VietNamNet Bridge – Despite economic difficulties that have forced the majority of consumers to tighten their budgets, producers of branded goods have reaped steady profits because of high-income earners.

Luala Fashion, for example, made its official presence in HCM City by opening a 300 square meter shop in District 1 in the central area of the city.

The shop will serve as a jumping board for Luala to exploit the Vietnamese market which is believed to become larger.

Do Ngoc Minh, President of Luala, noted that though many well-known fashion brands have been present in Vietnam, the market still has great potential thanks to the increasingly high number of high income earners.

A report released by Boston Consulting Group (BCG) in late 2013 also showed that Vietnam was the country with the highest growth rate of the middle-class and high-income earners in South East Asia.

BCG predicted that Vietnam would have 33 million rich people by 2020, which is double the current figure and equal to two-thirds of that of Thailand.

Meanwhile, the Vietnamese average income per capita would increase from $1,400 to $3,400 per annum.

Up to 90 percent of Vietnamese think their children and grandchildren would have better lives than theirs. Meanwhile, only 70 percent of people think so in other countries.

IPP, the distributor of many world’s well-known brands, has reported a 10 percent growth rate in 2013. Other fashion trading companies including Bon Mua, Mai Son have also reported two-digit growth rates for the year.

Aldo, Charles & Keith, Mango and some other brands saw sales increase by 10-20 percent.

According to Minh, Luala’s profits have mostly come from the distribution of products of brands well known in the world. Though the products are very expensive, they still can be sold well to loyal clients.

High-end fashion market

The sales of branded fashion goods are expected to increase significantly this year. Nielsen, a market survey firm, in a report released in early May, reported that 31 percent of the 31,000 people surveyed said they were inclined to be more “generous” when spending money on clothes after two years of fastening their belts.

The optimistic consumers think their financial situation will improve this year, which will allow them to buy more things.

This could be the reason why more famous brands are expected to arrive in Vietnam.

In late April, Central Group, the Thai leading retailer, opened a shopping center, Robins, in Hanoi.

The shopping mall gathers 120 fashion brands, including world-famous ones such as Gucci, Ralph Lauren, CK, Diesel, Versace, Lacoste and Guess.

IPP is still trying to add to the list of famous fashion brands to be distributed within its network. It is reportedly considering developing a chain of shops for middle-class customers to boost sales.

Minh of Luala said though the business is promising, the competition is getting fierce.

Luala, instead of running single-brand goods shops or developing shopping malls, will focus on developing multi-brand goods shops. These will be the shops where many brands can display their goods.

DNSG