Local fashion brands struggle to keep market share following Uniqlo, H&M, Zara debuts

Early next month, Uniqlo will officially open store in Vietnam, following H&M, Zara. This could leave huge pressure for domestic fashion brands struggling to maintain in the market. Vietnam market has enthusiastically welcomed international fashion brands.

Currently, Vietnam fashion market worth more than $3 billion  per year. Zara has been doing well in the market. With two stores in Hanoi and Ho Chi Minh City, the firm reported 2018 revenue exceeding VND1,700 billion, higher than total revenue of a luxury fashion retail chain.

With four stores in the market, H&M reported VND653 billion ($28 million) revenue in 2018, 4.3 times higher than the previous year. Every day, Vietnamese consumers spend about VND1.8 billion ($77,400) to buy clothes from this brand. 2018 was a great year for H&M in Vietnam market.

Vietnam has made significant contributions to our overall growth in Southeast Asia, said Fredrik Famm, Managing Director, H&M Southeast Asia.

However, Vietnamese fashion brands are struggling to retain their shares in the market.  Vietnamese brands like Foci, NinoMax, BlueExchange, PT2000 have to fight to have a place in the market. Foci had to leave the game.

In 2012, it announced to withdraw from the market when the business owner explained that the firm could not compete against Chinese clothes, which were sold in Vietnam with reasonable prices.  

Other brands with stable positions in the market such as May 10, Viet Tien, An Phuoc focus on a narrow segment, office fashion.

Analysts believe that Vietnamese brands have been in bad situation since they did not catch up with fashion trend. Meanwhile, Zara and H&M can reduce costs and lower costs to increase competitiveness.

Property bull market has been another attack on local brands since space leasing price keep increasing. Price has increased by 2 to 3 times compared to two years ago.

Yukihiro Katsuta, senior vice president of Fast Retailing Group, parent company of Uniqlo said that: "Vietnam's real estate price is now very high. Therefore, finding a place with prime location and affordable expense is too difficult."