Vietnam is one of the fastest developing countries in the world with a huge population, and the number of middle and high income shoppers and consumers is steadily increasing.
As a result, international brands such as Zara, H&M and Uniqlo have spotted a great opportunity for them to roll out new concepts and increase sales. Today, this is happening in a lot of industries, and fashion is one of them.
Vietnamese people (especially women) take a lot of pride in their appearance, and with a growing middle class, more consumers have the cash to pay more for quality international brands and up-to-date products.
Of course, price remains the most important factor when it comes to making a purchasing decision for most people in Vietnam, but fashion products also convey image and status which are very important in Vietnamese culture.
The millennials (aged 15-35 years old), accounting for a third of the population, are now the country’s driving force, and have higher standards of fashion and higher exposure to global trends via internet/social media and travel experiences.
This young population is key to the development of international fashion brands since they have the desire to buy, the money to do so, and are already sold on these brands as most of them know them and sometimes buy their products from overseas.
These factors offer a good perspective for the entrance and development of international fashion brands in Vietnam and a platform to acquire new customers.
Can foreign fashion brands really change the way Vietnamese consumers shop?
Vietnam is following the global trend of standardization. These brands want to offer the same customer experience everywhere in the world, so they have strict guidelines to meet customer demands and roll-out concepts that are proven to work in multiple countries.
This potential roll-out in Vietnam is a real opportunity for Vietnamese people to gain access to these products, some of which they are already aware of.
Vietnam is a country where local brands and local makers can offer more unique and individualized products, but what Vietnamese want today, especially the younger generation, is to have international brands that offer modernity and a feeling of being part of the wider world.
These brands may be offering mass market products, but that’s what young shoppers are aspiring to, and new store openings will likely drive increased traffic to the numerous shopping malls that have popped up in key cities.
At a basic level, they will raise the shopping experience in Vietnam by offering a comfortable, spacious and premium shopping area with a clean store lay-out and iconic shopping bags to make the shopping experience easier and more interesting. Expect trendy music and cool staff to greet shoppers when they enter the store.
Beyond this, another advancement we can expect from international brands is the adoption of technology to enhance the shopping experience.
Fashion, as an industry, is continually evolving and fashion retailers must constantly innnovate to stay relevant. These brands have the financial backing and experience to roll out new technologies quickly, which will reshape the way Vietnamese shop for fashion. Expect to see iPads in the hands of staff helping customers to track down what they want, and even customers doing it for themselves at pop-up kiosks.
Social media interaction, fashion competitions and mobile app membership could all be used by international retailers to drive interest in their stores. We can also expect their e-commerce websites to start offering a link between bricks and mortar and online. This will help reach a wider customer base (nationwide) when it’s hard to find spacious and affordable locations in Vietnam.
Consumer expectations of foreign brands
The fashion market is very scattered in Vietnam. Branded products account for a very small part of the total fashion/clothes market and are mainly targeted at the upper class.
Currently most of the population buy either unbranded products made by local tailors, products from local fashion brands, or imported products from Thailand or even China. When international brands enter Vietnam, it is unlikely that they will be adopted by the major part of the population.
Even if disposable incomes ares increasing, the low and middle classes are not ready to change their purchasing behavior to buy much more expensive products all the time.
While these international fashion brands can be considered mainstream by global standards, they will probably be more considered “affordable premium” or even “premium” by most Vietnamese shoppers.
If these brands want to make a real mark on the market, they must make themselves affordable to most of the population. However, if they do this they risk losing their main target consumers. As such it will be difficult for them to find the right positioning.
There are some major mistakes these brands will have to avoid in Vietnam.
The first mistake would be charging more for the same products than in other countries. Vietnamese consumers are connected/informed and will buy from overseas if the price in Vietnam is higher. We have already seen affordable brands become luxury brands when they entered Vietnam.
The second mistake they have to avoid is to believe that Vietnam is a country where they can sell their collections from previous years: Vietnamese are looking for the latest trends and do not want old stock from other countries. These international brands will provide a new alternative to young consumers and will probably have great success in the short term if the price is not too disconnected from what they currently pay for local brands. The only question is whether these brands will fully replace what people currently buy or if they will just be bought as a treat, as an add-on to the current purchases of a specific demograph only.
To sum-up, they should be affordable enough not just to attract a very small part of the population, not too cheap to stay aspirational, showcase the latest collections, offer an “international” look and feel, and take into consideration local tastes and sizes.
