The latest McKinsey Quarterly highlights Vietnam’s rapid economic growth, pointing out its middle class will have grown from 7 million households of consumers in 2003 to 25 million in 2013 — and retail sales doubled over five years to $39 billion last year.
The McKinsey authors say the country has room to grow because per capita retail sales ($450) are among the lowest in Asia. But the report cautions the market is fragmented and difficult to reach, and underscores lessons learned by a small number of executives from foreign companies who have experience there. Among them:
- Know your consumers. Vietnamese consumers are leapfrogging into new technology and modern products. An example is the leap into the Internet — with 5 million Internet subscribers and 18 million Internet users as of last year.
- See problems as possibilities. Food safety in Vietnam is a significant issue, with 3 million cases of food poisoning a year, which creates an opportunity for companies that can overcome fears about or food hygiene and refrigeration among street vendors and wet markets.
- Think creatively about distribution. Marketing success may require a network of independent and exclusive distributors that sell goods in “every nook and cranny” of the country’s 63 cities and provinces.
Overall, McKinsey adds to the increasing awareness that Vietnam’s notoriously poor infrastructure is improving, and modern trade has made significant inroads.
More on the McKinsey report on Vietnam consumers