Boosting Stimulus in Domestic Consumer Market

10:07:23 AM | 7/2/2024

Vietnam's domestic market presents significant opportunities for expansion and development, as highlighted by industry experts. Concurrently, retailers are launching stimulus programs aimed at bolstering purchasing power.

Retailers are implementing stimulus programs designed to enhance purchasing power

According to the Department of Industry and Trade of Ho Chi Minh City, the market stabilization program stands out as the most effective tool for price control. This initiative contributed to a minimal 0.15% increase in the city's consumer price index (CPI) for May and a year-on-year CPI growth of 3.24% for January to May, figures that are lower than the national averages. Moving forward, this program will be further enhanced in the second half of the year to ensure consumers have access to competitively priced products of high quality.

Jubilant promotion in June

In a volatile market, the purchasing power weakened on the economic slowdown. Therefore, instead of waiting for the national promotion program often launched by the Ministry of Industry and Trade at the end of the year, some localities have started this move with many attractive activities, lasting until the end of the year. They aimed to facilitate a rapid and strong economic recovery through their consumer stimulus programs to reduce inventories for businesses and meet consumer needs.

WinCommerce said it will continue to apply a good pricing strategy in 2024 in addition to the WiN Membership program that offers a 20% discount on WinEco and MeatDeli products. This June, WinCommerce launched two promotional periods, applicable from June 6 to June 19 and from June 20 to July 3, with a lot of incentives in many categories across the WinMart/WinMart+/WiN systems. Notable examples include a 50% discount, buy 1 get 1 free and buy 2 get 1 free, applied to a wide range of products like butter, milk, eggs, ice cream and frozen foods from June 20 to July 3.

Central Retail has applied masses of huge promotions, with discounts up to 49%, to all categories in the GO! & BigC system from June 13 to June 26. For example, Luc Ngan lychee, Ri 6 durian and Thai rambutan are discounted up to 25%; or pork with discounts up to 28%. This June, MM Mega Market system offered plenty of special promotions, for example shocking discounts on cosmetics, 50% off Besico-branded household appliances. In addition, MM Mega Market is also filled with local summer fruits sharply discounted for consumers.

Similarly, to stimulate green lifestyle in the community, Co.op Mart supermarket chain launched the "Vietnamese Family - Green Ambassador" promotion program. Accordingly, from now until June 30, the Co.op Mart supermarket system alternately will offer discounts of up to 40% on fresh food items and bring a variety of choices and savings to customers. With "Family Combo - Biggest Sale", combo packages of shampoo and shower gel, clothes, laundry, detergents, candy, drinks and other items are sold for VND44,900 - 599,000 a combo.

A representative of Vissan Joint Stock Company disclosed that since the beginning of 2024, the purchasing power among various consumer goods traders, including Vissan, has experienced a decline of 15-20%. Mr. Nguyen Ngoc An, General Director of Vissan, emphasized the company has implemented effective strategies to secure stable input materials, particularly through establishing partnerships with major livestock units for a consistent supply of live pigs. The company has undertaken a thorough review of its traditional market business models, proposing innovative approaches to enhance competitiveness and better meet consumer demands.

Creating momentum for the retail sector

To stimulate purchasing power, the Vietnamese Government recently proposed extending value added tax (VAT) reduction of 2% until the end of this year - an extension of six months from the last decision at the end of last year, applied to some goods and services subject to a 10% VAT rate.

It is believed that this policy will partly reduce the cost of living in purchasing consumer goods. Along with the VAT reduction, localities also announced plans to launch a concentrated promotion month. Notably, starting from June 15, Ho Chi Minh City launched focused promotions with merchants, businesses and retailers offering discounts of up to 100%.

In order to enhance the effectiveness of the centralized promotion programs, this year, HCM City also coordinated, associated, and supported similar programs in southern provinces and cities such as Dong Nai, Binh Duong, Ba Ria - Vung Tau, Tay Ninh, Long An, Ben Tre, Tien Giang, Hau Giang, Can Tho and Dong Thap. Therefore, consumers not only in HCM City but also in these provinces and cities will benefit from the same discount and promotion programs. In particular, to achieve the best outcome of consumer stimulus, the city has synchronously combined credit connection programs, supply-demand connections and focused promotions with other localities.

Likewise, in late May, the Hanoi Department of Industry and Trade launched a centralized promotion program in 2024 with a series of attractive activities lasting till the end of the year. Promotional programs offer discounts of up to 100%, attracting thousands of businesses to join.

The early start of the program is seen as an enticing boost to businesses and creates a chain effect for localities to join. Ms. Tran Thi Phuong Lan, Acting Director of Hanoi Department of Industry and Trade, said the new point of the 2024 promotion program is to develop smart business forms to catch up with the boom of e-commerce.

"Hanoi still must make breakthroughs and accelerate with specific solutions, foster centralized promotional programs to engage distributors to form close cooperation with manufacturers to offer attractively priced products and introduce aftersales programs. Overall, this year, Hanoi will organize promotions for all product groups," she said.

However, according to experts, price-cut stimulus amid weakening demand cannot boost growth. The retail sector expanded only 7.4% in the past five months but it accounted for the biggest share. Therefore, in addition to VAT reduction and direct promotions for goods and services, according to business representatives, there must be solutions for supporting industries.

For example, real estate market solutions, stable employment, steady bank interest rates, stable gold prices and foreign exchange rates bolster consumer confidence. In addition, the Government needs to have solutions to stimulate industries that serve the distribution and service sectors such as logistics, infrastructure and technology to create growth momentum for the retail sector.

By Bich Hanh, Vietnam Business Forum