Although there was a sharp decrease from 126 to 117 points compared to the previous quarter, Vietnam still placed among the most optimistic countries globally and overcame Philippines and Indonesia to rank 2nd in the world for having the most positive consumers, after India, whose score was 123.
The combination of deteriorating job prospects, rising anxieties about short-term personal finances and spending readiness drove the decline in Vietnam’s consumer confidence this quarter. All three drivers of consumer confidence - job prospects, personal finances, and spending intentions witnessed significant declines (-5 percentage point (pp) and -4pp, -7pp respectively).
“As Covid-19 has spread across the globe, lockdowns, business closures, and rising unemployment have slashed consumer confidence, and with it consumer readiness to spend. Having successfully managed the first wave of the Covid-19 outbreak, Vietnam is on a rebound, however, consumer confidence is weaker overall due to the impact of the pandemic which has impacted many people’s personal situation as well as their outlook going forward,” said Louise Hawley, managing director of Nielsen Vietnam.
Job security overtook health to become the number 1 concern
In the second quarter of 2020, Vietnamese consumers continued to rank job security (45 per cent, +5 per cent compared to the first quarter of this year) and health (44 per cent, -5 per cent) as their top two key concerns. After one year during which health was the top concern of Vietnamese consumers, this quarter, job security overcame health to take this position.
Remarkably, there was a big jump in consumer concern about the economy (31 per cent, +10 per cent), which is now at the highest level since the second quarter of 2014.
Louise observed that these trends are largely predictable as Vietnam was one of the first countries who controlled the first wave of the pandemic well and so stepped into the Rebound phase. This meant that health was no longer the top one concern of Vietnamese in the second quarter of 2020.
However, the pandemic drove a longer-term impact on the economy and consumer uncertainty, which resulted in job instability and a hesitation to spend. In previous quarter, work-life balance moved down one spot on the key concern list with less than one in four consumers indicating it as a worry (23 per cent compared to 22 per cent respondents in the first three months of 2020).
Another mention is increasing utility bills (8 per cent, +2 per cent) which is despite efforts to manage this and can be attributed at least in part to more people having spent more time at home during this period.
Vietnamese consumer became the most avid savers globally
Globally, Asia Pacific consumers are leading the way when it comes to saving intentions. In the second three months of 2020, with a slight increase (69 per cent to 72 per cent), Vietnam placed at the top globally for having the region’s most avid savers.
In the second quarter, Vietnamese people indicated that they spent less spare cash than the previous quarter. After savings, their spare money went on new clothes (39 per cent, -3 per cent).
Following last quarter’s trend, due to a slight decrease, Vietnam was still in top 2 countries having the highest proportion of consumers saying that they spent on Medical insurance premiums (38 per cent, -2 per cent compared to the first quarter of this year), just behind India (39 per cent).
In addition, Vietnamese consumers unsurprisingly indicated that they spent significantly less spare cash on holidays/ vacations and entertainment.
Government lockdowns to contain the Covid-19 pandemic started a domino effect, with businesses especially hotels, bars and restaurants closed down temporarily or permanently and consumer spending dropping due to fewer spending opportunities. The resulting job cuts and uncertainty increased anxiety about reduced incomes and stressed household finances, explained Louise.
“Even if we have seen a recovery in the latest months, consumer demand is on shaky ground and the coming weeks are likely to see an impact with further reductions to spending. At the same time, there remain reduced visits to stores, restaurants, and other venues, as well as financial concerns and depressed discretionary spending on categories such as entertainment, new clothes, and eating out,” said she.
Going against the trend, new technology products jumped into third place for ways in which consumers spent their cash. It is also the only increasing factor in the cash spending list of Vietnamese consumers in the second quarter of 2020.
“Having more time at home and with technology playing a key role in everything from education, working and entertainment has created this demand for technology products,” Louise added.