Euromonitor Apparel and footwear in Vietnam analysis

Thị trường Quần áo giày dép Việt Nam

EXECUTIVE SUMMARY

Apparel and footwear experiences strong performance in 2018

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

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

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

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

APPAREL AND FOOTWEAR IN VIETNAM - ANALYSIS

Country Report | Mar 2019

Market Sizes

Sales of Apparel and Footwear

Retail Value RSP - VND billion - Current - 2004-2023

102,998

0 50,000 100,000 150,000

Sales Performance of Apparel and Footwear

% Y-O-Y Retail Value RSP Growth 2004-2023

10.9%

Forecast

0%

5%

10%

15%

20%

Retail Value RSP - VND billion - Current - 2018 Growth Performance

Sales of Apparel and Footwear by Category

Apparel

60,208.2

Footwear

42,789.6

Sportswear

7,918.3

APPAREL AND FOOTWEAR 102,997.8

CURRENT YEAR % GROWTH

% CAGR 2013-2018

% CAGR 2018-2023

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

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

Apparel and footwear predicted to record healthy growth

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

DEFINITIONS

Explanations of words and/or terminology used in this report are as follows:

Other terminology:

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

Sources used during the research included the following:

Summary Research Sources

Official Sources Business Studies & Assistance Center

Ge ne ra l Sta ti s ti cs Offi ce

Mi ni s try of Indus try & Tra de

Vi e tna m Cha mbe r of Comme rce & Indus try

Trade Associations Da i Su Ha ng Vi e t

Gi a y Da Vi e t

Vi e tna m Le a the r & Footwe a r As s oci a ti on

Vi e tna m Te xti l e & Appa re l As s oci a ti on

Trade Press Ba o Ha Ti nh

Ba o Moi Bus i ne s s Re vi e w, The

Ca fé F Công Ly Ne ws Doa nh Nha n Sa i Gon Dung Ha ng Vi e t E-Ne ws pa pe r of Indus try & Tra de Entre pre ne ur Forum

Ha Gi a ng Ne ws Onl i ne

Competitive Landscape

Company Shares of Apparel and Footwear

% Share (NBO) - Retail Value RSP - 2018

Others Kering SA Giordano International L

An Phuoc Garment Co Ltd Quadrille & Vera Interna

Levi Straus s & Co Gap Inc, The Nike Inc Punto Fa SL (Mango) PVH Corp adidas Vietnam Co Ltd Triumph International (V

Pierre Cardin SA Viet Fas hion Co Ltd Kowil Fas hion Vietnam JS

H&M Hennes & Mauritz Vie

Binh Tien Dong Nai Imex

Blue Exchange Co Ltd Inditex, Indus tria de Di

Viet Tien Garment JSC

82.9% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.3% 0.3% 0.3% 0.4% 0.5% 0.5% 0.5% 0.6% 0.7% 0.8% 1.2% 2.1% 7.9%

Brand Shares of Apparel and Footwear

% Share (LBN) - Retail Value RSP - 2018

Others Convers e Giordano

An Phuoc Pull & Bear Gap Vera Winny Levi's adidas Mango Owen Triumph Ninomaxx Pierre Cardin H&M Biti's Blue Exchange Zara Viet Tien

84.0% 0.1% 0.1% 0.1% 0.2% 0.2% 0.2% 0.2% 0.2% 0.3% 0.3% 0.4% 0.5% 0.5% 0.5% 0.7% 0.8% 1.2% 1.7% 7.9%

Increas ing s hare Decreas ing s hare No change

Sa i Gon Gi a i Phong Onl i ne

Sa i Gon Ne ws

Sa i gon Ti e p Thi Onl i ne

Sa i gon Ti me s Onl i ne

Te xti l e & Ga rme nt Ne ws Tha nh Ni e n Onl i ne Tha o So, The

Ti n Moi

Ti n Tuc Onl i ne Tuoi Tre Onl i ne

Vi e tna m Bus i ne s s Forum

Vi e tna m Bus i ne s s Ne ws

Vi e tna m Economy Ti me s

Vi e tna m Inve s tme nt Re vi e w

Vi na corp VTC Ne ws Source : Euromoni tor Inte rna ti ona l