High-end retailers find new market

[PHNOM PENH POST]

The latest clothing styles from Paris and Barcelona were rare finds in Phnom Penh stores five years ago.

But Cambodia’s growing middle class has brought with it shoppers more willing to fork out cash for expensive threads, name-brand clothing retailers say.

Per-capita gross domestic product in current US dollars increased about 70 per cent between 2006 and 2011, according to Ministry of Economy and Finance estimates.

The trend is translating into more shoppers at the increasing number of name-brand clothing shops on Sihanouk Boulevard, near the capital’s Independence Monument.

“[Cambodians] really have purchasing power now. They come in nice cars, but you also see people pulling up on motorcycles and shopping in our stores,” said Ly Souden, marketing manager at Sovereign Retail Group, one of Cambodia's two major name-brand clothing importers and brand representatives.

Domestically owned Sovereign Retail opened a VNC clothing franchise on the north side of Sihanouk Boulevard in 2005.

Today, the company owns Paris's Axara and Spain's Mango franchises, as well as Malaysian brands

On the south side of the boulevard, Ming Wouy Group, also domestically owned, represents brands such as Polo Club, Pierre Cardin and Samsonite.

Ming Wouy and Sovereign Retail will expand this year on the positive economic outlook for the country in 2012.

The government has projected 6.5 per cent year-on-year growth.

Thaipheang Oudam, area sales manager at Ming Wouy's New Collection sales venue on Sihanouk Boulevard, said sales for name-brand products were driven by customers who had spent time overseas, but customers who had never been abroad were also peeking into the stores.

“The middle class is growing. People are going to school, taking care of their families and spending more money,” he said.

Sovereign Retail's sales grew by an annualised 11 per cent in 2011, Ly Souden said, up from four per cent in 2009 and 2010, but below the pre-economic crisis growth of 15 per cent.

Ming Wouy's clothing retail saw a similar trend, but Thaipheang Oudam did not disclose exact growth figures.

Sales were still threatened by the counterfeit products that flooded Cambodia's markets, the retailers said.

“We have faced that problem. A lot of people were asking why they need to buy shoes here for $40 when they can get them for half price somewhere else,” Ly Souden said.

“Some people don't trust us. ‘Is this the real thing?' they ask.”

Five years ago, the concept of a name brand was novel to most Cambodians, Ly Souden said.

The recent increase in clothing products from Europe has introduced new quality standards to the Kingdom.

Thaipheang Oudam said counterfeit products had actually helped shape an appreciation for name brands.

As the Khmer concept of quality evolved, an increasing number of Cambodians were seeking out authentic counterparts of the fake brands they had worn for years, he said.

The clothing market was intensely competitive and “chaotic”, City Mall general manager Hung Chuang Ming said this week.

The sheer number of shops marketing clothing – real or fake, on the street or in a mall – reduced the potential market share any one retailer could capture, he said.

Clothing isn't the only thing name-brand clothing retailers are trying to market.

Sovereign Retail and Ming Wouy say they are also trying to sell a customer-service experience.

Opening the Mango franchise required a level of service training not available five years ago, Ly Souden said.

Only when staff had met Mango's service requirements, as well as design standards for the venue, was Sovereign Retail granted the franchise, he said.

“The key to any luxury brand's  success will be how it targets consumers and the point-of-sales experience when they go into the stores,” Marcus Osborne, CEO of the Malaysia-based brand consultancy FusionBrand, said.

Developing brand awareness would be an important factor in emerging markets, Osborne said.

Promotion, presentation and advertising would shape the customer's experience with the brand, he said, although the process would take time.

Retailers predict fast growth in the niche market this year.

Japanese shopping-mall developer Aeon will begin building a mall this year, with completion expected in 2014.

Hiroyuki Okazaki, Aeon’s deputy general manager in Cambodia said the company saw much potential for high-end clothing retail in Phnom Penh.

He declined to mention specific brands but said the mall would have Western luxury products as well as products from Japan and Korea.

Based on the rate of market growth, Ly Souden said it was impossible to say what brands Cambodian shoppers would be trying on in the next few years.

“We can't have these brands here now, but in five years I think we’ll have Louis Vuitton and Gucci,” he said.