People are still tightening their purse strings.

Consumer purchasing power has not improved, so supermarket shopping carts are still mainly necessities and promotional items.

A survey by Vietnam Report in September showed that about 40% of respondents did not feel their financial situation had improved in the final months of the year. This sentiment was also reflected in purchasing power at major retailers, with shopping baskets mainly consisting of essential goods and promotional items.

According to MM Mega Market representative, in the first 9 months of the year, consumer demand increased by about 5-6% compared to the same period last year. Although the number of shopping bills increased by 9%, the value of each shopping basket remained at the same level. Specifically, the average shopping basket of each household remained at about 800,000 VND with products mainly being necessities.

Similarly, Saigon Co.op also said that sales increased thanks to weekly promotions. Each average bill at Co.opmart is between 400,000 and 500,000 VND, unchanged from last year. Instead of shopping for a variety of items like before, customers now focus on big promotional products with gifts.

Consumer purchasing power remains weak, leading to a shrinking demand for loans. Ms. Tran Khanh Hien, Director of Research at MB Securities Company, stated that credit growth by consumer finance companies alone is currently lower than the industry average, whereas during periods of economic stability, it was double that rate.

According to Ms. Dinh Thi Thuy Phuong - Director of the Department of Trade and Services Statistics (General Statistics Office), although the growth rate of total retail sales of goods and consumer services revenue in the first 9 months of this year (at current prices) increased by 8.8% compared to the same period in 2023, it has not yet reached the level of the pre-Covid period (increased by over 10%). The increase in the first 9 months of this year is still 2.5 percentage points lower than the average of the first 9 months of the years (2015-2019). This reflects the recovery of domestic consumer demand but not yet high.

After excluding the price factor of the CPI, real consumption growth from the beginning of the year to date has not been able to bounce strongly above the 5% threshold, according to data from financial services provider AFA Capital. This is a modest figure despite receiving support from more than 12.7 million international visitors in 9 months, up 43% compared to the same period last year.

Investment, exports, and domestic consumption are the three main drivers of economic growth. However, investment and exports are currently having to shoulder the burden of supporting domestic consumption to accelerate economic growth.

Mr. Huynh Hoang Phuong, an independent financial analyst, noted that consumer spending growth was lower than GDP growth in the first nine months of the year (6.18% and 6.4% respectively).

During periods of economic stability such as 2015-2019, consumption grew by an average of 7% per year, higher than the figure for the first nine months of this year. Consumption is an important component of GDP, accounting for more than 60% in Vietnam and about 60-70% in the US. It reflects consumer demand, is the basis for developing private investment and creates future economic prospects.

According to experts, the reason for low consumer spending is either a lack of confidence in the future of the economy or a negative impact on their jobs and income.

Many large-scale promotional programs have been launched to stimulate shopping and connect supply and demand. However, from the perspective of the distribution unit, Mr. Ha Ngoc Son, Deputy General Director of Saigon Trading Company (SATRA), realized that extending the promotional program would reduce its appeal. He said that the duration could be shortened to only about 1 month, half a month or even 1 week, but it needs to be synchronized and have a wide communication program to let consumers know. Thus, Mr. Son believes that it will create a synchronous spreading effect.

On e-commerce platforms, the discounts are also spread out over many months with the highlight being the double days (for example, August 8, September 9...). Therefore, Mr. Nguyen Binh Minh, Executive Committee Member of the Vietnam E-commerce Association, commented that the year-end promotion will only mobilize the remaining potential demand. Therefore, instead of waiting for people's consumption and income to improve, he suggested that the solution should come from the retailers themselves.

"The increasing commitment to users will motivate them to spend money even when it is not necessary," Mr. Minh emphasized. One of the solutions that is being implemented and needs to continue to develop in the future is identification in e-commerce. Supporting order cancellation even when the goods have been delivered will also help reduce buyers' doubts about the goods and limit disputes.

Ultimately, the core is that consumer income needs to be improved to create excitement in spending. According to Dr. Nguyen Quoc Viet, Deputy Director of the Institute for Economic and Policy Research, it is necessary to focus on sustainable development of the private economic sector to create jobs and income for people. This will contribute to the policy of increasing the basic salary by 30% and increasing the regional minimum wage by 6% from July 1 to have a broad and effective impact.

To achieve this, Mr. Viet suggested that the government should not immediately increase taxes and fees in 2025 when fiscal policy shifts from loose to tight. This is because doing so would force businesses to increase input costs or raise selling prices, inadvertently counteracting the current consumer demand stimulation policies.

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