Retail and consumer goods enterprises surge due to digital transformation

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A consumer is scanning QR codes when making purchases at a supermarket.

Numerous opportunities for businesses

According to data from the General Statistics Office (GSO), in the first 11 months of 2023, Vietnam's retail and consumer goods industry achieved a total revenue of over VND4,500 trillion, an increase of about 7% compared to the same period in 2022. This positive result is attributed to the application of digital transformation, AI, and Big Data.

Speaking about the potential for the consumer goods sector at the recent conference "The importance of digital transformation and the potential of AI and Big Data for consumer goods enterprises," Nguyen The Quang, Deputy head of the E-commerce and digital economy department under the Ministry of Industry and Trade (MoIT), mentioned that the trend of online shopping was steadily increasing. It is not only the younger generation participating but also more elderly people, attracted by the convenience in consumption provided by e-commerce platforms and digital transformation. Therefore, this is one of the opportunities for businesses in the era of digital transformation. The shift to digital transformation, AI, and Big Data applications will help businesses see changes in consumer needs and habits, allowing them to adjust their business strategies more effectively.

Assessing the importance of digital transformation in general and the application of AI technology for consumer and retail businesses, Nguyen Thu Thuy, Director of Networld Solutions, emphasized that AI could analyze everything from users' web browsing history, social media interactions, purchase history, to the geographical location of consumers, providing detailed information about the behavior, interests, and even emotions of individual consumers.

According to Thuy, by using AI, advertisers can ensure that advertisements are not only targeted but also personalized. The AI system can generate hundreds of creative variations from one advertisement, each designed to appeal to a specific user group, from customizing images and messages to selecting the most effective time and platform for distribution. AI helps create a personalized and engaging experience for each user.

Application of technology to expand market share

In this context, alongside traditional sales channels, many businesses have diligently embraced digital transformation, employing information technology, e-commerce, and exploring online sales channels, integrating multiple channels in e-commerce.

Nguyen Anh Duc, Chairman of the Association of Vietnam retailers (AVR) and CEO of Saigon Co.op, stated that timely investments in technology and changes in investment models have helped the Ho Chi Minh City Commercial Cooperative Alliance (Saigon Co.op) maintain growth momentum during the challenging economic conditions in the early months of the year.

Saigon Co.op's investments in AI and digital transformation are considered "unregrettable" investments that, along with changes in the investment model, not only helped businesses in general but also Saigon Co.op specifically overcame the crisis and set the stage for long-term growth. Each business participating in e-commerce and digitization needs to choose a suitable path based on its strengths, applying swiftly to keep up with the constant changes and updates of modern technology, emphasized Duc.

Similarly, Masan, one of the leading retailers in Vietnam, has adjusted its sales approach to align with rapidly changing consumer behavior in urban areas, the growth of modern retail channels, and e-commerce. The company plans to increase the revenue share from modern retail and e-commerce channels from 40% to 60% by the end of 2025. Additionally, Masan will introduce new distribution channels to reach consumers shopping through multiple channels.

In general, the economic recovery has propelled retail growth, and businesses that understand their core strengths have implemented innovative strategies, yielding promising initial results. Masan has also recorded positive business results in the second quarter of 2023, promising many positive highlights in the second half of this year.

However, according to experts, to begin realizing and succeeding in the digital transformation journey, consumer goods and retail businesses, especially small and medium-sized units, need preparation to face significant obstacles. The primary challenge is the investment cost. Businesses identify that the costs of investing in digital technology solutions, deployment, and technology maintenance are relatively high, while the short-term benefits of applying technology to business operations may not be immediately apparent. Additionally, significant barriers in terms of awareness need to be addressed. To develop businesses, there must be a shift in perception towards digital businesses, digital processes, data collection, and data analysis providing goods and products based on digital data.