Euromonitor Apparel and footwear in Vietnam analysis

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Thị trường Quần áo giày dép Việt Nam APPAREL AND FOOTWEAR IN VIETNAM - ANALYSIS Country Report | Mar 2019 EXECUTIVE SUMMARY Market Sizes Apparel and footwear experiences strong performance in 2018 Sales of Apparel and Footwear In 2018, apparel and footwear in Vietnam recorded double-digit current value growth, mainly due to higher living standards, a gradual increase in average incomes and strong development of social networks According to the General Statistic Office, the GDP of Vietnam grew by 7% by the end of 2018 Therefore, over the review period, consumers were increasingly willing to spend money on dining out, travelling and purchasing apparel and footwear, even for premium brands During the review period, the strong performance by internet retailing was the most significant factor contributing to the current value growth of apparel and footwear in Vietnam According to the Ministry of Information and Communication, the number of internet users in Vietnam has increased dramatically from 50.3 million people in 2016 to over 64 million people by the end of 2017 This was mainly due to the government’s policy to expand the internet network to rural areas across the country In addition, the government also wants to apply the internet and technology to various aspects of society such as operation management, education and business due to convenience, high accessibility and cost effectiveness As a result, the strong penetration of the internet has changed consumers’ shopping behaviour dramatically, including movement from mass to premium products and online shopping By the end of 2020, the government aims to increase the number of people purchasing products through internet retailing to 30% of the total population and is predicted to continue launching policies to meet the expectation Over the forecast period, the strong development of modern channels and internet retailers will create huge opportunities for Vietnamese consumers buying branded products from anywhere within the country at reasonable prices Retail Value RSP - VND billion - Current - 2004-2023 102,998 Forecast 200,000 150,000 100,000 50,000 2004 2018 Sales Performance of Apparel and Footwear % Y-O-Y Retail Value RSP Growth 2004-2023 10.9% International brands start to penetrate Vietnam As Vietnam became a member of various international organisations, especially the Trans-Pacific Partnership and APEC, a number of new international brands entered the country and received a huge welcome from Vietnamese consumers due to their brand reputation and Western designs These cities are usually the main target market of any new international players because of their huge population as well as higher number of mid- and high-income consumers Moreover, as Vietnamese consumers have become increasingly aware of the importance of improving their physical appearance and tend to buy branded products, there was a gradual movement from purchasing economy products to premium brands in large cities in 2018, especially Hanoi and Ho Chi Minh City Various multinational brands such Zara, H&M, Pull & Bear, and Stradivarius entered Vietnam in the last two years of the review period and experienced healthy current value growth, despite their high prices Over the forecast period, with a huge population of over 95 million people and higher awareness of healthcare, Vietnam is becoming an attractive country for foreign companies to invest in For example, Uniqlo is expected to open its first store in Ho Chi Minh in 2019 2023 Forecast 20% 15% 10% 5% 0% 2004 2018 2023 Unbranded goods and counterfeits continue to dominate Over the review period, due to their lower prices and increasing resemblance to famous brands, unbranded products and counterfeits continued to take a large share of sales away from legal apparel and footwear in Vietnam Another reason for their prevalence is their strong distribution networks throughout the country, with access to traditional markets Most of these goods are mainly imported from nearby countries such as China and Thailand or made by small local companies or individuals Vietnamese consumers can easily buy counterfeit and unbranded goods from various channels such as local stores, online retailers or open markets across the country, and rarely face any obstacles or serious legal pressure Overall, as the vast majority of Vietnamese consumers are highly price sensitive, resisting the temptation of counterfeit, unbranded and unauthorised products is unlikely for the foreseeable future Sales of Apparel and Footwear by Category Retail Value RSP - VND billion - Current - 2018 Growth Performance Apparel 60,208.2 Footwear 42,789.6 Sportswear 7,918.3 0% APPAREL AND FOOTWEAR 102,997.8 CURRENT YEAR % GROWTH 10% % CAGR 2013-2018 15% % CAGR 2018-2023 Social networks become most effective channel for advertising products In 2018, social networks became the most effective way for companies to interact with new customers and increase value sales Facebook remained the most popular social network Customers can easily update new products launched by companies and tend © Euromonitor Interna onal 2019 Page of to decide after reading feedback from other users Moreover, Facebook Livestream has become a popular trend in Vietnam for promoting products to consumers due to its entertainment, practicality and reducing concerns from customers Each livestream from celebrities such as signer Toc Tien or blogger Chole Nguyen can receive over 150,000 views and 3,000 comments from Facebook users Most of these users are mainly female, live across the country and are from any income segment Competitive Landscape Company Shares of Apparel and Footwear % Share (NBO) - Retail Value RSP - 2018 Viet Tien Garment JSC 7.9% After Facebook, Zalo Group is a popular local social network and has become a regular communication channel to Vietnamese consumers In September 2018, Zalo created a conference named “ Zalo Business” to notify companies and internet users about its advertisements and effective selling methods through the Zalo network In the future, Zalo Group has decided to invest in developing and improving its Zalo Shop, Zalo Ads and Zalo marketplace to optimise its interaction between companies and internet users Over the forecast period, social networks are predicted to be the most effective way to advertise apparel and footwear Together with a gradual improvement in the number of internet users, busier and more stressful lifestyles will become two significant factors contributing to the rapid value growth of internet retailing and changing customers’ shopping behaviour steadily in the future Inditex, Industria de Di 2.1% Blue Exchange Co Ltd 1.2% Binh Tien Dong Nai Imex 0.8% H&M Hennes & Mauritz Vie 0.7% Kowil Fashion Vietnam JS 0.6% Viet Fashion Co Ltd 0.5% Pierre Cardin SA 0.5% Triumph International (V 0.5% Apparel and footwear predicted to record healthy growth adidas Vietnam Co Ltd 0.4% PVH Corp 0.3% Punto Fa SL (Mango) 0.3% Nike Inc 0.3% Gap Inc, The 0.2% Levi Strauss & Co 0.2% Quadrille & Vera Interna 0.2% An Phuoc Garment Co Ltd 0.1% Giordano International L 0.1% Kering SA 0.1% Others 82.9% Despite the tough competition from unbranded and counterfeit products, apparel and footwear is predicted to experience positive current value growth over the forecast period The first contributing factor is the accelerating level of disposable incomes, leading to higher living standards Secondly, the increasingly strong influence from social networks as well as the globalisation process have greatly enhanced Vietnamese consumers’ standards in general and specifically in apparel accessories, showing increasing interest in Korean or Western fashion styles A greater amount of money is being spent on these items through reliable sources such as modern channels and online retailers, especially in big cities such as Hanoi and Ho Chi Minh Over the forecast period, apparel and footwear is expected to record healthy current value growth due to gradual economic improvement and increasing living standards International agreements would help to increase Vietnam's reputation in ASEAN and become an attractive country for foreign countries to invest Hence, an increasing number of international brands is predicted to enter Vietnam and attract a higher number of consumers to buy branded products The unit price of international brands is predicted to marginally decrease due to reduced tariffs up to 0% for members within TPP or APEC This factor would help to stimulate the demand amongst Vietnamese consumers in the future Brand Shares of Apparel and Footwear % Share (LBN) - Retail Value RSP - 2018 Viet Tien 7.9% Zara 1.7% Explanations of words and/or terminology used in this report are as follows: Blue Exchange 1.2% Other terminology: Biti's 0.8% H&M 0.7% Pierre Cardin 0.5% Ninomaxx 0.5% Triumph 0.5% Owen 0.4% Mango 0.3% DEFINITIONS GBO refers to global brand owner, which is the ultimate owner of a brand NBO refers to national brand owner, which is the company licensed to distribute a brand on behalf of a GBO The NBO may be a subsidiary of a GBO or it may be a completely separate company Share tables at both GBO and at NBO level are provided in the report Reference to shares in the report analysis is at NBO level SOURCES adidas 0.3% Sources used during the research included the following: Levi's 0.2% Summary Research Sources Winny 0.2% Vera 0.2% Genera l Sta tis tics Office Gap 0.2% Minis try of Indus try & Tra de Pull & Bear 0.2% Vietna m Cha mber of Commerce & Indus try An Phuoc 0.1% Da i Su Ha ng Viet Giordano 0.1% Converse 0.1% Others 84.0% Official Sources Trade Associations Business Studies & Assistance Center Gia y Da Viet Vietna m Lea ther & Footwea r As s ocia tion Vietna m Textile & Appa rel As s ocia tion Trade Press Ba o Ha Tinh Increasing share Decreasing share No change Ba o Moi Bus ines s Review, The Ca fé F Công Ly News Doa nh Nha n Sa i Gon Dung Ha ng Viet E-News pa per of Indus try & Tra de Entrepreneur Forum Ha Gia ng News Online © Euromonitor Interna onal 2019 Page of Official Sources Business Studies & Assistance Center Sa i Gon Gia i Phong Online Sa i Gon News Sa igon Tiep Thi Online Sa igon Times Online Textile & Ga rment News Tha nh Nien Online Tha o So, The Tin Moi Tin Tuc Online Tuoi Tre Online Vietna m Bus ines s Forum Vietna m Bus ines s News Vietna m Economy Times Vietna m Inves tment Review Vina corp VTC News Source: Euromonitor Interna tiona l © Euromonitor Interna onal 2019 Page of
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