Fashion brands like Gucci and Louis Vuitton are targeting Southeast Asia, a destination worth 12 billion dollars

From Gucci, which showcased its Love parade spring-summer 2022 collection in Ho Chi Minh City, Vietnam’s most populous city, to Louis Vuitton, which debuted its spring-summer 2023 Trunk show in Singapore last March, luxury fashion houses have started to recognize Southeast Asia as a strategic area of focus. In fact, Thailand, Vietnam, and Singapore are now becoming attractive prospects. «In 2022, the Asian luxury market (excluding China) experienced a growth of 43% compared to the previous year, resulting in a turnover of 48 billion euros. Additionally, the market exhibits some significant changes that influence the trend», Federica Levato, senior partner and Emea leader of fashion & luxury at Bain & company, explained to MFF. Some traditional luxury hubs in Asia like Macau and Taiwan have slow or below-expectation recoveries while other markets surprised with growth.

«The growth achieved by Asia in 2022 highlights the rapid expansion of Southeast Asia, with a market value of 12 billion euros last year. Thailand was the leading contributor to this growth», she noted. The expert specifically mentioned that this region has sustained its impressive growth trajectory, backed by a surge in spending from Russian tourists, early influx of Chinese consumers, and a robust demand for jewelry and watches. Over the past few months, despite increased global uncertainty, growth dynamics have continued due to an influx of tourists and growing local consumer interest. «While it is unlikely that there will be ‘another luxury market powerhouse like China,’ Southeast Asia (including Indonesia, Singapore, Malaysia, the Philippines, Vietnam, and Thailand) has tremendous potential for growth and contribution», Levato explained. By the end of the decade, this region is projected to have 20-25 million middle and upper-income consumers, making it poised for 15% growth by 2022. However, these countries require infrastructure development for local expansion. According to the expert, India, among the rising stars, shines. Its luxury market could grow to 3.5 times its current size by 2030, driven by the increasing interest and evolving behavior of young customers towards luxury goods.

Flavio Cereda, co-investment manager for luxury brands at Gam, emphasized that «Southeast Asia’s luxury market is not homogeneous but comprises diverse regions with unique dynamics». Singapore, for instance, is almost a fully grown market, with major luxury brands having a significant direct presence for many years. Although small in size, this market has always had significant potential driven by both tourism and its affluent local clientele. The recent influx of Hong Kong residents has further enhanced its growth prospects. The Thai market heavily relies on tourism, particularly from China, with comparatively limited local demand. «Post-pandemic developments have increased demand and sparked interest from major brands», he stated. Vietnam is a relatively untapped market with a focus on growing tourism and potential for future local customers. The expert also noted that major brands have already established a direct presence in Ho Chi Minh City. «We estimate that Southeast Asia accounts for 2 to 3% of the global luxury market, with half of it being generated by tourism», Cereda stated. Lastly, Nella Ngadiman, ceo of Bluebell Southeast Asia and Australia, presented the May 2023 Asia consumer profile market research’s findings. «We surveyed 251 high-end consumers in Singapore and Malaysia with an annual spending of over 1,200 dollars in the premium sector», she said. On average, consumers in the luxury goods sector plan to spend 14,706 dollars in the next 12 months. This is a 71.8% increase from the previous 12 months’ actual spending, averaging at 8,560 dollars per consumer. «Though intentions may not be as accurate as actual spending, this steady increase signifies significant growth in consumer intention in Singapore and Malaysia». (All rights reserved)