Business
Fast fashion market – Challenges for Vietnamese enterprises
In recent years, international fast fashion brands have expressed interest in Vietnam’s market. However, while Vietnamese customers are anticipated to for new fashion brands coming to Vietnam, domestic enterprises are under pressure to compete with new players.
After huge success in Ho Chi Minh city, Zara, a famous Spanish fashion brand has opened its first store in Hanoi. In addition to Format, Zara, H&M, and Mango, some famous fast fashion brand (contemporary term used by fashion retailers to express that designs move from catwalk quickly to capture current fashion trends) such as Uniqlo and Forever 21 are planning to join the Vietnam’s fashion market.
According to a market research by Savills Vietnam, the country has a high percentage of population in range of 20 – 30 years of age; customers have a preference for imported products; the growth rate of Vietnam’s fashion market is 20% per year, which are important factors for Vietnam to be a high potential market for international fashion brands. As such, along with the improvement in living standard, customers have higher requirements for luxury goods and quality products. At present, Vietnamese customers now instead of choosing products with durability, they are in favor of products currently on hot trend with short term use.
Not only international brands, but domestic enterprises are grasping chances from this trend, for which they are focusing on design phase and introducing products to match the customers’ preferences. At present, some domestic fashion brands have put foothold on the market, such as Ivy Moda, Eva de Eva, Hera DG. However, despite being in the home ground, domestic fashion brands are struggling in the competition with international brands. As such, the limitation on input materials had led to difficulties for domestic enterprises in offering products with new trends on the market. The use of traditional business model such as discounting periodically from 20% - 70% is hardly of getting attention from customers.
Meanwhile, fast fashion brands are capable of quickly changing their product design, offering new products in average 1 month. Moreover, the limitation of product supply can reduce the risk of overstocking, while stimulating customers to purchase products with limited amounts. Especially, with reasonable price and in combination with being foreign brand, products of international fashion brands can easily dominate the market. On the other hand, the growing trend of shopping online also put pressure to domestic enterprises, as they need to improve their production chains and distribution channels. The process of quality checking and packaging must be improved to ensure quality consistency and meeting customers’ expectation. As such, they are facing the risks of returning products.
Currently, each fashion brand has its own strategy, which is based on the survey on purchasing rate and income level of customers in each segment, as well as the valuation of the product. Therefore, in order to compete fairly with international brands, domestics companies should study the market seriously and invest significantly for the design of the product; applying modern business strategy, diversifying the input material supply to quickly meet requirements of the fast fashion characteristics.
More and more fast fashion brands are coming to Vietnam.
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Not only international brands, but domestic enterprises are grasping chances from this trend, for which they are focusing on design phase and introducing products to match the customers’ preferences. At present, some domestic fashion brands have put foothold on the market, such as Ivy Moda, Eva de Eva, Hera DG. However, despite being in the home ground, domestic fashion brands are struggling in the competition with international brands. As such, the limitation on input materials had led to difficulties for domestic enterprises in offering products with new trends on the market. The use of traditional business model such as discounting periodically from 20% - 70% is hardly of getting attention from customers.
Meanwhile, fast fashion brands are capable of quickly changing their product design, offering new products in average 1 month. Moreover, the limitation of product supply can reduce the risk of overstocking, while stimulating customers to purchase products with limited amounts. Especially, with reasonable price and in combination with being foreign brand, products of international fashion brands can easily dominate the market. On the other hand, the growing trend of shopping online also put pressure to domestic enterprises, as they need to improve their production chains and distribution channels. The process of quality checking and packaging must be improved to ensure quality consistency and meeting customers’ expectation. As such, they are facing the risks of returning products.
Currently, each fashion brand has its own strategy, which is based on the survey on purchasing rate and income level of customers in each segment, as well as the valuation of the product. Therefore, in order to compete fairly with international brands, domestics companies should study the market seriously and invest significantly for the design of the product; applying modern business strategy, diversifying the input material supply to quickly meet requirements of the fast fashion characteristics.
