The fashion industry in Vietnam is a “fertile land” for growing fashion brands with the large potential it has. According to the Global Retail Development Index 2010 composed by AT Kearney, Vietnam ranked 14th out of 30 countries in terms of having the most attractive retailing industry worldwide. The domestic apparel market enjoy an average growth rate of almost 10 percent in recent years. This favorable macro-environment, coupled with a large young population, increasing disposable income and living standards, make the fashion industry in Vietnam a target for many global fashion brands.
Foreign brands’ strong presence in the fashion industry in Vietnam
Vietnamese fashion brands face fierce and continuous competition from overseas’ brands. For many years ago they had to compete against Chinese imports and now with Thai brands for average income earners. As for the high end market, they have strong rivals from the United States, Europe, Japan and South Korea. About 200 foreign fashion brands are present in Vietnam, accounting for 60 percent of the domestic market share. The environment thus has been made hard for local firms to survive. Foci, a brand of Nguyen Tam Fashion Company, had opened 60 fashion brands throughout the country. However, the number of Foci’s shops has reduced gradually in the last three years and is even planning to convert to restaurant chains.
A strong appetite for luxury fashion brand
Surprisingly, even though the GDP and per capita income of Vietnam were only $171.1 billion and $1,911, respectively, ranking 148th in the world, Vietnamese consumers have a strong appetite for luxury fashion brand. A survey conducted by Nielsen concluded that Vietnam ranks third in the world in terms of fondness for branded goods, only surpassed by China and India. 73 percent of Vietnamese survey participants answered that they liked buying products of famous brands, and 56 percent of the Vietnamese respondents said they were willing to pay more for designer products rather than for less known items with the same functions. What’s more, the strong appetite for luxury brand in the fashion industry in Vietnam does not seem to ease at all. The Hermes boutique in Hanoi, opened in 2008, increased its profits gradually by 20 to 30 percent each year. Salvatore Ferragamo has opened its fifth store two years ago.
The luxury market in the fashion industry in Vietnam can be further expanded, since the number of ultra high net worth individuals in Vietnam is predicted to double to 300 by 2024, according to the Knight Frank Wealth Report 2015. The increase of 159 percent makes Vietnam the fastest growing population of persons with a net worth of more than $30 million.