How Covid changed spending habits of Vietnamese

This is something the 31-year-old English teacher in a high school in Vinh Town in the north-central Nghe An Province has never done before.

"I used to earn VND35 million (over $1,500) a month but now get less than a third of that," she says as if to explain her new habit.

She recently walked into a clothing store and spotted two items that she really liked. But when she checked their prices she immediately changed her mind and bought something that cost VND300,000.

"This is the first item I have bought in the last six months."

A woman shops for food at a supermarket in Thu Duc in HCMC. Photo by VnExpress/Quynh Tran

Before the Covid-19 outbreak, shopping used to be a hobby, a "stress reliever" for Khanh, who has a passion for clothing and electronic goods. But when her husband's income from tourism fell by more than half last year and dried up at the beginning of this year, as did her income as a tutor, she was forced to "cut down on unnecessary purchases".

The things that are not necessary are what she used to buy most often in the past.

"The first thing I did was download a spending management app to itemize all my expenses during the day."

She makes sure to check and collect the small change left in the pocket and the motorbike every day.

To save electricity and water expenses, she washes dishes by hand instead of dishwasher and turns off the air conditioner on rainy days.

Dr Pham Khanh Nam, dean of the economics department at the University of Economics Ho Chi Minh City, said the economic crisis caused by the Covid outbreak has forced people to change their spending habits.

In the two years of the pandemic there have been widespread job and wage cuts, leading to a sharp decrease in disposable incomes and spending and shopping by people.

According to a report by the General Statistics Office, retail sales of consumer goods and services decreased by more than 10 percent in August. For the year the drop was around 6.2 percent.

"After months of social distancing consumers are tending to shop in a more cautious way and rethink what is really necessary," Nam said.

A study by consulting firm McKinsey & Company found that Americans have been spending only half the usual money on apparel and consumer electronics.

Le Hoang Vy, 28, owner of a children's clothing store in HCMC's Binh Thanh District, said, "The epidemic makes people have no need to buy or sell anything.

"My sales decreased by 70 percent compared to before the epidemic even though I sold items online and paid heavily for advertising."

She did not expect demand to increase again in the near future because people have just returned to work and there are other items they need more than clothing.

Nam also said the trend of buying cautiously and reducing spending is also caused by the unstable prices due to the supply disruption.

"My family's income has not been reduced, but the daily food bill has increased by 30-40 percent in the last few months," Duong Thuy, 35, of HCMC's Nha Be District said.

Duong Thuy cooks at home in HCMC's Nha Be District. Photo courtesy of Thuy

Because prices are not steady, she has had to cut spending and be more cautious, the banker said.

Whenever she wants to buy anything on e-commerce platforms, she does not make the purchase right away but instead puts the items in the shopping wish list and reviews them later, she said.

"Doing this helps me realize there are many items I don't actually need. So I delete them and only leave behind items that I truly want".

The pandemic’s impact on the psychology of consumers is also causing them to reduce spending, Nam explained, since the perception of risk greatly influences consumption behavior.

"After witnessing the major impacts caused by the pandemic, and when disposable income decreases and fear increases, people tend to save more."

They might not be ready to invest in durables at the moment, he said.

Thuy is a prime example of consumers now focusing on saving more due to fear of the pandemic.

"The prices of many items have gone up and so my expenses also increased. My family still has to pay a bank debt of VND8.5 million a month."

Thuy started making a savings plan in September. On the day she gets her salary, she puts an amount in an online savings account and "absolutely avoid touching" that amount.

She carefully monitors her monthly spending, and also deposits any surplus in the savings account.

"In the past, when I got a bonus, I wanted to change my phone or buy better furniture. But when the epidemic occurred, I found it was no longer necessary. I need to have a backup in case I get sick."

Nam does not expect the shopping and consumption situation to change much for at least six months.

"The epidemic is still complicated, policies can change constantly. People's spending trends depend on the reopening of the economy."

But he emphasized that if the Covid situation gets better and the economy improves, consumer behavior would also change in a positive direction.

"The psychological factors affecting shopping behavior are all short-term. In fact, people easily forget and move on. It is only temporary psychology. When everything is back to normal, they will return to their old habits."

In her apartment in Vinh , Khanh sighed as she watched cosmetic bottles and jars run out at the same time.

"Now, I have to think hard about whether should I buy a tube of sunscreen costing VND300,000."

She still hopes to return to the days of "spending freely". Her husband has gone back to work after four months of unemployment and students are also about to resume in-school learning.

"I still dream of a skin care cosmetic set of VND18 million. Maybe next year I will be able to buy it."