Economic slowdown curtails Tet spending

With relish, Lu Thu Trang filled her shopping cart with Lunar New Year treats.
Reaching for some imported Belgian chocolates, she did a double take and took cheaper locally-made candies instead.
“I have no Tet bonus this year as the global economic recession has slashed sales at the company I work for,” said Trang, who was shopping at the Big C supermarket in Hanoi.
“So, I’m buying only the essential Tet foods this New Year,” said the 32-year-old personnel clerk from a Thai-invested company in the capital.
Trang is only one of many whose holiday spending has been cut by the economic slowdown. A number of firms, especially in textiles, garment, footwear and farm products, have lowered Tet bonuses for their employees. Others have even instituted lay-offs or cut salaries due to the difficult financial situation.
Decreasing purchasing power, slower economic development growth and an increasing unemployment rate are all expected to lead to only modest retail market turnovers during the holiday shopping season this year.
Traditionally, both prices and sales surge during Tet season as consumers stock up on new items for the New Year.
But this year might be different.
Deputy General Director of Big C in Hanoi Nguyen Thai Dung said, “Our turnover growth this Tet will not be high; an estimated 10 percent compared to 25-30 percent during previous Tets.”
Some supermarkets might not even make small revenue growths over the holidays as local consumers have tightened their belts in the face of economic difficulties.
“The market this year is gloomy due to decreasing purchasing power. During the current economic downturn, it’s difficult for supermarkets to post turnover growth,” said Tran Manh Canh, deputy general director of the Hanoi Trading Corp. (Hapro).
“We’re hoping sales grow as Tet [which falls on January 26] approaches.”
Essential products such as grain have been the bestsellers so far, Dung said, adding that locally-made products are selling while imported items are moving much slower.
Hapro’s Canh said the price of most products had not yet increased and sales of standard items such as candies, beverages and tobacco have remained unchanged against the previous Tet.
The somber commercial atmosphere has hit not only supermarkets and upscale department stores, but also street-side shops selling locally-made items to low- and medium-income earners.
“Business has been difficult this year. We’ve seen a remarkable drop in customers and our selling volume has dropped by 30 percent this Tet,” said Nguyen Thu Vinh, owner of a wholesale candy shop on Bach Mai
Street, as he sadly pointed to piles of goods overflowing out the front door.
To fight the down-beat atmosphere, supermarkets and shops are offering big discounts, gifts and lucky draws. Big C has offered discounts of 10-30 percent on over 700 items while Hapro Mart has implemented 5-30 percent sales on hundreds of products.
Meanwhile, a wide range of local candy producers such as Kinh Do, Bibica, Hai Ha and Vinabico have offered discounts of 5-10 percent on their products.
Still expecting Tet sales to swell despite the gloomy economic forecast, most supermarkets have stocked up on extra goods and have thus far left prices unchanged.
“We’ve set aside VND570 billion (US$33.53 million) to increase our goods supply this season. Our supply is estimated to be 15 percent higher than last Tet,” said Hapro’s Canh.
“This is a good time to buy as everything’s on sale and the shelves are packed,” said 25-year-old Nguyen Le Huong, an accountant at a state-owned commercial bank, as she squeezed out of the narrow Metro Supermarket doorway with a cart full of fruits, vegetables, rice and clothes.
However, the sales and promotions are not enough to attract many poorer locals, especially those working for small producers. Prices are still too high compared to their incomes, which have gotten smaller since the economic crisis began.
“My income is not enough for daily meals, let alone Tet. Everything, despite the sales, is still too expensive,” Nguyen Kim Thu, a seamstress at a private garment company said as she selected some pork at an open-air market along a crowded and dusty street.
Reported by Ngan