Foreign fashion brands outdo local apparel in Vietnam market
Fashion brands that were once only available to Vietnamese customers via ‘carry-on’ sellers, those who re-sell items they had bought overseas and brought into Vietnam as hand luggage, are now having their share in the US$3 billion fashion market of the Southeast Asian country.
Queuing for clothes
It was at lunch break on a weekday, but the Zara store inside Vincom Center in District 1, Ho Chi Minh City, was already packed with customers from all walks of life: foreign tourists, white-collar workers, and even a handful of customers who had flown over 1,000 kilometers from Hanoi just to visit the outlet.
To buy a piece of fashion at the store, customers must queue their way through every stage of the purchase, from picking, fitting, to paying.
The Spanish budget clothing and accessory retailer opened its first and only store to date in Vietnam in September, but the initial hype for the brand has not seemed to die down just yet even more than a month after their arrival.
Trang, a customer from Hanoi, said she was buying clothes not only for herself but also for her friends and colleagues, so she had been spending a lot of time and energy picking the right style and size.
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.
In contrast, many stores of domestic designers are struggling to attract and retain customers despite affordable prices and regular promotions.
Nhung, an experienced ‘carry-on’ seller, said there is clear segmentation of consumers’ fashion in Vietnam, as a younger generation of Vietnamese with an interest in fashion and a good income are more inclined to opt for international brands.
At VND500,000 (US$22) to VND2 million ($89) per item including tax and shipping fees, clothes of such budget brands as Zara, H&M, or GAP are reasonably priced considering their trendy designs, Nhung said.
New brands will arrive soon
According to Sean T. Ngo, CEO at VF Franchise Consulting, most international brands are opening stores in Vietnam through franchising, or granting the right to use a firm’s business model and brand to a local partner.
However, apparel franchising requires much higher standards than its food and drink counterpart, according to the CEO.
Apart from experience, franchisees are required to have a zero-loss business record and must be able to convincingly present their business development plan to the franchisor during the bidding process, which explains the success of international brands in Vietnam, Ngo said.
Swedish budget apparel retailer H&M has also finished the paperwork to open their first store in Vietnam in 2017, according to insiders’ knowledge.
Meanwhile, Japanese casual wear designer, manufacturer and retailer Uniqlo is also looking for a local franchisee to enter the Vietnamese market in the near future.
With apparel products targeting all ranges of customers, men, women, teenagers and children alike, gathering at one single retailing area spanning thousands of square meters, such brands are posing tough competition against local retailers, the director of a local fashion brand remarked.
“These brands introduce between 5,000 and 10,000 new designs every year on average so they appeal to a very wide base of customers. This has pushed Vietnamese brands to the outskirts of Ho Chi Minh City and other provinces to find customers,” the director said.
Tatsu Yano, director at the Singapore branch of Japanese department store chain Takashimaya, asserted that customers’ demand for high-end fashion in Vietnam is still high, considering the young population and the rise of the country’s middle class.
A stable economy and government incentives to attract foreign investors are also playing a part in the big picture, the director said.
