Luxury market in vietnam an emerging mar

Luxury Market in Vietnam An emerging market in prospect MBA PART TIME: LUXURY BRANDS MARKETING AND MANAGEMENT ISC Paris Session of 2010- 2011 Authored by: Hai Anh TO NGUYEN THI Advised by: Mr Michel CHEVALIER Table of Contents I EXECUTIVE SUMMARY II INTRODUCTION III WHERE IS VIETNAM LUXURY MARKET’S POSITION AMONG SOUTH EAST ASIA COUNTRIES South East Asia markets overview A growing zone 10 Luxury consumers of South East Asia countries 10 Potentiality, Opportunities, Threats by market 12 Indonesia: An economy in stabilizing stage 12 Malaysia: An attractive destination for luxuries 13 Singapore: Switzerland of Asia 14 Thailand 14 Brunei 15 Vietnam 16 Markets Mapping 17 IV VIETNAM LUXURY MARKET OVERVIEW Economic Overview 1 High annual growth rate An internationally open economy Increasing numbers of Private Enterprise 4 Foreign Direct Investment (FDI) is surging Highest Inflation rate in Asia Corruption Other Rankings Demographic: A young and active population Urbanization trend 10 SWOT Analysis of Vietnam Luxury Market 13 V IS VIETNAM A PROPRITARY / POTENTIAL MARKET? 14 Emergence of new wealthy class in sufficient number to constitute a sustainable market 14 Consolidation of middle class (monthly income of more than US$ 435) and emergence of wealthy class 14 Emergence in demands for luxury goods: Establishment of a society of consumption and effervescence of luxury market 15 The fancy for luxury goods of young people 16 A new trend : The demand for more sophisticated products 16 Vietnamese Luxury Consumers: 17 Profile of Vietnamese luxury goods consumers : 18 The conspicuous mode of consumption (or Status Consumption) 19 VI HOW TO DEVELOP LUXURY MARKET IN VIETNAM 20 Luxury market outlook by sector 20 Cosmetics and Perfume 20 Prêt-a-porter, Lingerie 23 Leather and Accessories 24 Jewelry, Watch 25 Home equipment and Real Estate 26 Entertainment (Golf, Spa) 26 Distribution 26 General characteristics of luxury goods distribution in Vietnam 26 Chosing the right distribution system 28 Rapid development of distributors/ importers 29 Insufficient commercial surfaces adapted for luxury distribution 30 Locations in Ho Chi Minh City and Hanoi for luxury retailing 31 Retail Market Updates for 2011 35 Renting price of a corner or a boutique 38 Marketing and Communication 39 Magazines 39 Advertising, Media 39 Constraints 40 VII Counterfeit market 40 Uncompetitive price due to heavy taxes and tariffs 41 RECOMMENDATIONS 41 Products: 41 Place: 42 Promotions: 42 VIII REFERENCES 43  45 I EXECUTIVE SUMMARY In the first part of this paper, a comparison of Vietnamese luxury market has been carried out with an overview and consumption habits analysis of the South East Asia markets which are geographically near to Vietnam Today’s luxury landscape in Asia has changed significantly with the emerging of new potentialities Being the late comers behind the mature market such as Japan, South Korea and China, South East Asian countries present promising opportunites for luxury brands with the rapid economic growth Despite the low GDP per capita compared to other developed countries, the living standards in those countries are improving dramatically with a client limited but elitist with different demand from mature luxury markets to satisty The studied countries in this report (Indonesia, Malaysia, Singapore, Brunei, Thailand, and Vietnam), although being geographically closed, the markets are different in term of maturity, culture, and customer behaviors The dynamism of each market differs depending on the stage of development However, there is a clear evidence of long-term potentiality for luxury in both local markets that need heavy initial investment but low payback, and in travel retail zones Luxury consumers of South East Asia countries have always been avid for luxury goods and they are having increasing disposed income to satisfy their needs Regarding consumption habits, it is common in those markets that the purchasing of luxuries is not only a lifestyle but more importantly, is a way to demonstrate the social status As the result, seeking for a conspicuous aspect still is an undeniable stimulator in purchasing decision What distinguishes Asian luxury customers from Westerns’ is a different hierarchy of needs The Western counterparts want to feel good about themselves, hence, they seeks for brands whose products make them feel at ease and comfortable On the other hand, the highest need in Asian culture is status Although some behaviors may differ from one country to another, the status seeking is particularly important With a modern consumption trend, the consumers in emerging countries are becoming highly selective Higher price used to be allocated with higher quality but consumers are now spending wiser with more requirements for specialty and uniqueness They are also more knowledgeable with all the information available for brand comparison, those affluent consumers are now demanding Among South East Asia countries, Vietnam luxury market is the newest The pionner in the region was Singapore Being late compared to Hong Kong, Singapore discovered real luxury consumption International luxury brands penetrated the market since the 70s and most of the important names have already implanted Luxury in Malaysia made its first steps during the years of 1980 in the big commercial galleries in luxury hotels but the market took it real first motion at the middle of the 1990s Analysts believe that the Malaysian market presents a strong potentiality for both local and tourist consumptions Next was Thailand, the luxury market made it first steps during the 1980s with the arrival of Louis Vuitton the luxury market not only depends on the economic growth but also the politic stability the country often experiences politics crisis that causes the slowdowns in luxury market over the whole country The first luxury products appeared in Jakarta – Indonesia in the early 1990s, when the development of the sector was very difficult due to products from contraband market Indonesia is a developing country where the population which is tempted by the consumption is becoming more important The luxury market of Brunei is still limited du to the small population but the amount spent on luxuries are substantials Even if some luxury brands have entered the Vietnamese market since years but the real trend of luxury products consumption is extremely recent, started from 2006 Since then, the luxury market enjoys outstanding development with the introduction of numerous brands The second part tempts to analayze different dimensions of luxury market in Vietnam based on its economy development and demographic factors Vietnam is the Asian country that is considered one of the fastest growing economies in the world, after China and even greater than India For the period of 1998 - 2003, its average GDP has progressed around 6.8% and increased up to 8% during 2004-2007 with slight slowing from 2008 to now From 1986, the Vietnamese economy benefices from a new politic of “Doi Moi” (Renewal), leading to continuous movements of opening and liberation This allowed the country to integrate progressively to international exchanges and to develop an economy sorely internationalized degree of openness of 168% in 2007 After joining WTO, powerful economic development and improved standards of living have changed the consumption trend among Vietnamese people Numerous of luxury brands that could not enter to the market just some years ago due to the lack of adequate distribution channels are now available in the market, offering the consumers with larger product choices The embrace of private enterprise increase favor the apparition of many entrepreneurs, benefit from the rapid growth of the country to become nouveaux riches Similar to China, investment is crucial for driving the economic growth performance Foreign Direct Investment poured into Vietnam is not as high as China but higher in most of other neighboring countries However, the country is facing an accelerating inflation has forced the government to apply tightened monetary policy that causes difficulties to businesses After joining WTO, the Vietnamese government has significantly decreased the imported custom tariff for many product categories However, the barrier of entry for luxury goods into the Vietnam market is still very high Besides, the Ministry of Industry and Trade activated on the 16 May 2011 new restrictions on the import of certain luxury goods The high level of custom duty, especially for luxury goods, continues to favor the development of contraband with neighbor countries of Vietnam From a demographic point of view, the luxury potentiality in Vietnam relies on a very young population with a median age of just 25 The young society is promising for a long-term investment as people are open to change and often quite entrepreneurially minded The high percentage of young consumers would be a critical factor helping Vietnam to stand out among emerging retail market, including China, India, or Russia Vietnamese consumers can have greater access to international brands information research thanks to its openness to foreign influence and good English proficiency, and are more receptive to foreign brands’ communications messages The enrichment of the country benefits firstly the citizens and the high-income groups A clear urbanization trend is noticed with an increasing apparition of wealthy class in major cities who are the main consumers for luxuries In 2010, Vietnam has imported $5.7 billion of luxury goods, illustrating an emergence in demands for luxury goods and The penetration of foreign brands into the Vietnamese market is relatively recent and making a fast-developed market Nouveaux riches are showing their desire to expose their new social status with demand for more sophisticated products: the qualification of luxuries is no longer based only on price Vietnamese consumers, particularly those who belong to middle and upper classes, are modifying their habits Their profile can be described as well educated, updated to the technology, prudent and respectful to the traditional, optimistic, and festive Promising opportunities for foreign companies are clearly shown offering luxury products to Vietnamese market since high level of Status Consumption is displayed The third part concentrates on the question for foreign brands of how to successfully enter market by using proper distribution channels and communication strategies An outlook of market by sector gives a general understanding of the current development state of different sectors in Vietnam The cosmetics sector in Vietnam is still developing and the main difficulty of luxury cosmetics brands in Vietnam is the competition of a wide range of uncontrolled fake, mislabeled, and smuggled products The demands for luxury reade-to-wear used to be very limited in Vietnam Thanks to the development of adapted commercial surface, as well as the apparition of leisure activities (clubs, bars, opera…) consumers started to spend more for luxury clothes Leather sector is in full expansion with numerous distributors who chose to invest for luxury accessories However, shoes market stay undevelloped for both males and females The vietnamese jewelry is still remain very traditional in both fabrication and design Luxury home decoration sector in Vietnam face a real concurrence with local brands There is an actual revolution of distribution in Vietnam The distribution sector started to be completely open to foreign investors, who can own 100% capital of their boutique, or any distribution structure , logistic is certainly one of the most delicate problem in Vietnam, notably in land transportation From 2006, the acceleration of luxury brands’ implantation to Vietnam is clearly seen The retailing sector is going through a period with tremendous changes with the apparition of a luxury market Most of foreign brands choose to firstly enter the market via a local distributor or importers The number of enterprises active in the luxury sectors has been increased considerably in the period of 2005-2006, notably in the fashion-related fields There is a lack of adapted commercial surface for luxury distribution The Vietnamese real estate market is actually characterized by a profound shortage of offerings, the undertaken of numerous construction site and the extremely high prices Prime retail rents in Vietnam is quite high compared to South East Asia neighbours, even higher than Malina and Bangkok According to the international real estate service provider Savills Vietnam, the high rent in the city center is a big challenge for current and future retailers Luxury brands have a large choice of communication means to to communicate their brand images Nowardays, the apparition of Vietnamese version of internation high-end fashion magazines such as Elle, Harper’s Bazaar and other lifestyle magazines such as Cosmopolitan, Her World have greatly improve the dynamism of communication channels Used to be practically inexistent at the early 1990s in Vietnam advertising means are also more diversified, covering all the Media types, including television, radio, press, displays, and Internet Only some weaknesses still exist in urban displays, which is still low-structured Finally, the two main constraints of the luxury market in Vietnam were counterfeit products and uncompetitive price due to heavy tariffs and taxes II INTRODUCTION Vietnam has experienced a tormented history, with war and territorial conflicts – some remain unsolved, like the recent conflicts about South East Asia Sea with China However, the extraordinary dynamism of the country is again writing a history This country is well known about its beautiful landscapes, the historical monuments dated from the imperial periods, and the architecture inherited from French colonization But nowadays, Vietnam distinguishes itself by one of the country having the fastest economy growth rate after China and even greater than India And the luxury market, as a result benefit from a strong growing demands with the expanding of population who has high disposal income According to CPP Luxury Industry Management Consultants, Vietnam is among the fastest growing luxury markets worldwide Vietnam has become a country of records: record of young population (50% of the population are under 22 years old), and most importantly, the record of the growth rate with the GDP of more than +7.5% over the last decade Also, the FDI (Foreign Direct Investment) is in exponential increase (14 billion Euros in 2007) and the exportation rate is (+22.6% in 2007) (Ubifrance, 2010) This is clearly a tangible sign, not only from a voluntary of a nation to come out of the poverty, but also a political voluntary affirmed the integration to the world’s development In a country where just 20 years ago, people still walked on flip-flops cut from old tires, a Gucci beach sandals of $365 can come as a shock Displays of wealth used to be frowned in Vietnam when the government wanted to take the assets of the wealthy to redistribute to the poor Since the late 1980s with the introduction of free market, foreign investors started to come to Vietnam bringing with them a Western styles and attitudes, making a growing market in every sector, including luxury goods How can Louis Vuitton market a $3,500 handbag in a nation where the annual per capita income is just over $800? This paper is going to analyze the luxury market in Vietnam in details by considering different dimensions in order to evaluate whether promising opportunities and forsesable prospect are truly present in the market III WHERE IS VIETNAM LUXURY MARKET’S POSITION AMONG SOUTH EAST ASIA COUNTRIES South East Asia markets overview Consumers in Asia have always been avid to luxury goods In early years, it was the image of Tokyo’s Ginza district, Hong Kong’s Causeway bay or Singapore’s Orchard Road Today’s luxury landscape in Asia has changed dramatically, with the development of new emerging paradises Being left behind for a long time with the success of luxury markets in Japan, South Korea, China, and India, the South East Asia countries evoke nowadays-strong countries studied desire in for this luxuries report If the (Indonesia, Malaysia, Singapore, Brunei, Thailand and Vietnam) cannot compare with the two giant emerging Asian markets China and India in term of market size, those countries however, offer interesting opportunities for luxury products Although the market is not as mature as some countries to the others, the growth rates are significant, giving the opportunities to grasp in all the countries in the area China is not the only country enjoying rapid economic growth: The World Bank raised its 2010 growth forecast for the South East Asia countries by from 7.3% to 8.9% from 2009, showing a strong potentiality of the market  An area with more than 400 million of inhabitants and a luxury market estimated of one billion euros (2007)  Although being geographically closed, the studied countries’ markets are different in market maturity, culture, and customer behaviors The dynamism of each market differs depending on the stage of development  The luxury markets are currently concentrated to only the capitals: Kuala Lumpur, Jakarta, Singapore, and Bangkok Exceptionally, in Vietnam with two big cities, whereas Ho Chi Minh City being the commercial center enjoys a greater market development and opportunity compared to the capital – administrative center  According to professional in the sector, Malaysia and Vietnam would represent the most important growth rate for luxury products in the next five years (Ubifrance, 2007) A growing zone There is an important potentiality in South East Asia countries Despite a low GDP per capita, which is increasing dramatically, the market is potential with a targeted customer more limited, elitist and with different demands from mature markets This market would clearly offer a long-term potentiality in both local market that need heavy initial investment but low payback, and in travel retail zones Indonesia Malaysia Singapore Brunei GDP per capita 2010 4,394 14,670 56,522 GDP projected for 2016 8,295 19,886 GDP Growth rate 2010 4.5 Income share held by highest 10% (2007) 29% Philippine Thailand Vietnam 48,892 3,737 9,187 3,134 65,953 51,108 4,852 14,657 7,817 -1.7 -1.3 -1.79 1.1 3.7 5.3 38% 33% 34.2% 34% 30% 10 Vietnam Singapore Brunei Thailand Malaysia Indonesia 2004 2005 2006 2007 2008 2009 2010 Philippine -2 Growth rate -4 Luxury consumers of South East Asia countries  The consumers are the more and more disposed to purchase luxury goods  They are largely sensible to luxury by the numerous marketing and advertising campaigns, the word-of-mouth plays also a fundamental role It is essential for consumers to be the firsts to purchase one product, or to have the minimum of what their entourage has  The high-income habitats travel the more and more and purchase luxury goods in other countries There are in-Asia travels to shopping in Thailand and Singapore, and out-Asia travels to shop in Western countries  Consumption of luxuries is not only a lifestyle but more importantly, is a way to distinguish themselves with others, and to create a countenance Also, seeking for a conspicuous aspect still is an undeniable stimulator in purchasing decision Hanoi: Total stock of the modern retail spaces in Hanoi decreased by 11.8% in the first quarter of 2011 as Trang Tien Plaza is temporary closed for renovation and the restructuring would allow it to achieve the premier status in the city More new high-end and luxury tenants are anticiapted to enter the market Numbers of projects are lauching and leasing activities are beginning Savico MegaMall and Mo Market was launched in March 2011 The giant Vincom revealed it aggressive plan of introducing 10 shopping centers nationwide with total GFA of more than million squaremetres in the next years under brands: Vincom Center and Vincom Mega mall The rental price is continuing to increase in the Centre Business District (CBD) but decline outside the CBD due to the rent discount policies offered by some new buildings In the next few year, luxury retailers will have more choices as the market is expected to welcome large new supply from major regional projects: Vincom Mega Malls (230.000sm), Royal City (200.000 sm) and Ciputra Mall (200.000sm) 37 Renting price of a corner or a boutique Department Stores: Prime retail rents in Vietnam is quite high compared to South East Asia neighbours, even higher than Malina and Bangkok According to the international real estate service provider Savills Vietnam, the high rent in the city center is a big challenge for current and future retailers The increasing in price of those locations may cause retailers to look for other commercial surfaces outside the CBD with more reasonable rent Luxury Department Stores like Parkson, Diamond Plaza are paid with a rent plus a profit sharing amount In Hanoi and Ho Chi Minh City, department stores announe before negociation a rent price generally around $120 pms and a debit of around 30-25% from the revenues For ground floor surfaces, the rent can be much higher, depending on the strategic location of the building (inside or outside CBD, on commercial axis…) We observe a continuous upward trend of rent inside the CBD over the years The rental of luxury and upscale commercial locations are managed by two foreign real estate agencies: CB Richard Ellis and Chesterton The situation of quasi-duopole contributes an alignment of renting prices 38 Boutiques: The rent of boutiques located on the streets present a larger price range due to variable factors and depend largely on the negotiation between two parts The best locations often belong to State-owned organisms The price maximum for an exclusive boutique in central street (such as Dong Khoi or Le Thanh Ton in Ho Chi Minh city) can be almost similar to a location in a Department Store Marketing and Communication Magazines Luxury brands have a large choice of magazines to communicate their brand images Just some years ago, it was hard to find a reliable and sophisticated magazines specializing in promoting luxury brands and target the audience Nowardays, the apparition of Vietnamese version of internation high-end fashion magazines such as Elle, Harper’s Bazaar and other lifestyle magazines such as Cosmopolitan, Her World have greatly improve the dynamism of communication channels Beside Fashion publication, high-end magazines specialized in different sectors such as cars, sports, food and beverages, watch and jewlery can help to tailor the marketing messages to specific customers High-end magazines are specialized in many luxury sectors - Fashion and Lifestyle: Dep ( Beauty : the local but trendiest magazine acts a reliable luxurious trend setter and fashion & beauty guide) , ELLE Vietnam, Harper’s Bazaar, Herworld, Cosmopolitan, Lady Luxury, Thoi Trang Tre (Fashion for the Youth), The Gioi Mot (The world of Fashion…) - Sport : The Thao Van Hoa & Dan Ong (Sport Culture& Men) , Vietnam Golf Magazine - Business: Business Styles, Businessmen… - Car: Autocar Vietnam Advertising, Media Used to be practically inexistent at the early 1990s in Vietnam, advertising has considerably developed, with the sector turnover of 300 million $USD by 2005, in progression of 50% compared to 2002 The advertising means are also more diversified, covering all the Media types, including television, radio, press, displays, and Internet Only some weaknesses still exist in urban displays, which is still lowstructured 39 With an audience rate of 96% in Hanoi and 92% in Ho Chi Minh City (Ubifrance, 2011), the television still play a medium choice for advertising campaigns In 2005, it received 70% of expenses compared to the press’s 28% The other media means cover the remained market parts With the development rapid of Internet and mobile phone, the brands are using the more and more this communication support Nowadays, there are around 3000 advertising agencies 60% of which are implanted in Ho Chi Minh City The market is dominated by foreign firms that represented 80% the activities of the sector Local agencies Foreign agencies Dat Viet Léo Burnett Vinexad BBDO Asiapacific Kim Minh J.Walter Thompson Lotus Communication Mc Cann-Erickson Goldsun Prakit & CB Public Company Youth Advertising company Dentsu Inc D&D Olgivy and Mather Advertising Viet My Saatchi and Saatchi Sunflower Media Publicis In term of policies, the advertising sector is strictly supervised The foreign agencies still cannot enter the market through an affiliate 100% of foreign capital They have to build an obligatory co-enterprise with a Vietnamese firm where they have to contribute at least 30% of the capital Constraints Counterfeit market Numerous illegal production and distribution of counterfeit products, usually from China still supply for markets and boutiques in Vietnam There is also illegal imporation of authentique products which are sold afterward in stores that not have exploitation license from the brands However, the Vietnamese authority started to be aware of the necessicty of banning the distribution and manufacturing network of counterfeit luxury goods The Civil Code of 1995 included articles about the protection of interlectual property in Vietnam and this subject was discussed when the negociation for the adhesion of Vietnam to WTO Although counterfeit problem in Vietnam is not as serious as neighbour countries such as China or Thailand, it can be a real menace for the growth of luxury market 40 Uncompetitive price due to heavy taxes and tariffs Imported products generally must incorporate the following elements into the pricing structure: - Import agent fees (typically to percent of the invoice) - Customs duty, depending on product category - Value-added tax (VAT) in the range of to 10 percent is levied on the landed cost when the goods change title - Luxury/Consumption Tax (especially autos, beer, and alcoholic beverages) Import taxes, value-added tax (VAT), luxury tax/special consumption taxes, customs service fees, and delivery delays can quickly price products out of the market or cut margins The fragmented distribution system creates multiple layers of wholesalers, dealers, and vendors, with markups at each stage Moreover, foreign suppliers are often frustrated by their inability to maintain control over the product's pricing Random and frequent price fluctuations are common for distributors and wholesalers Price plays an important role in the consumer's perception of the product Although Vietnamese consumers expect to pay a premium for a foreign label or brand, in practice, the actual number of consumers who are willing to pay the higher price is limited Most Vietnamese buyers are very pricesensitive With the abundance of less expensive products in the form of smuggled or counterfeit goods and “copycat” brands, the competition is keen For tourists, it is clear that luxury products in Vietnam are more expensive than other Asian countries, especially Singapore The revenues brought buy foreign tourists are very little Shopping tourist has always been attractive in countries like Singapore, Thailand, or Malaysia Tourists only come to Vietnam for its culture and beautiful landscape but not for shopping Also, due to the high price, wealthy local customers prefer to purchase luxury goods when travelling VII RECOMMENDATIONS Products: - The proposed collections have to be as up-to-date as those in Occidental countries One current issue of the luxury markets is the gap between local collections and those in Occidental ones The customers’ starts losing the trust into the local luxury market and only purchase when they travel outside their countries, believing they can get the latest trend The creating of “limited edition” is a competitive advantage for brands, especially in this area, where the client really sick for being unique 41 Having a long-term vision as the emergent markets need giant investment (due to undeveloped - infrastructure, distribution channels) therefore the Return on Investment cannot be quick Place: - Choose geographic emplacement strategic that is adequate to the image of the brands - Controlling the distribution circuit of products and supervise the counterfeit market - Choosing a good regional partner in case of association with an intermediary - Having a visible, central, and convenient location is indispensible in expanding the brand’s exposure to its target customers The lack of prime locations in HCMC is preventing niche/high end luxury companies from further expansion while creating barriers to entry to new entrants As a result, high-end luxury companies are currently expanding in Hanoi as opposed to HCMC - There is a general lack of distinction between “selective” brands and “niche luxury” brands as the words not exist in the Vietnamese language As such, consumers tend to categorize selective and niche luxury brands into the same segment Promotions: - Consolidate the communication: Sensitize and initiate the consumers to the culture of consuming luxuries, including brands unique character, products, services, history, and expertise - The communication and relation are key factors to success that brands should not neglect The welcome inside a boutique is very important, especially in Asian culture The customers should feel being unique and recognized - Communication: Specialized magazines, word of mouth, and events are regarded by niche luxury brands as the most effective marketing channels to allure consumers Intensive selection of invitees list for events is necessary to ensure high attendance rates since a proportion of high-net-worth individuals prefer to keep low profiles - The majority of high net-worth Vietnamese is considered to be “nouveau rich”, with most unfamiliar with luxury brands Education and brand management are critical to success - Vietnamese consumers tend to be influenced by peers, especially friends, family, and celebrities It is also a common habit among Vietnamese nationals to observe other people in public places to become aware of new products and styles 42 VIII REFERENCES  Chevalier M and Mazzalovo G., Marketing et Management des industries de luxes, 2nd edition, Paris, 2011  Okonkwo U, Luxury Fashion Branding: Trends, Tactics, Techniques, 1st Ed, Palgrave Macmillan, 2007  Bastien V and Kapferer, Luxe oblige, Eyolles, 1st edition, Paris, 2011  PRECEPTA, Les groupes de luxe dans le monde, Les défis stratégiques de la globalisation, Septembre 2007  Ubifrance, 2010, L’essentiel d’un marché  Ubifrance, 2010, Ouvrir un point de vente Ho Chi Minh ville, Tisserand G el all  Ubifrance, 2011, POLI J., S’implanter au Vietnam  Les nouveaux modèles de distribution des maisons de luxe, Eurostaf, 2005  Asia’s temples of luxury – How consumer behavior will change in the dawning age of responsibility, Interbrand  GLOBALTRADE, “Using an Agent or Distributor in Vietnam”, , 2010  CROWE HORWATH DTL AUDITING COMPANY, “Vietnam attempts to raise tariffs to restrict luxury imports”, , 2010  BUSINESS-IN-ASIA, “Asia’s inflation will cause economic slowdown”, , 2009  LUXURY SOCIETY, “ The important changes in the luxury consumer”, , 2010  CAMPAIGN SINGAPORE, “Luxury and the new consumer mindset”, , 2010  UNCOMMON WISDOM, “Asian Luxury Market Sparkles”, , 2010  DEUTSCH BANK RESEARCH, , 2007 43 “Understanding Vietnam”,  LOS ANGELES TIMES, “Vietnam's nouveaux riches fuel luxury shopping market”, , 2007  THE SAIGON TIMES, “Young, high-income people to drive retail growth”, , 2009  VIETNAM BUSINESS NEWS, “Vietnam spends $5.7Bln importing luxury goods in 2010: MoIT”, , 2011  INDEX MUNDI, “Facts about Vietnam”,  TRADING ECONOMICS, “Indicators for VIETNAM”,  ASIA FASHION CLOTHING, “Vietnam Luxury - Brands Extravagance”, < http://www.asiafashionclothing.com/index.php?id=620>  VIETNAM LUXURY, “Grand Opening ceremony of the largest luxurious shopping mall in Vietnam”, , 2010  VIETNAM LUXURY, “The Garden Shopping Center”, , 2010  VIETNAM LUXURY, “Flagging demand for luxury property in Vietnam”, , 2010  VIETNAM BUSINESS & ECONOMY NEWS, “How basic wage increase affects inflation in 2011 remains unknown”, , 2011  VIETNEWS, “September inflation set for small rise”, , 2010  VIETNAM BUSINESS NEWS, “Restraining inflation rate at 17% poses major challenge”, , 2011  THANH NIEN NEWS, “Inflation no barrier to luxury binges”, , 2011  CPP-LUXURY, “Vietnam, among the fastest growing luxury markets worldwide”, http://www.cpp-luxury.com/en/vietnam among-the-fastest-growing-luxury-marketsworldwide_1059.html>, 2011 44  PRLOG, “Luxury travel increasing in Vietnam - Luxury Travel Vietnam Group Reports”, , 2008  GOLIATH, “Driving consumer behaviour: an analysis of middle-class consumer habits in Vietnam.”, , 2010  VIETNAM BUSINESS FORUM, “Vietnam Is One of the Five Most Lucrative Retail Markets”, , 2011  ECC INVEST, “Participate in Vietnam”, , 2011  INTELLASIA, “Spike in imported luxury consumer goods bleeds forex”, , 2008  NIELSEN, “Doom or Boom in Vietnam in 2009: What will the global economic tsunami wash upon Vietnam's shores?.”, < http://www.acnielsen.com.vn/news/BoomorDoom.shtml>, 2009  NIELSEN, ”Keeping Up with Generation V, One of the World’s Youngest Populations”, , 2005 45 APPENDICES: Luxury Brands and Distributor in Vietnam Distributo r/ Importer Section Brand (s) Communication/ Marketing City Store (s) An Tran Accessories specialized in eye wear Brands of the Italian group SAFILO, Bulgari, Roberto Cavalii, Prada, Versace, Gucci, D&G, Fendi, Giorgio Armani, Max Mara, Ray Ban, Police Distributor of leather bags from Just Cavalli, Missoni, C&C, Exit Fidelity program with price deduction Events: fashion shows, PR and pubs in magazines HCM Cosmetics, Perfume, Tourism, Wine Exclusive Importation, Distribution: Annam Fine Food: The Warehouse (wines Baron Phillipe de Rothschild, Joseph Drouhin, M.Chapoutier, Georges Duboeuf, Louis Rosderer, Antinori) Annam Prestige (Lancaster and Coty brands: Marc Jacob, Kenneth Cole, Lancaster, Sarah Jessica Parker, Chopard, Davidoff, David Beckham, Adidas, Lulu Castagnette, Aspen, Jovan, Joop!) , Hospitality Equipment (Schoff Zwiesel) Public Relation Own distribution channels: EYEWEAR HUT, SUNGLASS, OPTIC One luxury eyewear boutique in Park Hyatt (2005) A lot of prestige locations Caravelle Hotels, Diamond Department Store Metropole Arcade (Cartier, Montblanc) Haut-de-Gamme and Luxury brands: Calvin Klein, La Neige, OPI,Tony Wear, The Undershop, Red Earth, Guess, Polic, Zinth, Swarovski, Lancel parfumeries called Zen : Lotita Lempicka (exclusive), Guess, Lancôme, Cartier, Guerlain, Christian Dior, Calvin Klein, Chanel, Boucheron, YSL, Versace -Hire designers for the merchandising in sale locations -Events, advertising in local magazines, “echantillon”, partner, “atelier de maquillage”, affichage, celebrity endorsement (Ex: Lancel was launched Importer, Distributor Apple Tree Importer, Distributor, Fabricator C&T Group Distributor Cosmetics, Leather, Fashion Accessories HCM HN HN, HCM, Hai Phong 45 locations through Vietnam Lancel: Parkson HCM and Hai Phong Year of Establi shmen t 1990s Empl oyees Came to VN 1992 1992 Customers Notes Middle to Upper class , local 96% of international eyewear brands market 3000 Perfumes: sophisticated, young active women (executives in Vietnamese and internationals enterprises) French company implanted in Vietnam, started in tourism then real estate and distribution Tourism, Leisure: Exotissimo, Emeraude Classic Cruise, Kamu Lodge Real Estate : Archetype, Imo Development, Bamboo Factory, Lacquer Factor 550 Majority of clients are women Started with the name Saigon Trade Co., and transformed to “societe par actions” in 2000 DAN JEWELRY Jewelry -Alphana: high-income customers ($500-$ 100 000/ ring) -Dan: wealthy people with different collections of precious and semiprecious stone ($300 - $60 000/ ring) Fashion, Leather, Cosmetics Exclusive of Salvatore Ferragamo, Lancôme (launched 2006 at Parkson and Diamon Plaza), Bally… Decoration, “art de table”, fashion -Decoration: Christofle (exclusive), Daum, Wedgwood -Bedroom: Sealy, Santas, Frette, Schlossberd -Bathroom: Spirella, Alessi -Spa: Mt.Sapota -Kitchen: Siematic, Leifheit, Peugeot, Afi, Siemens, Rubbermaid -Epices: Mc Cormick Fashion: FCUK, Hermes (watches) Furla Fabricator Distributor DUY ANH Fashion and Cosmetics CO LTD on 2007 at the Opera Hoc Chi Minh with invitees from Vietnamese authorities, medias, and represents of Richemont Asia) Merchandising: group of internal designer + freelance Using principally PR activities: events cocktails Don’t use brand embassadors Fidelity card from $5000 for price reduction HCM boutiques: DAN JEWELRY (Caravellle Hotel) and ALPHANA (Dong Khoi street) Written press articles HCM and Hanoi Parkson, Diamond Department Store -Written articles HCM Diamond Department Store, Parkson, Zen Department Store -Relation de presse -Events -Direct marketing: emails, phone calls to HCM et HN locations -Diamond Plaza (HCM) -Hilton Hotel Weeding rings purchased by men, mother-in-law Payment in liquid Best seller: rings and earrings Sale increase from October - Mars 25 to 60 yo, 60% locals, most foreigners are Australians 1994 Importer Distributor EIGHT LIONS Importer Distributors GOLDEN SUMMER Franchise Leather and accessories types of customers: - “particuliers” (important sale) -Hotelier industry 2000 targeted customers: locals, expats, tourists -Hanoi: “officiels”, Imported diamonds from Belgium and Hong Kong The firm wishes to diversify its activities by distributing leather/eyewear products Short-term goal: to become the national incontrovertible in the Vietnamese jewelry and accessories market -Lancôme: Late arrival to Vietnam and already had 40% of cosmetics market -Developing in luxury duty free sector as the husband of the chairwoman is the president of IMAN PAN PACIFIC (main actor in duty free) -Private firm, American capital Started being a consultant, and developed into distribution retail in privileged customers -Service of “entretien” of bags (HN) -Opera view (HCM) KIM YEN Trading Co LTD Fashion, Cosmetics -Lingerie: Aubade, Jenna, Huit -Cosmetics: Decleor (exclusive), Carita -Advertising, brochures HCM -Carita/Decleor: beauty salons, corners at Diamond Plaza and Parkson -Aubade: boutiques and corner at Diamond Plaza LA NEIGE Cosmetics La Neige is a Korean brand of AMORE group -Big-format visuals provided from mother company with Korean models -Free product sample, fidelity program with 80000 members (2007) HCM, Ha Noi, Hai Phong , Nha Trang, Hue -50 locations : in department stores, 4-5 in every big cities Exclusive : -Watches: Bulgari, Gucci, Cartier (for both Vietnam and Cambodia), Montblanc, DKNY, Armani, Fossil, Rolex, Chopard -Leather: Cartier, Montblanc -Stationeries : Montblanc, Cartier - Magazines and affiches - Direct marketing - Relation de presse Importer Distributor ONE WORLD Distributor HCM HN OPENASIA Group Distributor Fashion, Accessories Leather Cars -Exclusive distributor for Louis Vuitton (1999), direct management of the brand in Vietnam -Leather: Hermes (2007) -Lingerie: La Perla A lot of Public Relation HN HCM A lot of prestige locations in Vietnam -Carevelle hotel, Diamond Department Store -Metropole Arcade (Cartier and Montblanc) The firm has a luxury commercial arcade of 1000m2 in the 1995 70 1988 1998 men spend more than women -HCM: business men, private entrepeneurs -Women >30 with high purchasing power -Past: 80% expats Now: 70% locals -Sales peak on March for international women day -Men rarely purchases lingerie for their wives - Sales peak from September to Lunar New Year Important profit made by gifts purchasing - Active women 2545 yo 2004 with careful study of Vietnamese market - Only 2% vietnamese purchase occasionally Cartier - Average age : 2830, most are men - 20% purchases are for glfts -Vietnamese representation of Singapore firm Luxury International PTE LTD -From 2010, all products range of Cartier are available in Vietnam Rich Vietnamese that gained from stock market Hongkong holding firm, created by French “actionnaires” The firm also include 12 firms (Openasia -Under the control of C&T Corporation - Higher price compared than products in Korean due to heavy imported taxes -Sales are made more in HCM than HN -Jewelry: Korloff -Cars – exclusive : Chevrolet, Volvo, Audi -Entertainment : Bang&Olufsen (exclusive) -Owner of Catherine Denoual Maison (linge maison brode) distributed in “reseaux selectifs” (Lane Crawford in Hong Khong, Harrod’s in London) and one own store in HCM, and Gaya(concept store 450m2 in HCM) Editor of luxury magazines -Gourmet Saigon (mini guide of local Michelin in English once a year) and -Rest Relax Magazine (specialized in spas and salons) -Thoi Gian (Times) – Jewelry and Watches, used for references to professionals of the sector -Doi Moi (Reforme) to introduce luxury brands to Vietnamese consumers within sectors fashion, accessories, cosmetics, decoration, lifestyle, jewelry (2007) 300 international brands : haut de gamme and luxury -Fashion: Soda Exchange, Baleno, Eternity… -Perfumes, Cosmetics: DTNY, Tommy Hilfiger, Estee Lauder, Shiseido… ORIENTAL LTD Editor PARKSON Co.LTD Agent, wholesale, distributor PHUONG PHAT Co.LTD Importer Distributor Perfumes Cosmetics Imported about 2000 references per year, distributed in ParisFrance “parfumeries” : Hugo Boss, Lacoste, Gucci, Dunhill, Escada, Valentino, Dolce Gabbana, Jean Patou, Montblanc, Anna Sui, Laura Biagotti, Giorgio Beverly Hills, Max Mara, Kenzo, Givenchy, Make Up best street in HN and 260m2 (3 boutiques in Opera Center HN (Korloffm Kenzo, La Perla) Partners, Openasia Capital) and consultancy for luxury brands to enter Vietnamese market -Luxury activities only started from 2005 although Louis Vuitton was already introduced in 1999 -Bicultural employees Pacific Place (Band&Olufsen) The magazines are available in salons of airlines companies, clubs, private suites in hotels, luxury restaurants in HCM and HN -Magazines -Promotional and fidelity programs with multiple benefits: reduction in restaurants, clubs and coffees; accumulating points for gift voucher -Events: party for special member times a year -Local magazines -Posters -Advertising in cinemas -Launching events (for example Kenzo Amour was launched with a luxury dinner on the bank of Mekong river) 2003 HCM, locations in opened in 2005 (17 000m2) and 2007 (24000 m2) HN, opened in 2008 Hai Phong HCM, HN, Bien Hoa, Can Tho, Quy Nhon opened in 2007 (18 000 m2) - Paris-France perfumeries are presented in principal city of VN : -Multi-brands st th stores (1 and District) and 20 2005 in VN Vietnamese firm with mother company in Singapore that offer services: product launching, POS opening, promotional events -Sales peak in women days (8 Mars and 20 October -70% locals, 20% expats and 10% tourist -70-80% women -Malaysian chain of Department Store, belongs to Lion Group (1987) -The firm plans to open up to 10 locations by 2012 Peak sales are in Women days, Valentines, and Christmas -Young Vietnamese from wealthy families; >24 (university divisions: -Phuong Phat (distributor,importer) -Paris France (chain of luxury “perfumerie”) PRESTIGE VIETNAM Importer Distributor THUY LOC Trading & Construction Co.LTD Importer Distributor Leather, Cosmetics, Jewelry Perfume Cosmetics Forever, Carolina Herrera, Paco Rabanne, Ninca Ricci, Burberry, St Dupont, Paul Smith, Azzaro, Moschino, Alessandro Dell’Acqua, Salvador Dali, Morgan, Cartier, Sonia Rykiel, Balmain, Mauboussin, Jacomo, Lalique, Marina de Bourbon, Leonard -Leather: represents Vietnamese of Longchamp (2004) -Jewelry: Misaki, Zeaders, Hot Diamond -Perfume: Evaflore, Ulric de Varens, Morgan -SHISEIDO (Exclusive from 1997), L’Occitane, Clarins (Management, from 2004), Iseey Miyaket and Jean Paul Gautier (2006), Cle de Peau, Esprit, Thierry Mugler, Bulgari … - Written articles - Public relation - Promotion Longchamp: big fashion magazines, HTV7 television Channels has broadcasted a presentation of the brand in the program LAM DEP (How to be beautiful) -Magazines, posters, press relations, product launching events -Occitane : VIP card, Occitane Club with reductions, invitation, free spa, sample… Hanoi -Counters in department stores in cities and provinces -Another perfumery called Winchai 63 -Longchamp: counter at Diamond Plaza, flagship store next to Hoan Kiem lake (center HN) -Misaki- locations:Parkson (HN,HCM, HP) and Diamond Plaza - Zeaders: Diamond Plaza (HCM) -Hot Diamonds: Parkson, Verby Plaza (HN) - 68 boutiques/ counters in Vietnam -20 Perfumeries concept HAL’S in countries - Beauty Salons: Clarins (7) , L’Occitane (2025), QI Spa of Shiseido graduated) , 30 yo and business men -Tourists (mostly Australians) : 30% 2001 1994 60 Created by a Hungarian and Vietnamese -Sales peak from November to Mars -High officials or executives of foreign companies -Customers are concentrated only in HCM and HN -Most consumers are women even men accounted for 40% of sales of Spas and 12% of Cosmetics -Private company, leader of Vietnamese market with 60% in Perfume, Cosmetics market and 68% in Spa and Beauty Salons - Co-investor with KhaiSilk (vietnamese luxury silk) in real estate project SaiGon Paragon – luxury residential and commercial center (2008) - ... desire in for this luxuries report If the (Indonesia, Malaysia, Singapore, Brunei, Thailand and Vietnam) cannot compare with the two giant emerging Asian markets China and India in term of market. .. to come to Vietnam bringing with them a Western styles and attitudes, making a growing market in every sector, including luxury goods How can Louis Vuitton market a $3,500 handbag in a nation... billion of luxury goods, illustrating an emergence in demands for luxury goods and The penetration of foreign brands into the Vietnamese market is relatively recent and making a fast-developed market