12:51 (GMT +7) - Tuesday 30/05/2017

Business

Dressed for success

Released at: 11:25, 20/03/2017

Dressed for success

Photo: Viet Tuan

The recent arrival of international fashion brands in Vietnam is evidence of the country’s huge potential despite any short-term challenges.

by Linh San

The latest news in Vietnam’s fashion market is that Hennes & Mauritz AB (H&M), an international brand known for offering fashion and quality at the best prices in a sustainable manner, will open its first store in the country at a site still to be revealed. “Vietnam is an interesting market with potential for H&M and we’re confident that our fashion and quality and versatile style offerings will be well received by the customers,” Ms. Elnaz Barari from H&M’s Communications and Press told VET.

H&M is now present in 64 countries with 427 bricks-and-mortar stores. In 2017, besides Vietnam, H&M will also open outlets in Colombia, Iceland, Kazakhstan, and Georgia. CEO Karl-Johan Persson confirmed the openings on November 30 while also announcing a 7 per cent increase in global sales during the financial year.

Before H&M, the Spanish budget clothing and accessory retailer Zara opened its first and only store to date in Vietnam last September, and the initial hype over the brand is still to die down. Ms. Ngoc Linh, a customer from Hanoi, was waiting in a queue to buy clothes at the Zara store inside the Vincom Center in District 1, Ho Chi Minh City. “I like its style; it’s fashionable and prices are reasonable,” she said. 

Ms. Linh is now 20 years old and she is just one among the younger generation who believe it’s time for “delicious food, beautiful clothes” instead of “feeding and clothing oneself properly”, like previous generations in Vietnam.

Prior to Zara, many other moderate and budget fashion brands such as Mango, GAP, and Topshop had already landed in Vietnam and are opening new stores on a regular basis. “Fashion is a multi-billion dollar industry in Vietnam that caters to the young and well-to-do population,” said Mr. Sean T. Ngo, CEO of VF Franchise Consulting. “The demand for higher quality fashion brands will continue to climb as rising household incomes and a growing middle class boost disposable income levels, increasing opportunities for overall retail spend.”

Fashion brands abound in Vietnam, with many staking out a presence in various categories, from trendy fashion to casual wear, exotic, bohemian, artsy, business, gothic, and rocker, while there are also haute couture brands like Channel, Gucci, Ferragamo, Louis Vuitton, and Burberry, among others. However, mass market brands continue to dominate the industry, including foreign brands such as Mango, Zara, Gap, Banana Republic, and Marks & Spencer. It seems only a matter of time before other mass market global brands enter Vietnam, including Japan’s famous Uniqlo.

“There is a shift among Vietnamese consumers, especially in the higher income brackets, towards higher-end and even luxury products, including fashion brands,” said Mr. Ralf Matthaes, Managing Director of Infocus Mekong Research. He added that, on average, Vietnamese consumers are saving money on such items as daily groceries and other basic essentials but are spending these savings on increasing their personal status, and international fashion fits very much into this spend category. 

Appetite for luxury fashion 

The number of ultra-high net worth individuals (UHNWI) in Vietnam is predicted to double by 2024 to 300, according to the Knight Frank Wealth Report 2015. The 159 per cent increase makes Vietnam the country with the fastest growing population of persons with a net worth of more than $30 million, followed by another ASEAN member, Indonesia, with 132 per cent. Ultra-rich individuals in Asia hold net assets of $5.9 trillion, surpassing even North America’s $5.5 trillion. Furthermore, the report predicts that cities across Asia will see an increase of 91 per cent in UHNWIs over the next decade.

But not only the uber-rich are on the rise. According to Euromonitor International, more than 100,000 Vietnamese had a disposable annual income of more than $75,000 in 2013. As in China, the extremely affluent in Vietnam are constantly looking for opportunities not only for investing their money but also to spend it.

As luxury goods enjoy strong cachet in the country of some 90 million people, Vietnam’s expanding middle class is also expected to start joining the shopping spree.

A survey conducted by Nielsen concluded that Vietnam ranks third in the world in terms of fondness for branded goods, surpassed only by China and India. Moreover, 56 per cent of respondents said they are willing to pay more for designer products than for lesser known brands, despite both having the same functionality. 

The market for apparel in Vietnam is predicted to reach $4.2 billion by 2017, according to Euromonitor International’s forecasts. Among the first high-end fashion brands in Vietnam was Franc