Features

Rising wealth and the aspirations of urban dwellers are changing the purchasing habits of consumers in Vietnam’s big cities, opening up a new sector for developers to exploit.

Eye of the beholder: luxury cosmetic producers such as Clarins are upping sales in Vietnam as consumers are exposed to the international mass media and greater travel opportunities

At the entrance to the National Cinema Centre in Hanoi, there is a signboard advising filmgoers “Don’t buy tickets from brokers”. But the advice seems to have little effect these days. Ticket speculators fill their pockets as filmgoers, eager to watch blockbusters like King Kong, vie with each other for a seat in the four-screen complex. Brokers do a good trade particularly at weekends when the young and old alike crowd into the four-screen cinema.
Such demand is a change from just five years ago, when cinemas were left dilapidated or were upgraded into discotheques and restaurants because they failed to lure movie-goers. Now customers are coming back, fuelling the construction of new cinemas to meet demand.
Since the government officially permitted private film production companies three years ago, a handful of investors have jumped on the bandwagon. Galaxy spent $1 million building a cineplex in Ho Chi Minh City with three screens of 1,000 seats along with a bar, fashion shop, beauty salon and spacious parking.
State-owned cinemas have been upgraded with cushioned chairs and surround-sound systems. Following the rise in popularity, investors are looking for sites to build cinemas. The most ambitious among them is MegarStar, a joint-venture between Envoy Media and Phuong Nam Film, which is soon to open the first eight-screen cineplex with 1,100 seats in Vincom City Towers.
MegaStar plans to open eight complexes across the country, with the next facilities to be located in Hung Vuong Plaza in Ho Chi Minh City and TD Plaza in Haiphong. Unlike stand-alone complexes built by Vietnamese, MegaStar cinemas are part of shopping malls where filmgoers can dine, shop or take part in other leisure activities.
Cinemas complexes like MegaStar signal a fast change in the country’s urban landscape. Marc Townsend, managing director of CB Richard Ellis, a property consulting company, said he has seen a rise in the number of cinemas, bars, cafes and clubs since his arrival to the country in 2003. Golf is another example. Previously, few Vietnamese played on golf courses, as it was deemed a luxury sport. Now more locals are playing on courses such as Chi Linh Star Golf. Five-star hotels and resorts have also attracted an increasing number of Vietnamese guests.
However, a lack of space in Vietnam’s major cities is making it hard for enterprises such as MegarStar to locate a place to build new cineplexes. In response to this need more shopping malls such as Vincom and TD Plaza, which currently can be counted on one hand, are being planned as developers aim to tap into the rising affluence of the population. The most ambitious plan is to build a 110,000sqm mall as part of the 360-hectare new town in Hanoi.
Local retailers like NinoMaxx and Blue Exchange are aware narrow and dingy shop houses do not encourage customers to linger and they are looking for more space with better layout and lighting. “Customers will shop at well-planned, bright shops that offer choice and competitive prices with food nearby,” said Townsend.
Researchers have observed a split in consumer trends with the majority of the population still purchasing goods in open-air markets and dingy shops but high-income earners are opting for air-conditioned malls and supermarkets.
It takes time for locals to get familiar with malls. When Trang Tien Plaza and Vincom City Towers opened, locals just went window-shopping, as prices of cosmetics and fashion products in these trading centres were higher than those consumers saw on the streets. Air-conditioned malls were even used as a shelter from summer heat. But “the situation has changed a lot,” said Julian Bugledich, managing director of Vincom City Towers. “Originally, people just came and looked at goods on display but now more and more are buying.”
Bugledich said sales in the six-storey mall have increased significantly since the centre opened as people have started earning more money.
The mall is often crowded at weekends with shoppers taking away Levi’s jeans or LCD televisions, which costs at least $1,000 per unit. The manager said he had observed another change during the Tet holidays when many people from other provinces came to shop at Vincom. “It is a big difference,” said Bugledich.
What draws consumers to malls is the convenience of the one-stop destination with a variety of shops. But they do not only come for shopping, but also to have a modern, comfortable and entertaining experience at restaurants, game rooms and a cinemas.
What is also pushing consumers from shop houses to malls and supermarkets is the convenience. Hanoi and Ho Chi Minh City are no longer an easy place to shop on the streets. “Now if people go shopping on the streets, they need to drive from one place to another; it is getting harder and harder because of more traffic and a lack of parking,” said Paul Mason, managing director of e-Homes property consulting company.
Shop houses rarely provide parking space, and consumers have to park motorbikes on the narrow pavement. Hanoi and Ho Chi Minh City authorities have also banned parking on the sidewalk in several commercial streets during the daytime, thus discouraging consumers from shop houses.
It is even more crucial for retail areas to provide parking space these days due to an increasing number of cars on the road. Over 35,000 cars were sold by foreign-invested makers last year. The figure is expected to grow fast as urban dwellers shift from motorbikes to cars. “Retail areas must offer parking for customers,” Townsend said.
In this regard, malls and supermarkets have advantages. The Big C Thang Long Super Centre for instance has both indoor parking space for motorbikes and an outdoor area for car parking.
Bugledich said malls would become more popular in Vietnam.
“As people get wealthier, malls get bigger,” he said. “Vincom will be able to meet demand in one district and more malls could be built in other districts, even in other smaller cities,” he added referring to TD Plaza in Haiphong, which is similar to Vincom’s style with a five-storey mall and a twin apartment towers above. Other malls are under construction or in the planning stage now.
“Malls of scale similar to Vincom will be successful,” said Bugledich.
Developers are preparing sites for retailers when the trade deals with the US, investment agreements with Japan and the country’s looming access to the World Trade Organization opens up the market to foreign retailers.
Bugledich pointed out that more professionally managed malls would entice more international retailers to Vietnam.
Shops selling international jewelry, watches and fashion brands such as Long Champ, Benetton, Cartier and Levi’s already have a presence in Hanoi and Ho Chi Minh City. Brands are gaining ground as people are exposed to more mass media and overseas travel opportunities, and increase their understanding of what is fashionable and coveted.
The arrival of retailers like Parkson and Luxury Life are attracting more luxury brands like Kiton, Moreschi and Gianfranco Ferre. A Moreschi pair of shoes at Hanoi Luxury Mall has a price tag of $450 to $1,000, while a Kiton suit is sold for $7,000 – outrageous levels for a country where per capita income reached $640 last year.
Luxury Mall does not only cater to the 3.5 million foreign tourists who visited Vietnam last year but also affluent Vietnamese.
Fast economic growth over the last few years, a boom in private sector development that has seen over 120,000 new businesses set up since 2000, and foreign remittances of over $3 billion annually have given rise to a group of affluent professionals that have sufficient disposable income to purchase imported products, frequent more restaurants, coffee shops and spend more on entertainment and leisure.
As conspicuous consumption is now tolerated, the nouveau rich can pay a premium price for brand-name goods.
For those short of cash, banks are willing to lend a helping hand. VIBank, Eximbank and Dong A Bank are offering loans of two to three years to those, who want to borrow for shopping.
Such loans are good for electronic producers like Samsung Vina. The South Korean-invested company is promoting a number of high-end LCDs, Plasma TVs, and home theatres, which were more popularly used in public places in the past few years.
Now large screen TVs are a favourite home-use product in big cities, while convex-screen TVs are flooding rural areas. However, these purchases do not seem to be affecting the number of people lining up outside cinemas to watch the latest blockbusters.


No. 749/February 20-26, 2006