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Kids-driven consumption

Released at: 14:45, 28/10/2017

Kids-driven consumption

Photos: Viet Tuan

Higher spending on children has boosted the sale of goods and education-related and entertainment activities.

by Thanh Nghi

Selling goods for children helps Ms. Thanh Hang, a 25-year-old mother of an eight-month old, earn an average of VND50 million ($2,175) each month. “Three things mothers are willing to spend money on are diapers, dairy products, and clothes for their children, so I chose to start an online business,” she said. Many others also earn handy incomes from selling goods for children online. 

Goods for kids

Rising incomes encourage Vietnamese parents to spend more on their children, creating the conditions for the sales of children’s products, both for education and for entertainment, to boom. Vietnam’s maternity and children’s market is now worth $2.5 billion a year, with the figure set to double in the near future, according to FTA, a market-research group operating out of Ho Chi Minh City. 

“The top priority for me is my child, so I’m willing to pay more for top quality products,” said Ms. Le Trang, a 30-year-old with a newborn baby. Thanks to customers like Ms. Trang, TutiCare, a retail chain for mothers and kids, now has 30 stores in seven cities and provinces around Vietnam. “Demand for quality children’s products is increasing and parents have more information and are more aware about where to shop,” TutiCare’s CEO Luu Van Quang told VET. “Our chain has grown at 20 per cent each year over the last three years.” 

TutiCare will also have online channels. Besides growth in its distribution system, sales, and revenue, the chain focuses on investing in its administrative system and customer care services to increase convenience and win the trust of customers. 

It plans to expand its distribution chain, with 40 new stores opening in other cities and provinces this year and 70 by 2018. Meanwhile, Bibo Mart, another baby goods retail chain with 120 stores around the country, expects to have 500 by 2019. Others such as Con Cung and Kids Plaza have expanded to 133 and 71, respectively, in recent years. 

As a customer of the chain, Ms. Thu Giang, a 31-year-old mother of two children under six years of age, usually buys Japanese diapers and other kid’s care goods each month. “I normally spend VND3 million ($130) on products for the kids,” she said. “I trust TutiCare’s products.” Main items sold at TutiCare are powdered products, diapers, and other goods for kid’s care, with the best sellers being imports at higher prices, according to Mr. Quang.

Soc & Brothers, which partners Japanese snack maker Ezaki Glico and others, has seen revenue increase compared to the same time last year. Marketing Officer Dao Viet Hung said the number of customers who choose high quality and expensive goods is growing. 

Education and entertainment services

The toys business has recorded significant growth, with Vietnamese consumers now demanding safer products with clear origin, rather than low-cost imports from China. “Though prices are higher than for other kinds of toys, I often buy products at chain stores,” Ms. Thanh Huyen, a 34-year-old mother of a five-year-old girl. “Quality and creativity are my concerns when I buy toys for my daughter.”

The high-end toy market has entered something of a boom period, according to the Con Cung JSC, which owns concung.com and ToyCity. “The scale of toy chains such as My Kingdom, ToyCity, and ToyLand may be four times higher than now within the next three to five years,” according to the founder of Con Cung, Mr. Luu Anh Tien. “This comes from consumption trends and greater spending capacity.”

My Kingdom, owned by the Viet Tinh Anh JSC, now has 200 stores in Vietnam, half of which are in Hanoi and Ho Chi Minh City. The chain focuses on distributing assembled toys made by LEGO, Siku, and Moxie Girlz simulating super-heroes from DC Comics, Marvel, and others. Prices are about $30 for each product. Thanks to customers like Ms. Huyen, revenue at My Kingdom came in at VND480 billion ($21 million) in 2015, a 50 per cent increase compared to 2014, according to market analysts Virac. Funny Land, belonging to Gold Kids, saw revenue of VND60 billion ($2.6 million) in 2015, with 29 stores including 15 in Ho Chi Minh City and seven in Hanoi. 

Higher incomes have also boosted spending on education-related products. Music and drawing classes for children from five years old are also on the upswing. The two courses cost VND10 million ($435) for a year, and Ms. Hoang Oanh, a Hanoian mother of a six-year-old girl, is willing to pay for her daughter’s extra studies. “I think it’s important for her besides studying at school,” she said. “The cost is affordable.”

Like Ms. Oanh, Ms. Huyen wants her five-year-old daughter to be good at English so she is willing to spend VND12 million ($520) on four courses a year at the Mojo English center in Hanoi. After two years, Mojo English has opened two centers in Hanoi and plans to expand as demand for studying English increases. Besides the expansion of major English centers, there are many other opportunities for small centers like Mojo English to develop. 

STEM (Science, Technology, Engineering and Math) education courses are also popular in Vietnam. The S3 Academy for Creation now has hundreds of students aged from 6-12 even though it’s only been established for a short period of time. The ten-day course costs about VND1 million ($44) for kids aged six and seven, who do scientific tests and work with robots. S3 plans to open five more locations in the near future. 

Many parents, however, can’t afford to spend a great deal on their children. “The number of high-income households is small, while living costs in Hanoi and Ho Chi Minh City are nearly as expensive as major cities around the world,” Dr. Khuat Thu Hong, Director of the Institute for Social Development Studies, said. “Spending on education, medical, and entertainment services for kids has become expensive and this puts pressure on low-income households.” 

As living expenses rise, it’s harder for many parents to provide a better life for their kids. The difference between real and fake products is blurred in Vietnam, according to Ms. Hong, which means many consumers look to pay more for quality products. Low income earners, meanwhile, are left with a choice of low-quality products at cheaper prices.

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