nielsen - vietnam retail landscape

RETAIL OVERVIEW ASIA & VIETNAM

OCTOBER, 2016

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AGENDA

Key Retail trends in Asia

Vietnam consumers and market landscape

It’s golden time to build your strategic partnership with Retailer

4 trends shaping future of retail in Vietnam

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Todays big challenges

DIGITAL CONNECTING with

Shoppers

VALUE Winning the battle for

value

GROWTH Managing slow

growth

THE ASIAN RETAIL LANDSCAPE

CONVENIENCE Meeting ‘ON-THE-GO’ consumer lifestyle needs

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GROWTH REMAINS HARD TO FIND IN ASIA PACIFIC BUT SOME SIGNS OF VOLUME IMPROVEMENT AS THE YEAR PROGRESSES

6.8%

5.5%

3.6% 3.8% 3.1%

1.5%

3.3% 3.8% 3.9% 4.0%

3.4% 2.8%

2.2% 2.1%

3.3%

1.2%

6.2%

7.1%

2.8%

1.2% 1.7%

2.1%

2.7% 0.8% 0.6%

1.5% 2.0%

2.2% 2.3%

1.6%

1.0%

1.3%

13.0% 12.7%

6.5%

5.0% 4.8%

3.5%

6.1%

4.7% 4.5%

5.5% 5.3% 5.0%

4.5%

2.8%

4.3%

2.5%

2011 2012 2013 2014 2015MAT Q2

2016 2014-Q1 2014-Q2 2014-Q3 2014-Q4 2015-Q1 2015-Q2 2015-Q3 2015-Q4 2016-Q1 2016-Q2

Unit value change Volume change Nominal growth

Fast Moving Consumer Goods growth rates

Note: Regional Summary for APAC is based on Australia, China, Hong Kong SAR, India, Indonesia, Korea, Malaysia, New Zealand, Philippines, Singapore, Taiwan, Thailand, and Vietnam. Indonesia has changed the retail census in 2010. Hong Kong SAR has changed the retail census in 2011. Vietnam has

recalculated its growth rates based on new universe.

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CHINA AND SINGAPORE NEGATIVE TREND IN FIRST HALF OF 2016, WITH POSITIVE VOLUME TREND IN VIETNAM

COLOUR CODING - AVERAGE Q1 & Q2 2015 vs Q1 & Q2 2016

Avg. volume growth decreasing

Avg. volume growth increasing

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Retail Channel Shares in Asia (including India): AVERAGE SHARE OF TRADE BY CHANNEL

Traditional Trade share has remained stable in 2015

11.5% 11.2% 11.0% 10.5%

26.8% 27.0% 27.3% 27.3%

6.2% 6.5% 6.8% 7.0%

9.9% 10.1% 10.1% 10.2%

36.9% 36.5% 36.0% 36.0%

6.7% 7.0% 7.1% 7.4%

2012 2013 2014 2015

Others

Drugstores

Traditional Trade

ConvenienceStoresMinimarkets

Supermarkets

Hypermarkets

HYPERMARKETS SHARE IS BEING SLOWLY ERODED Growth channels are Drugstores, Minimarkets and Convenience Stores

Source: Estimates based on average shares from Retail Index Countries covered -HK, China, India, Indonesia, Malaysia, Philippines, Thailand, Taiwan, Singapore markets

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7.4

0.9

3.1

1

5

1.7

4.8 5.3

HYPER/SUPER PERSONAL CARE CVS ONLINE

2008 2013

IN CHINA HYPER/SUPERMARKET SHOPPING TRIPS HAVE FALLEN AS OTHER CHANNELS HAVE GAINED

During the past 6 years, Chinese shoppers have cut their Hypermarket trips by 30%

Source: Nielsen Shopper Trend 2013 – average trips per month

-32% Vs. 2008

Trips

+89% Vs. 2008

Trips

+55% Vs. 2008

Trips +430% Vs. 2008

Trips

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Asian consumers increasingly living on the go A day in the life of an urban shopper provides a lot of opportunities for a convenient retail offer…

Small sized vegetables

Source: Observation/ website

Get coupons by paying bills in CVS

NEW DAY START!

08:45 am 12:30 pm

13:30 pm

18:00 pm

21:00 pm

Freshly brewed coffee

15:30 pm

19:30 pm

Late night snack

Pre-cut fruit

Pre-cooked home meals

Rice Lunchbox Meal

Bundle Promotion: Meal+ Drink

ATM

Pick up theatre tickets

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‘GIVE ME MORE FOR MY MONEY” Promotions are the new norm – increasing expectation of value for money

Source: Nielsen Consumer Panel

32%

40%

29% 28%

41%

24%

8%

28%

21%

38%

64%

KOREA CHINA THAILAND

Hypermarket Supermarket CVS/Minimarkets Online

PROMOTIONS PLAY A BIG ROLE FOR ONLINE RETAILERS

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95.9 97.4 87.3

76.6

20's 30's 40's 50's~

2014

(Y2014)

90%

KOREA IS LEADING THE WAY IN E-COMMERCE E-Commerce drives total retail sales growth and is now largest retail channel

68% 48% 26% 25%

Annual penetration % Y2014

(Y2014)

43%

MOBILE SHOPPING PENETRATION %

ONLINE SHOPPING PENETRATION %

PENETRATION BY DEMOGRAPHIC (%) PENETRATION BY CATEGORY %

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FUTURE OF RETAILING…

RETAIL (Brick & Mortar)

Add value Make it easy

Consider channel

differences

Know your shoppers

RETAIL/DIGITAL

DIGITAL

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VIETNAM CONSUMERS AND

MARKET LANSDCAPE

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18.2

10.0 6.8

4.6 0.7 2.1

2011 2012 2013 2014 2015 9M2016

ECONOMY IN 1ST 9 MONTHS GREW SLOWER THAN TARGETED PLAN OF 2016, HOWEVER THERE ARE STILL GREEN TICKS FROM RETAIL AND SERVICES SECTORS.

Source: Government Statistics Office (September 2016)

6.2

5.3 5.4 6.0

6.7 5.9

2011 2012 2013 2014 2015 9M2016

GDP GROWTH

CPI CHANGE

FDI reached $16.4 Bil in 1st 9 months leading by manufacturing and real estate.

WHOLE & RETAIL SALES grew 8.15% vs same period YA

CONSTRUCTION & SERVICE contributed 2.52 pts and 2.55 pts to GDP respectively.

AGRO-FORESTRY-FISHERIES struggle with only +0.7% vs year ago.

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THIS OPTIMISTIC IS REFLECTED IN NEW BIG TICKETS BASICS

Source: Nielsen Consumer Confidence Index Survey – Q1’2016; IDC, https://www.idc.com/getdoc.jsp?containerId=prVN25523315; Vietnam Automobile Manufacturer’s Association; GfK http://focustaiwan.tw/news/aeco/201509130012.aspx; World Travel Council, “Travel & Tourism Economic Impact 2015 Vietnam”, 2015 estimated domestic tourism growth 8.4%

VIETNAM CONSUMER CONFIDENCE INDEX (CCI) Q2’2016

Above 100-baseline and in top 10 globally for 8 consecutive quarters

SPENDING FOR THE NEW BASICS

SMARTPHONES

MAJOR APPLIANCES

AUTOMOBILES 76%

SAVINGS -2

WHERE DO VIETNAMESE CONSUMERS CHANNEL THEIR SPARE CASH?

SAVING IS STRONG HABIT

http://focustaiwan.tw/news/aeco/201509130012.aspx

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4.0%

3.7% 4.7%

2.9%

1.7%

5.2%

2.9%

6.2% 6.4%

3.7%

4.2%

1.2%

5.0% 5.5% 5.5%

4.8%

3.5%

5.9%

3.3%

7.3%

7.8%

5.3%

6.1%

3.1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Unit Value Growth Volume Change Nominal Growth

UNLIKE KEY CITIES, FMCG SOFTENS THIS YEAR IN NATIONWIDE AND SHOWS MUCH VOLATILITY TO BE PREDICTABLE

Source: Nielsen Retail Index – Versus year ago

Fast Moving Consumer Goods (FMCG ) dynamics - Total Nationwide

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7.4% 7.9% 8.2% 9.6% 3.9% 7.6% 8.6% 5.9% 10.1% 7.2%

3.0% 2.9% -5.4% -3.2% -1.4%

8.3% 9.8% 3.5% 2.3% -0.4%

6.3% 6.3% 5.2% 8.2%

3.3%

6.8% 7.1% 6.8% 5.8%

3.1%

5.8% 3.4% 1.8% 4.7% 5.3% 6.7% 6.5% 3.9% 2.9%

-0.3%

6.5% 6.1% 3.7%

5.2%

2.2%

7.8% 9.0% 5.2%

7.6%

4.9%

FMCG Nominal Value Growth vs. YA by regions

NORTH 24%

CENTRAL 29%

SOUTH 47%

FMCG SOFTENS PARTICULARLY IN NORTH, CENTRAL & MKD DUE TO UNFAVORABLE WEATHER CONDITIONS

S.East (30%)

MKD (17%)

Salinity intrusion

Drought

Beverage scandals

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PICTURES IN IN 6 KEY CITIES IS MORE POSTIVE IN WHICH GROWTH KEEPS MOMENTUM

Source: Nielsen Retail Index – Versus year ago

Fast Moving Consumer Goods dynamics - Total 6 cities

2.1%

3.7%

2.6%

3.5%

0.7%

3.7%

0.7%

3.8% 4.6%

2.3%

5.2%

3.5%

3.2%

4.7%

3.6%

4.5%

2.0%

4.3%

1.6%

4.7%

5.4%

2.9%

6.3%

4.3%

0%

1%

2%

3%

4%

5%

6%

7%

Unit value change Volume change Nominal growth

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19 Source: Nielsen Retail Index – Versus year ago (*): MT excludes Saigon Coopmart

Unite Value change Volume change Nominal growth

FAST MOVING CONSUMER GOODS DYNAMICS – MT vs TT

-1.9% -2.0% -2.2%

7.4%

5.7%

2.1%

-0.1%

2.1% 2.2%

10.5%

6.9%

9.6%

2.8%

4.2%

11.4%

4.9%

-5%

0%

5%

10%

15%MT 6 cities (*)

2.4%

5.1%

-0.5%

1.2%

3.2%

1.0%

3.8%

0.9%

3.8%

5.7%

2.0%

6.5% 6.6%

-5%

0%

5%

10%

15%Traditional Trade Off 6 cities

MODERN TRADE VOLUME GROWTH ACCELERATE DURING LAST YEAR, WITH AVERAGE PRICE DECREASING

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RAPID STORE OPENING

BIGGER SPENDING FOR SUPERMARKET

NEW FORMATS ATTRACT CONSUMER

MT GROWTH DRIVEN BY 3 KEY FACTORS

421

1411

457

461

240

341

0 1000 2000 3000

Jun 15

Jun 16

CVS Minimart Supermarket

Supermarket replace

Wet Market to be

consumer’s most spending channel

Number of Stores % Consumer Shop

Source: Nielsen Shopper Trend 2015

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MORE PLAYERS TO COME It’s no longer the game of Coop, Metro & BigC

22 Base: All HM/SM shoppers, 2013 (n=1486), 2014 (n=1465), 2015 (n=1382) Ref: Q18 Thinking about the same statements , please indicate which stores you associate with each of the statements?

TOP 10 ATTRIBUTES IMPORTANT FOR CHOICE OF SUPERMARKET / HYPERMARKET Good deals and promos and low prices have overtaken convenience as the top attribute this

year. This, coupled with shoppers’ awareness of prices shows retailers need to more conscious about their pricing strategies.

2014 2015

1

2

3

4

5

6

7

8

9

10 Are the first to have new products Pleasant store environment

Every thing I need in one shop Provide enjoyable shopper

experience

Low prices for most items

Wide range of healthy and organic products

High quality fresh food

Every thing I need in one shop

Provide enjoyable shopper experience

Has a wider variety of products

Food and groceries are good value for money

A place where its easy to quickly find what I need

Has a wider variety of products

Are the first to have new products

A place where its easy to quickly find what I need

Convenient to get to

Provide really good deals and promos Low prices for most items

Convenient to get to Provide really good deals and promos

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Val % growth MAT TY vs YA

Val % growth MAT LY vs YA

YET PERSONAL CARE MAIN CATEGORIES SLOWING DOWN IN MT RETAILERS NEEDS YOUR HELP

Source: RA index, all categories where 3 years trend is available; size of bubble stands for absolute Val of particular category (MAT TY)

SUSTAINED GROWTH

BACK TO GROWTH

SLOWING DOWN

SUSTAINED DECLINE

Beverages

Milk Based

Baby

Cigarette

Non-Food

Food

-15.0

-5.0

5.0

15.0

25.0

35.0

-25 -15 -5 5 15 25 35

Beer

H.F.Drinks

Energy Drinks

Packaged Water

Sport Drinks

Diaper Fem. Care

RTD Milk

Pie & Sponge Cake

Spoon Yogurt

I. Noodle

Tissue

Sauce Lau- ndry

Snack

Fabric Softener

Sham -poo

Bis-cuits

Bouillon-Msg

Coffee

Cooking Oil

Personal Wash

Milk Powder

Tooth paste

Facial Care

Hair Conditioner

Deo

Dish washing

Body Lotion

Mouth wash

RTDT

Insec. Aerosol

Facial Tissue

Chilli

Cleaner

Mayonnaise

Teabag CSD

Gum Baby Cereal

Modern Trade HCMC+Hanoi

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IT’S A GOLDEN TIME TO BUILD YOUR RELATIONSHIP WITH KEY RETAILERS NOW

PERSONAL CARE SLOWS DOWN

CURRENT PLAYERS RE-STRUCTURING

NEW PLAYERS COMING

PC is the biggest two super-group of FMCG for

Modern Trade

Metro is now MM Market BigC changes Top

Management

Auchan, Seven Eleven, AEON, MM Mega

BUILDING STRATEGIC PARTNERSHIP WITH RETAILER WITH CAT-MAN PRACTICE

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INCREASE YOUR SHARE GROW WHOLE CATEGORY

TWO WAYS TO INCREASE BUSINESS RESULTS Retailers don’t care about sales of specific brands but whole category instead

CONFLICT WITH RETAILER WIN-WIN FOR BOTH

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CATEGORY MANAGEMENT DEFINITION

A joint retailer/supplier process of managing categories as strategic business units,

producing enhanced business results by focusing on delivering consumer value

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A CONSTANT PROGRESSION

US recession

Wal-Mart first retailer

to apply CatMan

Spread to Europe, Asia,

Middle East, esp. in saturated

markets

1990 2000 2010

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TRANSLATING SHOPPER BEHAVIOR AND RETAILER IMPERATIVES INTO IN-STORE ACTIVITIES

4P resentation roduct range romotional plan ricing

30 Workshop

CSD category, Vietnam

31 Workshop

CSD, UK

32 Workshop

Toothbrush & paste, Carrefour China

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CAT-MAN REQUIRE SUPPLIER TO SEEK SUPPORT FROM A PREFERRED MANUFACTURER

As long as he can: Understand the retailer’s strategy Support the retailer’s strategy Share it own strategy Support the retailer’s tactics

That preferred supplier is called a category captain.

WHAT CAT-MAN INCLUDES?

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CAT-MAN’S 8 STEPS PROCESS

Category Definition What is the category?

Category Strategy How will we get there?

Category Tactics What actions will we take?

Category Role How important is it?

Category Scorecard Where do we want to go?

Category Assessment Where are we?

Category Review What are the results?

Category Implementation How will we bring it to life?

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SHOPPER-CENTRIC CATMAN

Shopper behavior driven Meet’s shopper needs

FUNDAMENTAL CATMAN & SHOPPER-CENTRIC

TWO LEVEL OF CAT-MAN

FUNDAMENTAL CATMAN

Consumer (RMS) data-driven Meet’s consumer needs

ONE shopper = FOUR consumers!

Average household size of Vietnam is 3.8 (GSO)

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KEY THINGS YOU HAVE TO LEARN

FUNDAMENTAL SHOPPER-CENTRIC

• 4 roles of a category • How to assess a category • Which tactics to apply for which

situation for which role • How to implement in reality: task,

timing & tips • How to work, build relationship with

Retailers and to be their category captain

• Embedded shopper insights into current Cat-man process rather than using consumer data only as fundamental Catman

• Re-fine your trade strategy, tactics, merchandizing plan with shopper insights

• Apply the latest findings of neurological research into in-store tactics

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AGENDA: FUNDAMENTAL CATMAN

Definition

Market Overview

Introduction

Roles & responsibilities

Category definition

Category role

Category assessment

Category scorecard

Category strategies

Lunch

Category tactics

Shopper behavior

Review day 1

Category tactics

Implementation & review

Tools and data needed

Lunch

Day 1 Day 2

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Imbed a shopper-centric framework into your existing Category Management processes

Define a consistent trade strategy addressing deep shopper insights

Incorporate shopper behavior into tactical decisions

Identify new ways to merchandise a category

Apply the latest findings of neurological research into in-store tactics

Benefits Agenda Day 1: strategic Day 2: tactical

AGENDA: SHOPPER-CENTRIC CATMAN

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4 TRENDS SHAPING THE FUTURE

OF RETAIL IN VIETNAM

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4 TRENDS SHAPING THE FUTURE

1. THE CHANGING DEMOGRAPHY

2. MARKET FRAGMENTATION VS. CONCENTRATION

3. CHOOSY CONSUMERS VS. “FAST-MOVING” SHOPPERS

4. THE POWER OF RETAILERS

42

Younger, Older, Wealthier

MIDDLE CLASS

33 MILLION by 2020

DYNAMIC & OPTIMISTIC

ELDER** POPULATION

20% by 2020

MILLENNIALS*

30% of the current population

(*): Age of Adults in 2015: 18-34; (**): Age of Adults in 2020: 50-69

1. VIETNAM DEMOGRAPHY NOW & FUTURE

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43 Source: Nielsen Traditional Trade Thought Leadership Q4, 2015; : Nielsen Retail Index

Traditional Trade Rural

2. MARKET FRAGMENTATION VS. CONCENTRATION MAJOR CHALLENGES OF FMCG INDUSTRY

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>65 MM people are and will be living in Rural

Vietnam

Rural contributes 54% Total FMCG

sales

1.4 M Traditional Trade stores account

for 85% FMCG sales

Average purchase time 90 sec.



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Access to new products

CONVENIENCE Quick & easy


46 Source: Nielsen Vietnam Region Difference Report

• Care what others think, concerned about others opinions

• Importance of traditionalism; family values • Long term orientation • Price conscious though not willing to

compromise quality to price • More loyal to brands/ product

GO BETTER

RISK AVERSE

HAPPY - GO -

LUCKY

• Usually worried about their future hence they work hard, make plan and strictly follow their plan

• Play safe; mindful in spending • Save and live for better future: highest

proportion of income allocation to saving

• Satisfied with current life and optimistic about life

• Live for the moment - don’t care much about the temporary and believe their lives are temporarily fine

• Sense of individualism; highly open for new out of home entertainment channels and venues

NORTH

CENTER

SOUTH

47

CONSUMERS ARE LOOKING FOR HEALTH, QUALITY & AUTHENTICITY

“HEALTH” - THE BIGGEST CONCERN

Source: Traditional Trade Thought Leadership Q4, 2015; Retail Growth Strategies Report 2016, Lifestyle report 2015

48% VIETNAMESE PEOPLE CONSIDER

“STAYING FIT AND HEALTHY” AS TOP ASPIRATION FOR THE FUTURE

9 13

15 18

21 34

19

Malaysia

Indonesia

Thailand

Singapore

Philippines

Vietnam

SEA Average

% PEOPLE CONSIDERING “HEALTH” AS BIGGEST & 2ND BIGGEST CONCERN – Q4’15

VALUE-FOR-MONEY

89% Vietnamese consumers will PAY MORE for foods that promote HEALTH benefits

73% willing to pay more for HIGHER QUALITY

48% of Vietnamese consumers purchase packaged food because of “ADDED HEALTH BENEFITS” & “ALL NATURAL INGREDIENTS”

3. CHOOSY CONSUMERS

48

MORE SOPHISTICATED: SEEKING FOR MORE BENEFITS AND MORE SERVICES ON-THE-GO LIFESTYLE

USING IN-STORE SERVICES

Petro/filling stations

52%

Fast-food

52%

In-store banking

56%

Prepared food

45%

Coffee services

47%

Postal services

47%

Source: Traditional Trade Thought Leadership Q4, 2015; Retail Growth Strategies Report 2016, Lifestyle report 2015

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49

Where do consumers shop?

Base: All shoppers 2014 (n=1497), 2015 (n=1500) Ref: Q7a Which of these types of stores have you visited in the past 7 days? Ref: Q8 On average, how often would you shop at the following type of store? Ref: Q7d Which of these types of stores would be the one where you normally buy most of your food and grocery items?

Supermarkets

Wet Markets

Traditional Grocery

52

2014

60

79 85

51 64

% Change

(+/-)

-6

-8

-13

How often do they shop ? Ave. per month

2015 2014

21.2 22.4

2.7 2.8

8.4 8.6

3.3 3.6

Channel spend most in?

2015

37

49

7

6 16 11 5

2015

Convenience Stores

4. POWER OF RETAILERS

Personal Care 12 9 3 1.0 0.9 0

Supermarkets has replaced Wet Market as channel with highest expenditure, CVS and Personal Care win penetration, with still space to grow

2013

53

34

11

1

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50

SUPERMARKETS ARE SLOWDOWN ON EXPANSION

Source: Banners’ official website

SUPERMARKETS’ EXPANSION

71 74

76 77 80 81 82 83 84 84

39 42

50 50 50 52

28 30 31 31

33 33 34 34

17 19 18

20

30

21 21 21 21 19 19

19

19 19 19

6 9 9 9 9

13 13 13 14

1 1 1 1 3 3

5 6 6 6

1 2 2 2 3 4 4 4 4

Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16

Co.op Mart

VinMart

Big C

Aeon Citimart

Metro

Lotte Mart

Auchan

AEON

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51 Source: Banners’ official website

Number of Store

MINIMARTS OBSERVE STEADY EXPANSIONS WITH NEW PLAYERS

FOOD STORES

MINIMARTS’ EXPANSION

83 87 87 89 91 91

88 88 88

98 101

45 45

52

60 61 61

76

83 81 84 85

34 38 38 38 38

15 16 18 20


Co.op Food

SatraFoods

Zakkamart

Bách Hóa Xanh

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Number of Store

CVS IS BOOMING ACROSS VIETNAM

CVS ’ EXPANSION

88 97

104 110

119

129

139

170 174

183 189

95 97 95 91

103 103

132 141

145 142

152

97 103

117

128 129 130

106 108 109

130 129

48

62 67 65 62 65 65

98 103 106 106

17 17 17 17 25

30 37

47 50 57 59


Circle K

B's Mart

Shop & Go

Family Mart

Mini Stop

Vinmart + 800

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Number of Store

MODERN DRUGSTORES CONTINUED THEIR EXPANSION YET SLOW DOWN IN PAST QUARTER

HEALTH &

BEAUTY STORES

HEALTH & BEAUTY STORES’ EXPANSION

31

33 34

36 37

40 41

43

46 47 47

23

25

27

30

33

38 38

41 41

43 43

34

41 42 42

39 39


Medicare

Guardian

Pharmacity

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MOM & KIDS CHAIN ALSO PICKING UP

Source: Banners’ official website

MOM & KIDS CHAIN’ EXPANSION

Stores Aug-16 Sep-16

Concung.com 82 83

Bibomart 64 69

Kids Plaza 53 55

TutiCare 24 25

Shoptretho 21 22

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55

VIETNAM IS ONE OF TOP DESTINATION FOR BUSINESS EXPANSION, ESPECIALLY RETAILING

Asia Top 3

priority markets for companies likely to expand

Top 11 Worldwide Most attractive retail market

FUTURE BUSINESS SENTIMENT SURVEY

MAR 2016

GLOBAL RETAIL DEVELOPMENT INDEX TM 2016

Top 3 Asia: China; Indonesia; Vietnam Top 11 Worldwide: China; India; Malaysia; Kazakhstan; Indonesia; Turkey; United Arab Emirates; Saudi Arabia; Peru; Azerbaijan; Vietnam

nielsen - vietnam retail landscape

Data & Analytics