Automotive, home appliance, and electronics markets: Purchasing power is shrinking.

SGGP 27/05/2023 08:47

Currently, the electronics market is quite sluggish. In many stores and supermarkets, there are more sellers than buyers, despite the continuous launch of discount and promotional programs.

Customers browse products at a Dien May Xanh electronics store in Ho Chi Minh City.

There were very few customers.

Over the weekend, the Cho Lon electronics supermarket (located on Cach Mang Thang Tam Street, District 3) saw only a few customers browsing. Similarly, other supermarkets in the same chain on Truong Chinh Street (Tan Binh District) and Quang Trung Street (Go Vap District) also experienced a significant drop in customers. "Previously, each employee earned over 15 million VND per month, but now their base salary is less than 8 million VND per month," said Ms. M., a product salesperson for a well-known electronics brand at the Cho Lon electronics supermarket.

Around 7 PM on a weekend, at the Nguyen Kim electronics supermarket (located in BigC Truong Chinh, Tan Phu District), there were only 3 adults and 1 child looking at the displayed televisions. Further observation at the same supermarket on Quang Trung Street (Go Vap District) showed that the entire shopping space, spanning thousands of square meters, had only a few customers. After looking at product samples and checking prices for a 1 HP air conditioner, Mr. Ngo Van Phu (a resident of Go Vap District) said that his house is small, located in a deep alley, and quite hot, so he wanted to buy an air conditioner for convenience. Prices ranged from 5.5 to 11.5 million VND per unit, a decrease of 5% to 26% compared to before, depending on the brand. “However, I still need to check prices at other electronics supermarkets before making a final decision,” Mr. Phu said.

According to supermarkets, the case of Mr. Phu browsing but not buying immediately is quite common. Observations at supermarkets show many promotions and discounts ranging from 5% to 40%, along with support for installation, shipping fees, and gift vouchers; however, purchasing power remains significantly lower, by 30% to 70% compared to before the Covid-19 pandemic. According to information from electronics chains such as Nguyen Kim, Cho Lon, and Dien May Xanh, consumers are more interested in essential goods, so high-value, non-essential items (such as electronics) are outside the priority list, leading to increased inventory.

Statistics from the General Department of Customs show that from the beginning of May until now, the volume of imported complete automobiles has continued to decline rapidly, with only 3,257 complete automobiles of all types imported nationwide, with a total value of over 88 million USD. Meanwhile, in the first quarter of 2023, the country imported over 42,000 complete automobiles, with a total value exceeding 925 million USD. According to updates from the Vietnam Automobile Manufacturers Association (VAMA), in April, sales across the entire automobile market reached only 22,409 vehicles, a decrease of 25% compared to March 2023 and a decrease of 47% compared to March 2022. In the first four months of 2023, total sales across the market decreased by 30% compared to 2022, with specialized vehicles experiencing a 58% decrease. According to the Ministry of Industry and Trade , businesses are facing high inventory levels and a sharp decline in vehicle sales. The causes of this situation include limited access to bank loans, high interest rates, exchange rates, and inflation.

"Enduring the wait"

Businesses have implemented a series of measures such as cutting staff, downsizing premises, offering heavy promotions to clear inventory, and selling additional household items like glasses and dishes, but these have proven ineffective. To address the immediate challenges, Thien Hoa electronics supermarket, located at the foot of Tham Luong bridge (bordering Tan Binh and District 12), recently closed down and announced the transfer of its premises.

Similarly, the Nguyen Kim electronics supermarket (next to BigC Truong Chinh), which used to thrive due to its large customer base, has now downsized, moved its store to the ground floor, and is operating right inside the BigC supermarket. Many electronics stores and supermarkets that were once bustling along Hoang Van Thu and Ly Thuong Kiet streets (Tan Binh district) are now quietly closing down or returning their premises due to a lack of customers.

Why are fewer people visiting stores and supermarkets than before? According to some electronics retailers, the general mindset of families before the Covid-19 pandemic was to readily replace old appliances (televisions, refrigerators, washing machines, etc.) after a period of use rather than waiting for them to break down. However, now that incomes have been affected, this has directly impacted purchasing power. In addition, the increasing trend of online shopping is another reason why customers are not visiting supermarkets in person.

Businesses say it may take several more years for the market to recover, but all of this is still just a forecast. Facing immediate difficulties related to rent, employee salaries, warehousing, etc., businesses still have to carefully plan and struggle day by day. While it's understood that this is a challenge not unique to any particular industry in the current context, if retail businesses cannot survive and the government doesn't provide timely support policies (such as tax reductions, preferential loan interest rates, etc.), it will affect the entire economy .

Imported goods dominate the market.

Currently, some domestic electrical appliance brands such as Kangaroo, Alaska, Sunhouse, Nagakawa… have a relatively small market share, insignificant compared to the numerous foreign "giants" present in Vietnam. Estimates from businesses suggest that the market size of brands like Samsung, LG, Sony, Casper, TCL, Toshiba, Sharp, Panasonic, Electrolux… in Vietnam is approximately $2.5 billion.

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