Cambodian consumers growing more brand-conscious

Cambodian consumers growing more brand-conscious

International retail companies are increasingly probing the Cambodian market, as many Cambodian consumers, newly moneyed and conscious of brand names, are increasingly demanding foreign fashion labels.

In Phnom Penh, shoppers have recently seen an upswing in the presence of internationally respected retail brands. California-based and internationally popular Skechers opened on Sihanouk Boulevard less than two months ago, while Hong Kong-based global fashion retailer Giordano opened nearby to Sorya mall only this August. Other brands, like the women’s fashion label Mango from Barcelona, are slated to open for business in the city within the year.

Malaysian retail giant Parkson Holdings also has plans to set up a mall fit for international brand names by 2012.

According to Matthew Randall, a legal consultant in Phnom Penh, the arrivals of international brand names to Cambodia is partly due to the initiative of savvy Cambodian businesspeople who, conscious of their country’s growing appetite for labels in their country and of the potential for a lucrative enterprise, approach popular foreign companies for franchise rights.

“It’s more of a pull factor than it is a push factor,” Mr Randall said,??CLIENTS?? explaining that while international brands may still overlook Cambodia’s market due to its small size, Cambodians themselves have begun to identify growing interest for international products in Phnom Penh and to recruit companies to satiate burgeoning demand.

“They live here and they know the market. They know how much and on what people are spending,” he said.

“We never think that the Cambodian market is too small. The market is very interesting right now and the economy is moving so fast,” said Ly Souden, marketing manager of Sovereign Retail Group, which plans to open a Mango franchise on Sihanouk Boulevard by the end of the year. He added that Mango, which has opened stores around the world, including one in Vietnam, was already interested in exploring the Cambodian market when Sovereign approached the brand.

Sovereign Retail Group, which opened in 2003, currently owns three luxury retail stores along Sihanouk Boulevard. Its first two stores–shoe store VNC and women’s fashion store E.pse–hail from Malaysia, while Axara Paris, its most recent store and Cambodia’s first European clothing brand, is a transplant from France.

Each of the three labels has been tremendously successful, Mr Soudan said, adding that Sovereign’s three franchises all cater to a middle and upper-class clientele that he said was now very aware of and interested in the latest fashions.

Just five years ago there were no international brand names in Cambodia, Mr Souden said, adding that since then the tastes of Cambodian consumers, nudged by exposure to foreign trends and lifestyles through media and overseas travel, have dramatically changed and demand for the latest in brand-name clothing is on the rise.

And though the consumer base for high-end fashion is still nowhere near as large as it is in Thailand or Vietnam, Mr Soudan said that, even still, he is confident that Cambodian consumers can support more luxury brand-name retail as income sizes grow, and as, through exposure to more and more high-end clothing brands in the city, consumers become increasingly quality-conscious.

“At first some people would come to Axara and not understand why the prices were higher,” said Mr Soudan, explaining that the shoppers did not yet know that there was any quality difference between Axara’s clothing and the garments they could purchase at a fraction of the cost at a local market. Axara’s customers, he said, have now come to understand and value the superior quality of Axara garments.

He added that Sovereign is not concerned about its products competing against cheap and, to the untrained eye, often identical knockoffs. Cambodian consumers, he said, increasingly “appreciate the real product” and are coming to value both quality products and the service that comes with a high-end shopping experience.

Chhim Neaoypov, operations manager at Phnom Penh’s Skechers shoes, said that Skechers, which opened after the Cambodia-owned B2B Corporation approached the American brand for franchise rights, is also not worried about competition from low-quality fakes.

“It is no problem because our customers know the brand and they are starting to know about quality. It is a new generation,” she said.

“Brand names are extremely important to Cambodian consumers,” said Joanne Clifford, creative director of CADE Advertising, which works with Cambodian companies. She added that labels are especially sought after, even regardless of economic class, by Cambodian youth.

It is now crucial, she said, that even local companies cultivate a brand around their product if they expect to successfully cater to the increasingly brand-conscious tastes of its potential customers and compete against the internationally recognizable names that such consumers have come to crave.

“Until two or three years ago, local [advertising] clients had no idea what a ‘brand’ is. But most clients understand now that a strong brand is very, very valuable.”

Though Cambodian consumers may be eager for brand named clothing, it is still unclear how many mind whether or not their logoed shirt is genuine.

Paul Guymon, regional research director at the marketing firm Indochina Research, said in an e-mail that the market for real, brand-name products “remains very small and is limited to a small percentage of the population,” adding that “international name brands are out of the reach of the majority of the population owing to lack of disposable income.”

Even so, Brett Sciaroni, senior partner at Sciaroni & Associates, said he was optimistic that the popularity of fake products was likely not because consumers do not care about the distinction between the clothing that comes off the hangers in airy, bright retail spaces and the cheap copies sold in markets.

Rather, he said, high-end retail is new to Cambodia and many consumers are simply still unaware that there is in fact a distinction between the two products.

While “international companies are somewhat wary of Cambodia’s reputation as a haven for bogus products,” Mr Sciaroni said, international companies are still growing more and more interested in Cambodia. Though they are often recruited here, foreign brands are also investigating the market on their own initiative, he said.

“Whenever I sit down with an international companies selling consumer products, I always tell them, ‘you’re going to do very well here,'” said Mr Sciaroni, adding that Cambodians have long placed a premium on and been overwhelmingly receptive to international brand names. Though only time will tell, he said, he expects that Cambodians will also come to prefer the original product over its forged counterpart.

 

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