percent from early October.

“Many consumers gave up their habits of buying and storing goods since they expected lower prices”, he said.

According to Tran Minh Chau, a retailer at District 1’s Tan Dinh Market in HCM City, soft drinks, spices and dried good products are staying put on the shelves.

The clothing industry has also been hit by market woes. Turnover at some shops specialising in trading clothes with famous brand names, such as Milano, Salvatore Ferragamo, Chloe, Balenciaga, Marc and Bally, has declined by 20 to 25 percent.

Meanwhile, the business office of the Zen Plaza trade centre in HCM City reported that purchasing power of clothing and cosmetics products there fell by 20 percent over the corresponding period.

Sales of electronics and electric goods on the market decreased by between 10 and 20 percent, according to Lien An Thach, director of the Cho Lon Electric Engineering Supermarket.

In the latest survey by AC Nielsen, the Vietnamese are ranked ninth among the most optimistic countries in a Global Consumer Confidence Index, a decrease of two places compared with early this year.

The country’s confidence index is 8 percent lower than the figure recorded in the first half of the year.

Every six months, AC Nielsen conducts the Global Consumer Confidence Index (GCCI), polling over 26,000 Internet users from 47 markets on their job prospects, personal finances and spending habits, among others.

Survey results indicate that Vietnamese spending habits changed significantly, with up to 49 percent of respondents saying that they would deposit their savings in lieu of shopping and entertainment. Early this year, most respondents said they used their expendable income for consumption activities.

Nguyen Hong Huong, director of the Vinatex supermarket chain, said “Domestic consumers do not want to spend much at this time partly because of the economic crisis, and partly because they hope the consumer product prices will drop further”.
Source: VNA