The booming of retail baby and maternity market in Vietnam
8 months pregnant Thao Nguyen (name changed), was picking her way through the thousands of items for mothers and babies to find the very best towel come her baby in a few months. Overwhelmed by the kaleidoscope of colors and designs of imported goods, Thao remarks “There has been far more choice in the market than when I gave birth to my first child in 2009. With all of these cute items, I just can’t decide.”
Back in 2009, there were far fewer supermarkets, and mothers and pregnant women like Thao could only choose from a handful of private retail stores, where the products were not so plentiful and the quality not so great.
Over the last decade, the appearance and development of large-scale mum and baby retailers have changed the face of the market. Currently, it is very easy to find a mum and baby supermarket offering different brands only a couple of streets away
Booming market with opportunities for foreign brand
As the country with the highest proportion of young families in Southeast Asia with 12 percent of households having babies under one year of age, and over 30% of households having kids under two years old. Vietnam is touted as a promising market for mother and baby care products.
With rising incomes and improved education, parents are becoming more willing to pay a premium for high-quality products that can serve their children well. Between 2014 and 2018, retail sales of baby and maternity products in Vietnam grew at an average annual rate of 15%.
The quality and origin of products are the two most important factors in the Vietnamese baby product market. Parents wanting high-quality products for their babies prefer international brands, especially those from Japan, Europe, America, and Australia. Currently, these brands have the highest market share, while consumer trust in domestic products is not high. Foreign brands such as Bübchen, Pureen, and Pigeon are performing well here.
The total revenue of this market is estimated at around $7 billion, with a growth rate of 30%-40%. Especially, consumer shopping habits have been shifting from traditional models like markets and supermarkets to well-known store chains specializing in the needs of mothers and babies.
The entry of Foreign Brands
The strong spurt of the mother and baby market in recent years has drawn foreign investors, the latest entrant being Mothercare from the UK. Mothercare entered Vietnam last April, Mothercare with five stores, and a 355 square meter flagship store.
Vo Thi Phi Phuong, CEO of ACFC, said that there is an immense demand for quality products in the high-end segment for hygiene, nutrition, and educational toys for babies from birth to around five years of age. “Especially, they need high-quality services,” said Phuong.
Bibo Mart, partly owned by ACA Investments, Japan’s leading Fund Management Company and an affiliate of Sumitomo Corporation, started out with only two stores in 2006, and grew to 141 stores by the end of 2018. The company aimed at 500 stores across the country before 2020. Bibo Mart is now the No.1 mum and baby chain in Vietnam and is valued at $140 million.
Launched three years after Bibo Mart, Kids Plaza has opened 72 stores across the country, and is the main rival of Bibo Mart. Additionally, other retailers like Con Cung, Shoptretho, TutiCare, and Soc&Brothers are also large players in the market.
Do Van Tuan, CEO of Kids Plaza, said, “The appearance of foreign brands in Vietnam demonstrates that the market is big enough to draw their attention. Foreign products are now officially imported and appear in increasing numbers in retail chains across the country. This means consumer demand is increasing.”
Explaining its focus on products in the mid and high-end segment, Phuong of ACFC, said that the mum and baby market is very competitive, however, there is a marked lack of products in the mid and high-end segment, which are high-quality, safe, and clear of origin.
According to Phuong, almost none of the existing mum and baby retail stores meet the demand in these segments, forcing customers to either order from abroad or go shopping abroad.
Along with mapping out consumer demand, combining the online and offline business methods goes a long way to ensuring the success of businesses because, in the context of the Fourth Industrial Revolution, e-commerce platforms are one of the most effective sales channels. Mothercare and other local mum and baby retail stores are no exception.
41% of the Mothercare’s global sales revenue comes from sales on e-commerce platforms, with 83% of these sales transactions being conducted via smartphones. The company implemented online sales in Vietnam, along with expanding its offline store chain.
Local retailers have also joined the e-commerce playground. According to Phuong of Bibo Mart, e-commerce platform trading revenues currently make up 14.5% of the company’s total revenue, and the figure is expected to increase to 30% in the next five years.
Many of the local customers also use online shopping platforms such as Tiki, Shopee, and Lazada.
Marketing – Creating Awareness and Trust amongst Women
In addition to traditional television advertising, creating awareness through online channels is an important marketing strategy. Vietnamese mothers are very cautious about the quality of baby products. They are eager to check online reviews and ratings on parenting forums and social media and share their user experiences. If a product can gain positive comments among the online parent community, it will become popular quickly, especially among young parents.
Partnering with Local Retailers and Distributors
Unlike fast-moving consumer products where new brands are easily accepted by local consumers, baby products, particularly for baby hygiene and skincare, tend to sell more on brand loyalty.
Partnering with the key local retailers is one of the most effective ways to increase brand awareness and secure distribution for new foreign brands.
At present, mom and baby stores are the major distribution channel for baby products in cities. Millennial mothers have high expectations for convenience and product quality, and mom and baby stores with a wide range of baby products have become their chosen shopping destination. In Vietnam, Concung, Bibomart, Kidsplaza, and Tuticare are the top mom and baby stores, with at least 50 outlets respectively.