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New private brand is part of growth strategy in 'most important' overseas market
The My Closet fast-fashion brand debuted at an Aeon Mall in Ho Chi Minh City.
RYO ASAYAMA and TOMOYA ONISHI, Nikkei staff writersSeptember 10, 2022 06:24 JST
TOKYO/HANOI -- With a young population eager to shop, Vietnam has become the runway for Japanese retail group Aeon's answer to apparel brands like H&M and Uniqlo.
Aeon's My Closet private label recently debuted at Aeon Mall Binh Tan in Ho Chi Minh City, offering everyday clothing at up to half the price of competing brands.
The lineup features around 400 different items, such as T-shirts and shorts, aimed mainly at 16- to 24-year-old women. The clothes are heavy on popular primary colors such like reds and yellows.
The clothes cost 50% to 75% of the price of similar items from other manufacturers. Where a T-shirt from a Western or Japanese company may be priced at 200,000 dong to 300,000 dong ($8.50 to $12.75), the My Closet equivalent goes for 150,000 dong, or about $6.
"We aim to make it Aeon's first fast-fashion" foray, said Yasuyuki Furusawa, general director of Aeon Vietnam.
Aeon has big plans in Vietnam, a fast-growing economy with a rising middle class, as part of a strategic focus on Asian markets beyond Japan. The retailer is drawing on the private-label know-how from its Topvalu brand in Japan.
AEON mall in Binh Tan District, Ho Chi Minh City. Photo coutersy of AEON.
Manufacturing is outsourced to local factories with spare capacity and staff. Production of any given item will last only a month or two, but Aeon will add new designs, keeping operating rates high and costs down. The company will curb shipping expenses by using existing distribution routes between stores.
Aeon will roll out the new brand at other stores in Vietnam, and will consider offering it on its Vietnamese e-commerce site as well as in neighboring countries such as Malaysia. Since launching its first Vietnamese shopping mall in 2014, the group has opened around 200 stores in the country, including supermarkets and six malls.
Aeon's medium-term plan announced in April 2021 calls for generating 25% of operating profit outside Japan by the fiscal year ending February 2026, 3 percentage points more than four years earlier.
Key to this plans is a pivot to Asian markets, where Aeon aims to double operating profit by that year compared with six years earlier, to over 100 billion yen ($700 million). Rather than transplant its Japanese business model wholesale to other countries, Aeon is developing new strategies tailored to each market.
Vietnam, which an Aeon executive called "the most important market in our overseas strategy," is set for a wave of investment. The group aims to open 100 supermarkets there by 2025 -- 10 times the total now -- and triple its shopping malls to 16.
The country has a population of nearly 100 million -- behind only Indonesia and the Philippines in the Association of Southeast Asian Nations -- with a young average age of 33. Its economy grew at over 7% a year before the pandemic, and has been bouncing back as coronavirus curbs are removed. Real gross domestic product grew 7.7% on the year in the second quarter of 2022.
Vietnam's middle class is swelling, and young consumers with more money in their pockets are eager to shop. The apparel market is forecast to grow by roughly half from 2021 to $7.33 billion in 2025, according to Statista.
Global brands are moving in. Fast Retailing, the Japanese parent of the casual clothing chain Uniqlo, entered Vietnam in 2019, and has now opened 12 shops there as well as an online store.
Swedish fashion retailer H&M has a network of 12 stores in Vietnam after setting up shop in 2017.
"We can't afford to stand still," said Aeon Vietnam's Furusawa.
Japan retailer Aeon tries on fast fashion in Vietnam with $6 T-shirts
New private brand is part of growth strategy in 'most important' overseas market
asia.nikkei.com
