The fashion industry has seen better economic days. Rising inflation, challenging macroeconomic conditions and shifting consumer behaviours are leading to slowing sales and uneven performance. While luxury giant Kering saw a modest decline in sales in 2023, particularly within Europe (with revenue at Gucci falling 4 percent in the fourth quarter), luxury brands are now turning to Southeast Asia after noticing a burgeoning market and a growing economy within the region.

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The Numbers Don’t Lie

Prada saw its 2023 net revenue rise by 17 percent, driven by growth in Asia and the “outstanding performance” of its Miu Miu brand, totaling to approximately USD 6.86 billion. January and February 2024 have seen Prada continue on a similar upward trajectory. The group’s growth came primarily from the Asia-Pacific region that saw an increase of 24 percent. Europe grew at 14 percent after slowing down in the second half while sales in the Americas “were flat”. While most revenue came from the APAC (Asia-Pacific) region, Southeast Asia is not far behind. According to global real estate services firm Cushman and Wakefield’s Southeast Asia Outlook 2023 report, Southeast Asia is expected to be one of the leading sources of growth for the global economy, with an average growth of 4.7 percent in 2023. It is also worth noting that the SEA (Southeast Asia) economy is large and has the third largest population after China and India.

Sales at the Prada Group — which includes Prada, Church’s, Car Shoe and patisserie chain Marchesi 1824 — rose by 17 percent in 2023 to USD 5.139 billion. By comparison, LVMH’s fashion and leather goods division generated sales of USD 61,264 billion last year. According to reports, CEO Benedetta Petruzzo, who joined in 2020, “is convinced” Miu Miu is just starting its growth spurt.

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OTB, the parent company of fashion brands Diesel, Maison Margiela, Marni, Paula Cademartori, and Viktor&Rolf has reported a turnover improvement of 74 percent in Asia amounting to USD 2 billion in revenue with Asia Pacific as its best performer. Meanwhile, the group’s business in Japan — which accounts for 23 percent of the sales — logged a 19.4 percent growth last year. One could argue this could be the result of John Galliano’s success with Maison Margiela, Glenn Martens’ rebranding of Diesel (which 35 percent of its customer base is made up of Gen-Zs) or the rise in Jil Sander’s popularity that saw sales grow by 17.3 percent. Reports also claim that during 2023, the Prada group made moves to strengthen its supply chain and technological capabilities that included an “AI training program for managers aimed at ‘exploiting’ the potential of artificial intelligence from the design stage of any project or process”.

Tapping on Consumer Trends

There are three new demographics that brands are targeting; tourism, a growing middle class, and the rise of “Gen Z-ers”. The post-pandemic years have seen a rise in consumerism by way of tourism in the region. Perhaps attributed to political stability, open borders, and a lower cost of expenses as opposed to the region’s Western counterparts, brands are leveraging on the region as an outpost to encourage spending across Malaysia, Thailand, and Vietnam with more boutique and lifestyle stores opening to harness an increase in footfall. The rising middle-class population of Vietnam, Malaysia, Philippines, and Thailand alongside a rise in China’s returning tourists make the nations likely to be the upcoming hot spots for luxury retail in 2024 and beyond. Cambodia, Laos, and Vietnam are also seeing a rising number of Chinese tourists.

The growing group of “Gen Z-ers” marks a younger demographic with new sensitisation habits who have been exposed to luxury fashion from a young age via social media. Brands know to target the region because of its higher purchasing power and the rising demand that comes from growing brand awareness. This younger generation of consumers are also propelled by the “idol fandoms” that regional brands endorse to leverage on the growing popularity of Thai actors and singers who are now becoming significant regional stars.

The Physical Manifestation of Trends

The expansion of world-class malls in Thailand (Siam Paragon and Iconsiam) and Malaysia (TRX, Pavilion and Suria KLCC) has become a significant factor in the region’s global luxury market. It goes without saying that luxury clients enjoy an elevated shopping experience. According to Angelito Perez Tan, Jr., co-founder and CEO of RTG Group Asia, Thailand’s growing economy is not to be dismissed particularly when compared to Singapore. “Thailand is bigger on luxury fashion and generates a significant part of its luxury revenues from this sector, while the luxury watches and jewellery category largely drive Singapore,” says Tan. “Additionally, Thailand’s luxury retail scene is driven by locals, whereas Singapore’s is driven by tourist consumption,” he adds.

Case in point, Louis Vuitton’s brand expansion goes to Bangkok. The luxury label is branching out once again from fashion to the lifestyle market with the opening of its “LV The Place Bangkok”. This is a first-of-its-kind 360 concept for the brand, including an exhibition, store, café, and fine dining restaurant with chef Gaggan Anand at the helm. Louis Vuitton is no stranger to extending the Maison’s brand with the luxury label opening its first chocolate store In Singapore at Le Chocolat Maxime Frédéric.

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The opening of new luxury boutiques at Kuala Lumpur’s The Exchange TRX at the heart of the Malaysian capital’s international financial district alongside the opening of Louis Vuitton’s “LV The Place Bangkok” show that brands are using growing markets in South East Asia as a “testing ground” while companies push their strategies on already developed nations like Singapore with big regional projects and campaigns.

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Previously overlooked by regional neighbours Thailand and Singapore, 2024 has seen Malaysia welcome numerous celebrities including Kim Yug-yeom of K-pop boyband GOT7 and Thai actor and singer Nanon Korapat alongside K-pop singer and actress Kim Se-jeong. The latter attended the grand opening of Longchamp’s flagship store in February. Token celebrities aside, Malaysia also welcomed Tudor Ambassador David Beckham that signals the brands’ understanding of the potential of the Southeast Asian market.

As it stands, Singapore was selected as the location for Louis Vuitton and Bvlgari’s trunk shows. Thailand’s capital hosted a Louis Vuitton men’s Fall/Winter 2022 spin-off show, and Vietnam’s Ho Chi Minh City, saw Gucci present a repeat show of its Spring/Summer 2022 Love Parade collection. As global audiences continue to make their way to Southeast Asia, the growing momentum of the region looks like it could be just what the fashion industry needs to turn the tide on an impending economic slowdown.

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