HANOI: Vietnam’s shoppers gave the economy a welcome boost last month, with total retail sales of goods and services surging by an estimated 10.6% year on year, according to the National Statistics Office.

Festivities marking the 80th anniversary of the August Revolution and National Day proved a powerful driver of consumer spending on goods, services and tourism, pushing total retail sales at current prices to more than 588 trillion dong or about US$22.3bil in August alone.

Among them, revenue from apparel increased by 13.7% year-on-year; food and foodstuffs surged by 12.3%; household goods, utensils and equipment grew by 10.4%; accommodation and food services rose by 13.2%; and travel and tourism services climbed by 15.2%.

Over the first eight months of this year, the total retail sales of goods and consumer service revenue was estimated to reach 4.58 quadrillion dong, an increase of 9.4% compared with the same period last year. Excluding the price factor, the growth was 7.2%.

Retail sales of goods was estimated to reach 3.45 quadrillion dong in the first eight months of the year, accounting for 76.3% of total retail and service revenue, marking an increase of 8.1% compared with the same period last year.

Food and foodstuffs surged by 10.1%, cultural and educational items rose by 7.4%, apparel saw an increase of 7.3%, and household goods, utensils and equipment grew by 6.7%.

Accommodation and food service revenue was estimated to have reached 552.4 trillion dong in the first eight months, accounting for 12.1% of the total revenue and rising by 14.7% compared with the same period last year.

In Ho Chi Minh City, revenue increased by 18.6%, while in Da Nang it rose by 18.2%. In Can Tho, the growth was 14.2%, Hai Phong saw an increase of 12.7%, and Hanoi experienced growth of 11.4%.

The bright spot in total retail sales and consumer services revenue was the tourism sector.

Specifically, travel and tourism revenue in the first eight months was estimated to have reached 61.2 trillion dong, accounting for 1.3% of the total and rising by 20.3% compared with the same period last year.

Yet challenges remain.

With households trimming non-essential purchases, businesses are under pressure to innovate and stimulate demand.

Former deputy-director of the Vietnam Industry and Trade Information Centre under the Industry and Trade Ministry (MoIT) Le Quoc Phuong said retail sales growth over the first eight months was relatively strong at 9.4%, and 7.2% after excluding price factors, showing that domestic consumption was performing quite well.

However, he cautioned that much of the growth stemmed from food, beverage and tourism services, which make up only a modest share of overall sales.

Meanwhile, the most anticipated sector for growth, retail goods, is experiencing a slowdown.

To boost domestic consumption, it is necessary to focus on sales of retail goods, as this is the most important area, said Phuong.

Most people’s lives were still relatively difficult and they were only buying essential goods, he said. Therefore, measures were needed to stimulate demand, such as promotions and campaigns to promote domestic products, he added.

According to several trade associations, the retail market is still growing but purchasing power is not high because people are facing financial difficulties and cutting back on spending.

A survey by several market research firms shows that rising prices for goods and services are forcing many families to carefully consider their daily expenditures.

The VOV online newspaper quoted president of the Hanoi Association of Women of Small and Medium Enterprises Mai Thi Thuy as saying that although Vietnamese consumers were saving more, businesses that understood their preferences and habits could still find opportunities.

She noted that while people were cutting back on spending, they continued to seek better-quality rather than cheaper goods.

The president suggested businesses conduct market research to understand market needs and consumer demands to produce suitable goods that stimulate consumption.

To survive, businesses must offer high-quality products that meet market needs, she added.

To contribute to economic growth this year, MoIT has implemented several solutions to unlock resources, focusing on domestic consumption stimulus programmes to create new growth drivers and promote the use of locally made products through both traditional and eCommerce channels.

Recently, MoIT Minister Nguyen Hong Dien signed a decision to organise the 2025 Vietnam Grand Sale, a national promotion programme.

The programme will take place nationwide from Dec 1 this year to January 18 next year, combining both traditional and eCommerce formats.

This is a crucial solution as market demand shows signs of stagnation, requiring strong and timely stimulus policies. — Viet Nam News/ANN