The overall picture of prospective domestic trade will substantially change on the strong impacts of the COVID-19 outbreak.

Domestic trade bears brunt of COVID-19 

Facing the rapid and complicated spread of COVID-19 infections across the country, Hanoi and many southern provinces and cities are applying social distancing measures as per Directive 16/CT-TTg. Therefore, trade and service are seriously affected.

According to the Ministry of Industry and Trade, total retail revenue of consumer goods and services was estimated at VND339.4 trillion (US$14.8 billion) in July, down 8.3% from the previous month and 19.8% from the same period of last year.

Specifically, merchandise retail reached VND291.8 trillion, down 11.4% year on year. Revenue of accommodation and food services is valued VND21.2 trillion, down 53.8%. Tourism revenue plunged 92.6% to VND133 billion. Other service revenue reached VND26.3 trillion, down 43%.

In fact, since the fourth wave of COVID-19 broke out in Bac Giang, Bac Ninh, especially Ho Chi Minh City and southern provinces, authorities and major e-commerce platforms in Vietnam planned to remove difficulties in essentials transportation, implement programs and actions to boost sales of essential consumer goods to people. Therefore, up to now, supply, circulation and distribution of essential goods have markedly improved, resulting in no shortage of goods. No hoarding was recorded and prices were kept relatively stable.

To strengthen support for people to shop online, the Ministry of Industry and Trade has focused on guiding e-commerce platforms to facilitate the participation of sellers and traders, and teach online business skills, especially shipping support and online payment.

Forecasting future trends

According to the ministry, in the third quarter, the domestic trade will still face risks, especially given the complicated pandemic development that has directly disrupted the manufacturing and business operations of enterprises in the Southeast region and the Mekong Delta. The traveling season already elapsed and consumer stimulus programs fell apart.

According to analysts, social distancing has negatively affected the manufacturing and business of most enterprises. The demand for storing foods is increasing owing to mobility restrictions, traditional markets are temporarily closed, people are working and studying from home, unemployment rate is high and average income falls. Therefore, consumers are forced to weigh up their buying priorities with a more sustainable and reasonable approach.

BSC Securities Company has made different forecasts for each consumer goods industry in the coming time. For essential consumer goods in the third quarter, growth momentum will be maintained by the need for storing foods. Consumer electronic goods (like telephones and laptops) will continue to benefit from the demand for studying and working from home and the back-to-school season. Nevertheless, with unfavorable transportation as a result of social distancing, businesses are unlikely to have high growth as last year, according to BSC.

For non-essential goods, BSC believed that companies will confront hardships as physical stores (accounting for more than 90% of revenue) are forced to be shut down and people’s incomes contracted after four waves of pandemic contagion since 2020.

However, BSC also forecasts that the domestic consumption picture will be brighter in 2022 when retailers regain growth thanks to store chain expansion, recovered income and increased pent-up demand. Large consumer companies are planning to expand their store chains, expected at 15-25% this year.

Consumption trends have changed. The unpredictable COVID-19 pandemic will force businesses to seriously consider the choice of living with it and swiftly adapt to new consumption trends and patterns.