What would become of local fashion brands in developing Asia as fast fashion takes over?

Fast fashion has over taken the globe and developing Asia is the latest target market retailers are focusing on. While apparel in developing Asia grew by 26 percent from 2011 to 2016, various fast fashion brands easily quadrupled that growth, hitting 100 percent and higher growth rates. As demand for fast fashion sees a surge in this region, local brands have been grappling with staying competitive. The thriving middle-class in developing Asia has been driving a fast fashion boom as they grow increasingly connected and fashion conscious. Moreover, the growing visibility of runway shows, look books and celebrities on social media led to consumers picking up on fashion trends at a tremendous speed. Consumers in this region perceive fast fashion retailers such as Zara, H&M and Forever 21 as rather premium international brands and they aspire towards them, switching away from local brands.

Developing Asia is expected to be the fastest growing region in apparel with India, Indonesia, Vietnam and Philippines registering the highest forecast CAGR at an average of 5 percent while global apparel’s CAGR is expected to be slightly less than 2 percent. Hence, it is no wonder that fast fashion brands have been quick to tap into this region, driving aggressive outlet expansion in the last five years. Many of these brands are quickly gaining traction in developing Asia, overtaking competition and featuring in the top five brands within a couple of years. Zara’s entry into Vietnam further proved the readiness of these markets. In September 2016, Zara opened its first store in Ho Chi Minh generating a whopping USD$246,000 in sales on its first day alone.

Fast fashion sees a boom in developing Asia and local brands face stifling competition

Although fast fashion brands are in the lead in most developing Asian countries, many of these countries have a strong presence of local brands which make up a significant portion of apparel shares. The second player after H&M in Malaysia, Padini, is a local brand with wide spread distribution and an extensive range of apparel. In the Philippines, trendy casual wear brands Penshoppe and Bench have also been long standing top players in the industry. The prominence of local brands is especially apparent in India with the likes of fbb leading for eight consecutive years while fashion-focused Thailand boasts a growing local designer market.

These local brands have been competing neck to neck with fast fashion players in recent years and face the imminent threat of losing shares as fast fashion retailers expand rapidly. Padini in Malaysia was overtaken as the leading player within three years of the opening of H&M. The denim category in Thailand is also highly contested among fast fashion and local brands such as Mc Jeans, AIIZ and Nobody Jeans with the latter losing market share. In womenswear in Vietnam, leading local brand, Blue Exchange, faces fierce competition from Mango which has been growing on the back of the increasing working female population.

Strategies for local brands’ long term growth

Local brands would need to adapt fast or risk being irrelevant in the long term. As competition intensifies, they should re-evaluate their target consumer segment, understand their consumers and better position themselves. In targeting consumers, seeking opportunities in relatively untapped markets instead of competing directly with fast fashion brands can drive continuous growth. Thailand’s fabric brand, NaRaYa, is a textile expert producing unique Thai designs for handbags and accessories. It targets Thailand’s growing number of tourists who prefer to purchase unique local items when shopping abroad, carving a niche positioning for itself. Penshoppe in the Philippines targets price-conscious consumers seeking style and affordability. It chose to adopt a value pricing strategy while positioning itself as premium and chic by introducing international celebrities like Gigi Hadid, as brand endorsers. Moreover, in understanding consumers, many local brands have a competitive edge over its international counterparts through its sizing and cut which are better able to accommodate to the petite frame of consumers in these countries.

Asia generates almost 50 percent of global internet retailing sales in apparel. The prominence of this channel would grow increasingly important as e-commerce sees an explosion in developing Asia. Focus on e-commerce, delivery and social media is required to effectively compete with fast fashion brands which are penetrating into this channel as well. Taking Singapore as an example, its most successful local brands are pure internet retailers often termed ‘blogshops’. Despite the dominance of fast fashion players, Love Bonito, which possesses only one pop-up store, is a local favourite due to lower prices, quick delivery and convenient return policies. The brands success is also owed to its social media strategy which rides on its own customers being brand ambassadors on Instagram. Similarly in developing Asia, the leading local players are all on e-commerce, tapping into Zalora and Lazada’s popularity in the region. Jaspal in Thailand which has its own e-commerce store for its brands continues to gain market share despite the entrance of various international players.

The future of local fashion brands in developing Asia

The future of local fashion brands in developing Asia is highly dependent on their ability to adapt as competition stiffens. Target consumer segments, positioning, online retailing and social media are crucial aspects to focus on. As many fast fashion retailers have been under fire for unsustainable manufacturing and being unethical sweatshops, local brands must avoid this and present themselves as alternatives especially since consumers are becoming more environmentally and ethically conscious.

Written by: Joanna Chan Gai Ying, Research Analyst, Beauty & Fashion Euromonitor International, Singapore.

Images: H&M Taiwan and H&M Japan. H&M Group website.