Vietnam Shoes Market

2014 A.S.Louken Group Pte Ltd.
Private & Confidential
Understanding Market
Trends and Consumers in
Vietnam
2014 A.S.Louken Group Pte Ltd. Private & Confidential
VIETNAM
Vietnam Demographics Population Distribution

From a total national population of 88
million, approximately 22% are
concentrated across 5 major cities where
HCM and Hanoi primarily accounts for 17%
of the overall population.
Population Distribution
9%
8%
2%
3%
78%
9,000
Ho Chi Minh
8,000
7,000
8,000,000
6,000
7,681,700
Hai Phong
Nghe An
Vinh
Others
Population size: Major Cities of Vietnam

6,844,100
7,000,000
5,000
Hanoi
x 10000
Population Size
6,000,000
4,000
5,000,000
3,000
4,000,000
2,000
3,000,000
2,952,000
1,904,100
2,000,000
1,000
480,000
1,000,000
Vietnam
Ho Chi Minh
Hanoi
Hai Phong
Nghe An
Vinh
Per Capita Annual Disposible Income,

Spending and Saving
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The general trend exhibits that the population is getting more affluent on an annual basis, supported by high
employment rate in the cities (below 4% unemployment rate).
Given this scenario, this demonstrates that there is a promising growth in the domestic consumption market.
Source: GSO 2012, World Bank
Savings: Income
Source: Euromonitor
Vietnam Income Band by Age (2011)
There are 2 distinct group of people with different level of income.

There is a large group of people within the age of 20 30 that have significantly lower income than those in the
30 to 59 age range. (These 2 groups makes up about 50% of the population.
Highest income earners are mostly those in their early 40s.
Good target for mid

to high end products
Good target for mass

market products
Source: Euromonitor
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to
edit
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What does all these mean?
Growing market size coupled with growth in
consumerism.
Majority of the more affluent reside in the cities.
Most of the affluent are age 35 to 59 years old. Target for

premium brands and products.
Market potential lies in the major cities HCM and Hanoi

(17% of overall population).
Relatively positive outlook on spending (consumer
confidence Index = 95, same as Singapore)
Vietnamese Consumers
Some Key Characteristics of Vietnamese Consumers
Vietnamese Consumers are generally Ethnocentric loyal to

countrys brands and products.
71% believe that local products are of high quality
80% prefer domestically produced garments
Consumers are easily convinced to make purchases due to

Price Discounts
Free Gifts with purchase!
Rise in number of working women.

More women taking up senior positions
Women want to share more responsibilities in lifes decision.
90% feel that their role is changing for the better
Where they shop for essentials: FMCG
Grocery outlets
365
23
Supermarkets
mini-marts
2014 A.S. Louken Group Pte Ltd. Private & Confidential
636,158
Retail outlets are growing at a

rate of 1.2%
Out of home consumption has
reduced; while In-Home
enjoyment has increased.
424
Hypermarkets
Source: Euromonitor
What are the common areas where money is spent?
Education, Healthcare, F&B products and Personal care are key areas of expenditure.
10
What are major fear in the minds of Consumers?

Likely concerns are .
Top Regular
consumption
Economy
Health
Rising Food
prices
Fruit Juices 46%

Soy Milk 44%
Beans/Peanuts 37%
Cholesterol-Reduced Cook oil
35%
Liquid Milk
31%
Job
Security
Volume
Growth
Yogurt 18%
11
Functional food and Drinks becoming popular
There is a growing trend in functional food

There was an increase in number of functional products from
400 (2000) to 1000 (2012) in the market
56% and 48% of residents in Hanoi and HCM respectively
consume functional food.
2000
Vitamins in
Beverages
1718
1000
500
Nutritional
Drinks
60
1500
Yogurt with
Collagen
0
2000
2012
Total players
Source: Euromonitor
12
Focus on In-Home Enjoyment
Several FMCG brands are convincing cost conscious Vietnamese that their outdoor
lifestyle can be transferred in home.
Maggi: Encourage cooking at home
13
Purchasing patterns of FMCG
Urban consumers are more busy.

Perception of 2/3 housewives:
I will buy bigger pack size because

it is less expensive
It is not the visual, 56% of
consumers do their maths ($ per kg)
smart shoppers
Source: Kantar World Panel

14
Lower income consumers down-size from bottle to sachets to

fight inflation.
Common with Shampoo and detergent.
Some trade downwards switching to house brands or local
brands.
15
Consumers are often attracted to product innovation.

New product lines or brand extension have potential to
invoke interest.
Source: TNS
16
Luxury and Premium Products: Are there Opportunities?
The affluent do not feel the impact slower economy, still maintain affluent lifestyle
In 2011, only 14% of population had bought a luxury/premium item in a year.
Income : USD 1,500 to 10,000 per year
Income >USD 70,000
8.2 mil
I dont feel much different. I dont feel

the impact of the economic crisis on me
Source: TNS
Too much stress, the worry always sticks

in my mind, we dont even have time to
feel worry of relaxed
19% of urban
population
Versus
17
How is their luxury lifestyle defined?
18
What is consider premium / luxury products to the affluent?
Premium
Quality
Premium
Price
Country of
Origin
Used by
Famous
people
Unique
Design
Exclusive/
Hard to find
19
Price >
VND10,000,000
Popular sought after premium / luxury brands in Vietnam
Close to 2 in 3 affluent consumers are willing to pay premium prices for technology related items
Source: TNS
20
CASE EXAMPLE:
FOOT WEAR MARKET IN VIETNAM
21
Overview: Vietnam Footwear Market

Market size
Distribution
Structure
Price distribution
Brand Domination
100%
US$1b
US$700m
Organized Market
Market value
25%
90%
Foreign
brands
80%
7.00%
9.10%
41.70%
70%
18.90%
60%
50%
20.10%
40%
Pairs/ year
75%
30%
Unorganized
Market
Local &
unbranded
20%
20.30%
10%
65.10%
17.90%
0%
Organised mkt
Low Price
Value
Unorganised mkt
Mass Premium
Premium
23
75 million
US$300m
Overview: Vietnams Footwear Market
Over the forecast period of 2013-2018, projected CAGR of 8%.

Footwear market is dominated by unbranded products from neighbouring countries,
especially from China.
However the average spending is low compared with other countries with just 1.5 pairs value
at US$10.7 per pair
Sales of Footwear by Region
Hanoi, 20%
HCM, 32%
Other
provinces,
48%
24
Social Class & Age: Spending on Footwear
Legend
Age
Makes up of approx 66% of

population. Spends 2% of their
disposable income on footwear
Makes up of approx 25% of Middle
income that spends 3-4% of their
income on footwear
Makes up of approx 9.3 % of who
often purchase luxury brands.
Spends approx 5% of income on
footwear
Social Class A are individuals with a gross income over 200% of an average gross income of all individuals aged 15+.
Social Class B are individuals with a gross income between 150% and 200% of an average gross income of all individuals aged 15+.
Social Class C are individuals with a gross income between 100% and 150% of an average gross income of all individuals aged 15+.
Social Class D are individuals with a gross income between 50.0% and 100% of an average gross income of all individuals aged 15+.
Social Class E are individuals with a gross income less than 50.0% of an average gross income of all individuals aged 15
25
The market for mid-range footwear would cater primarily for those falling into the Social Class of D
and E. They make up approximately 66% of the population which will provide an ample market size
for mass footwear brands.
% Distribution by Social Class
Footwear Market Sales by Segments
Sales of women footwear accounts for more than half of all footwear sold in Vietnam, double of
what men purchase in a year.
Sales distribution by volume

Diagram 13
Sales distribution by value ($)
Children
15%
Diagram 14
Women
57%
Women
57%
Children
7%
Men
36%
Men
28%
26
Branded vs Unbranded by Region

Consumers in HCM and Hanoi tend to be much more brand conscious than those living in other
provinces when it comes to purchasing footwear.
With higher disposable income, the consumers in these 2 cities are better able to afford branded
footwear as opposed to those living in other provinces.
Branded
39%
30%
Unbranded
91%
70%
HCM
61%
Hanoi
9%
Other Provinces
27
Distribution of Popular International Brands
Hanoi
500 Store Outlets
Total Sports
Stores
109 Stores
Top 3
40 stores
HCM
40 stores
6 stores*
29
Distribution of Popular International Brands
Hanoi
500 Store Outlets
Total Casual/
Office Stores
99 Stores
Top 5
40 stores
21 stores
15 stores
14 stores
9 stores
30
HCM
Competitive Landscape: Unbranded vs.

Branded Footwear
The following illustrates how the competition for the Vietnam footwear is structured based on the
different types of competitors and the market segments they target.
The Competition
Local brands (E.g.

Bitis)
Unbranded
Footwear
Premium/
Niche Market
Mid Market
Mass Market
Vietnam Footwear Market
Consumers who want social

status and with reasonable
disposable income.
Made up of middle income
consumers who wants quality,
reasonable design and affordable
price
Consumers seeking fast
fashion, makes frequent
purchase particularly
women or low income
consumers
31
International brands (E.g.

Nike, Clarks, Nine West)
Competitive Landscape
Sports
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Casual
Price range
Ananas
Office
< VND 1 mil

VND 1 -3 mil
> VND 3 mil
32
Burgeoning demand for

footwear
Population is growing
Ratio of footwear to population is 0.77
Heightening demand for

Womens Footwear
Getting more fashion conscious with exposure to foreign

media
More are working and making their own decisions
Newer segments: Mens and

Childrens Footwear
Needs to shoes for different occasion to fit lifestyle

Higher birth-rate
Mens Sports Footwear gaining

popularity
Getting more active and require shoes specialised for sports

activities.
Increasing unit price of shoes
Footwear steadily increased by 6%

Affluent customers in cities driving price up.
Stronger presence from

International Brands
Mid to high income getting more social status conscious

drive demand for international brands.
33
Major Market Trends in Footwear
In Summary
Consumerism is growing primarily in key cities supported by growth in disposable

income.
Opportunities lies in:
Mass Consumers
Demand for Health related products and services
Demand In-home enjoyment
Affluent Consumers
More affluent consumers (10% to 19%) want more hedonistic and luxury
experience.
Social status consciousness among city dwellers: Premium and luxury brands
34
35

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Vietnam Shoes Market

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2014 A.S.Louken Group Pte Ltd.

Private & Confidential

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Vietnam Demographics Population Distribution

Population size: Major Cities of Vietnam

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Per Capita Annual Disposible Income,

Click to edit Master title style

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Source: GSO 2012, World Bank

Vietnam Income Band by Age (2011)

Click to edit Master title style

There are 2 distinct group of people with different level of income.

Good target for mid

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Good target for mass

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Most of the affluent are age 35 to 59 years old. Target for

Market potential lies in the major cities HCM and Hanoi

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Some Key Characteristics of Vietnamese Consumers

Vietnamese Consumers are generally Ethnocentric loyal to

Consumers are easily convinced to make purchases due to

Rise in number of working women.

2014 A.S.Louken Group Pte Ltd. Private & Confidential

Click to edit Master title style

Where they shop for essentials: FMCG

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Retail outlets are growing at a

Click to edit Master title style

What are the common areas where money is spent?

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Click to edit Master title style

What are major fear in the minds of Consumers?

Fruit Juices 46%

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Functional food and Drinks becoming popular

Click to edit Master title style

There is a growing trend in functional food

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Click to edit Master title style

Focus on In-Home Enjoyment

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Maggi: Encourage cooking at home

Click to edit Master title style

Purchasing patterns of FMCG

Urban consumers are more busy.

I will buy bigger pack size because

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Source: Kantar World Panel

Click to edit Master title style

Purchasing patterns of FMCG

Lower income consumers down-size from bottle to sachets to

Click to edit Master title style

Purchasing patterns of FMCG

Consumers are often attracted to product innovation.

2014 A.S. Louken Group Pte Ltd. Private & Confidential

Click to edit Master title style

Luxury and Premium Products: Are there Opportunities?

Income : USD 1,500 to 10,000 per year

Income >USD 70,000

I dont feel much different. I dont feel

Too much stress, the worry always sticks

2014 A.S. Louken Group Pte Ltd. Private & Confidential