Compared with foreign goods, brands like Ivy Moda, Canifa, NEM … are highly appreciated for the reasonable correlation between price, design and fabric quality.
In late February, Elise – one of the leading female fashion brands in Vietnam announced the sale of shares to Asia Fund – a Japan Investment Fund. Mr. Tokuo Yotaro, member of the Elise Leader Board, said that in the future, Vietnam’s fashion industry will be the fastest growing in Asia.
The case study of optimization of supply chain and cash flow
Ms. Luu Thi Nga, CEO of Elise fashion chain affirmed: With the participation of foreign investors and additional resources from the business restructuring process, Elise will soon deploy many new high-end fashion brands in this year. For the next five years, Elise will still focus on the women’s fashion market segment of Vietnam in the age range from 20 to 45. According to Ms. Nga, this market is worth about 2 billion USD in 2022 and has an average growth rate of about 30% per year.
According to a survey by Asia Plus in 2017, a market research company, Vietnamese youth now significantly increase spending on costumes. 26% of people shop for clothes two or three times per month, 52% said they usually shop for clothes once a month. It is estimated that the value of Vietnamese textile and apparel consumption annually reaches about US $ 5-6 billion, equivalent to nearly VND 120,000 – 140,000 billion. Businesses think that the reality may be much larger, because in the market today, unknown goods, knockoffs, portable goods … are also strongly consumed, especially in rural areas. According to the Nielsen Quarter II in 2018 report, Vietnam’s fashion market will have a growth rate from 15% to 20% per year.
Over the past two years, with the arrival of global brands such as Zara, H&M, Pull & Bear, Stradivarius … startups, mergers, acquisitions and expansions of Vietnamese fashion companies are getting more and more active. Although many businesses have shrunk or even disappeared after a period of rapid development, many new brands with new thinking, new ways appeared and quickly got consumers’ attention.
Compared with foreign goods, brands such as Ivy Moda, Canifa, NEM … are highly appreciated for the reasonable correlation between price, design and fabric quality.
Despite the potential common market, expanding market share in Vietnam is actually not easy for both foreign and domestic enterprises. Foreign fashion brands, after quickly gaining success in some big cities, mostly leveled off, unable to reach out to other provinces due to the high price and style that did not suit the tastes of the majority of Vietnamese people. The expanding journey of Vietnamese fashion brands is even more challenging when many consumers still prefer unknown goods and knockoffs … In particular, many fashion companies in Vietnam are still managing according to the family model, so the ability to compete on new sample producing speed is not high.
According to Ms. Tran Mai Huong, founder of fashion brand Coco Sin, the biggest difficulty of this business is not running after the fashion trend or new style, but the problem of optimization of supply chain as well as cash flow. To survive, brands always need to launch new models. Every time a collection is sold, businesses must immediately reinvest in a newer collection. In addition, the pressure on fast new products also forces businesses to invest and own their own factories, because if outsourcing, businesses will always be passive on the progress and quality of products.
Running away from the old fashion business mind
Besides, the ability to conduct surveys on tastes and habits of consumers is also an important key that Vietnamese businesses must learn in the context of the increasingly shorter fashion life cycle of today’s products. This fact has forced global fashion corporations to invest more in Big Data technology which helps retailers orient from the beginning which products need to be produced, how much, and when to reduce prices … In Vietnam, fashion businesses still rely mainly on predictions and data with a certain lag.
It can be seen that Vietnamese fashion brands which have developed drastically in the market in the past few years have a new business thinking and master the tastes and characteristics of domestic consumers. Before the arrival of international brands, Ms. Doan Ngoc – CEO of Canifa fashion, said that this is an opportunity for company employees to learn about the service, approach how to operate the store. However, domestic fashion companies that want to confirm their position cannot imitate the model of international fashion, but must make a difference.
For example, Canifa chooses prices that are suitable for the majority and what the brand wants to make a difference to is durability. Ms.Doan Ngoc said that if the collection of international brands focuses on colors and design, in order to attract customers by fashion, Canifa will choose the fashion that is just enough (the products still catch up trend but must have a longer service life, shown by good material and no major changes in design). This strategy is appropriate to the situation, the income of the majority of Vietnamese consumers which is modest and the need for differences in clothing is not too large.
Aiming at the higher-end segment, Ivy Moda is also a successful brand with a refreshing and innovative way. If in the world, for a long time, fashion brands have held the organization of seasonal fashion shows in the year as an opportunity to communicate and reach customers, partners, and the public in the fastest and strongest way, but in Vietnam this activity is still strange. For nearly three years, Ivy Moda has been the leader of organizing seasonal fashion shows, integrating with fashion shows on television. In particular, this brand has gained a lot of attention through the collaboration with the world famous designer Graeme Armor in the Fall-Winter 2018 collection.
In parallel with strong marketing, Ivy Moda also brings high technology into logistics through RFID technology: managing electronic chips for each item, helping to increase the productivity of stages: inventory, coordination, goods transportation … It will only take 3 days instead of 10 to 15 days as before for the latest designs on the system of nearly 70 stores nationwide … Designer Phuong My once said: “When I made fashion, design only accounts for about 1% of the year. And 99% of the remaining time is business, people management, financial problems, brand expansion”- that’s the reality of fashion companies today!