JOIN US“When you’re in the store, there’s little time to think,” said the 30-year-old flight attendant, clutching two pairs of shorts and-a dress. “What’s here today might be gone tomorrow.” Some call it “fast fashion” retailing, the apparel sector’s equivalent of fast food. Across Asia, global brands are setting up shop as US and European shoppers cut discretionary spending, burdened by rising prices and a weak economic outlook.
The US retailers Abercrombie & Fitch and Gap, which operates the Gap and Banana Republic brands, are among them. They plan to open their first stores in the Hong Kong business district in a few months. Expansion plans by Abercrombie and other big names could hurt established Asian brands like Giordano, Esprit and Bossini, rather than high-end clothiers.
Although Asian shoppers still aspire to buy luxury brands, many are embracing specialty stores with higher inventory turnover and better value, especially as a new middle class emerges with more disposable income and fickle fashion tastes. These “cheap chic” brands are known for a limited run of new designs in as little as two weeks, a model that limits the surplus of unwanted clothes on shelves.
“Consumer confidence is very high in Asia, especially China,” said Shanghai-based China Market Research Group managing director Shaun Rein, whose organisation estimated that fast-fashion retail could grow as much as 15 per cent a year in Asia. “In the fashion retail industry, if you don’t win China, you're going to lose the world,” Rein said. The consultants PricewaterhouseCoopers expect demand for fashion and apparel in Asian markets to grow 4.7 per cent in 2011, led by 10.8 per cent growth in China.
Within four years, the Asia-Pacific apparel retail market is forecast to be 35 per cent bigger than that of Western Europe, according to the market data research firm Euromonitor International. The Asia-Pacific’s clothing market led the globe last year, advancing 7.6 per cent to $452 billion, it said.
“It is a pivotal tipping point for the industry and indicative of a new world order of consumption,” said Singapore-based Euromonitor’s Asia-Pacific Research head Geok Leng Loo. “A majority of consumers in the Asia-Pacific, while spiring to high-end luxury apparel rands, continue to look to trade up first o more ‘branded’ brands that still remain affordable.”
Abercrombie has taken a 21,000 square feet, or 1,950 square metre, multilevel space in the Knightsbridge nail in Singapore, its first store in outheast Asia. The casual clothing chain Uniqlo, operated by Fast Retailing of Japan, opened a new store in the Tai Po district n Hong Kong this month, its third store since November.
Zara, owned by the world’s largest clothing retailer, Inditex, opened stores in Sydney and Melbourne recently, while the British clothing chain Top’shop opened its first Osaka store in Umeda, Japan in May. The expansion is helping companies profit. Last month index a Madrid listed retailer report a 10 per cent rise in quarterly profit as growth in emerging markets offset a slowdown in Europe. The retailer plans 120 Chinese stores this year.
The increased attention to Asia by the Western brands poses a threat to regional labels that gained a foothold more than a decade ago. Giordano, for instance, is going to have problems because it is not considered stylish enough for the mainland market,” Rein said.
“It is not cheap enough. It’s lost its cachet,” he said. Fast Retailing saw sales of Japan’s Uniqlo clothing chain fall 1.6 per cent in May from a year ago, following a drop of 9.9 percent in the first half of its business year, ending in August.
In Tokyo, even consumers in the up-scale Ginza district have became more frugal in the past few years a trend that was accentuated by the earthquake and tsunami that hit the country on March 11.
“This is why we also have to look beyond the domestic borders and expand into international markets,” Fast Retailing executive vice-president Naoki Otoma said. Thailand, with its 68 million people, is an enticing market. The Thai clothing industry is Southeast Asia’s biggest, and is valued at about ¥860 billion, or $10.6 billion, Otoma said.
However, Hong Kong-based high-end fashion house Ports Design chief executive Alfred Chan was not worried. He said, “Fast fashion taps an entirely different type of consumer.
“Fast fashion is not innovative,” he said, adding the company had no plan to change its retail strategy. But in Australia, Zara’s arrival in April was the talk of Sydney. Shoppers lined up behind barricades when it opened and soon cleared shelves of 80 percent of its stock.
Zara’s 14,000 square metre store is to hit the market share of midsize clothing chains like Just Jeans and Port-mans, owned by Premier Investments. Departmental stores also could suffer, said Sydney-based Wilson HTM senior analyst Jacqueline Fernley. That could hurt Westfield, Australia’s largest mall owner, and other landlords like Centre, which operate smaller suburban malls. You can think through retailer by retailer who will survive and who wouldn‘t, Fernley said.