Although Asian shoppers still have a penchant for luxury brands, a new middle class is emerging with more fickle fashion tastes. “A majority of consumers in the Asia-Pacific, while aspiring to high-end luxury apparel brands, continue to look to trade up first to more ‘branded’ brands that still remain affordable,” said Geok Leng Loo, head of Asia-Pacific research at Euromonitor International in Singapore. “Fast-fashion” remains immensely popular in the region. Zara opened stores in Sydney and Melbourne recently, with shoppers lined up behind barricades when it opened soon clearing shelves of 80% of the stock. Abercrombie has taken a 21,000 square feet multi-level space in Singapore’s Knightsbridge mall for a store, its first in Southeast Asia. Meanwhile, British clothing chain Topshop launched its first Osaka store in May.
Clicks over bricks
Australian shoppers are ditching “bricks and mortar” retail shops and spending heavily on overseas websites.
According to a study by Commonwealth Bank released on July the 27th, of the A$9.5 billion (US$10.4 billion) spent online in 2010, A$5.3 billion was spent on domestic retailers, meaning almost half was sent offshore electronically into the bank accounts of US, European and other international retailers. Many are attracted to the much lower prices, the convenience and access to a wider range of products, according to research by Price Waterhouse Coopers and Frost & Sullivan. “Very few respondents – less than 1% – said they shopped overseas to avoid taxes, as claimed by retailers,” said Stuart Harker, Price WA&C’s global retail and consumer advisory leader. The strong Australian currency, hitting a 28-year high against the US dollar on July the 27th, is also one of the main catalysts pushing consumers to shop online from overseas sites.
Fashionistas of tomorrow
Vietnamese consumers are poised to be one of the biggest spenders in fashion in the region. Backed by a strong retail environment and growing consumer awareness of fashion and trends, Vietnam’s domestic apparel market grew by 9% in 2010 to reach 39,911 billion dongs (US$2.1 billion), according to Magdalena Kondej, head of apparel research at Euromonitor International. The country not only has a young population – in 2010 more than half (52.4%) of the population was aged under 30 according to Euromonitor International data – but it also has a population density nearly double the average for the Asia Pacific region with a rapid pace of urbanisation and a rise in living standards and disposable income.
I have to tighten my purse strings
While Chinese consumers are known to be big luxury consumers, money saving tips are currently among the hottest topics on China’s online forums. Price rises affecting everything from food to daily necessities are making average Chinese consumers in middle-and low-income brackets ever more cautious about their spending habits. For example, 54-year old babysitter Sun Guilan from the eastern Chinese city of Suzhou recently tracked her daily expenditure and was not pleased with what she saw. “One kilogram of beans costs 8 Yuan (US$1.24); three packages of facial tissues cost 12.5 Yuan. It’s becoming harder and harder for us to make ends meet,” she complained, adding that the 1,000 Yuan she earns per month is hardly enough to get by. According to the latest figures released by the National Bureau of Statistics (NBS), China’s inflation escalated to its highest level in three years in June, with the consumer price index (CPI), a main gauge of inflation, jumping by 6.4% year-on-year that month.
Will Asia Pacific’s consumers continue to tighten their belt in 2012?
If you are a Passport subscriber and would like to read more on this subject, please login to your account and search for “Spotlighting Consumers in the Asia-Pacific Region.” If you do not have a Passport subscription, contact your local office for more information.