Fashion Coming to Cambodia by Hook or by Crook?

The array of clothing brand names on view in Phnom Penh is set to grow. The Californian shoe-maker Skechers opened on Sihanouk Boulevard less than two months ago, while Giordano, the global fashion retailer from Hong Kong, opened near Sorya Shopping Center this month.

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.

But are such marquee names lured here by apparent opportunities or by invitation? And will demand in this comparatively small market justify their investments?

“It’s more of a pull factor than it is a push factor,” said Matthew Rendall, a partner at the legal consultancy Sciaroni & Associates, explaining that the arrival of international brands was partly due to initiative of local businesspeople who had approached popular foreign companies for franchise rights.

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

Mr Rendall said 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 and to recruit companies to meet rising demand.

Ly Souden, marketing manager of Sovereign Retail Group, which plans to open a Mango franchise on Sihanouk Boulevard by the end of the year, said Sovereign approached Mango, which has opened stores around the world.

“We never think that the Cambodian market is too small. The market is very interesting right now, and the economy is moving so fast,” he said.

According to Christophe Forsinetti, vice-president of Devenco capital, a private equity and consulting firm, new brands will have to start small in Cambodia due to the size of the market.

“Cambodia is definitely a small market. The middle class is very small and only exists in Phnom Penh,” he said. Name brands can be profitable, but he said he expected expansion to be slow, adding that his fund is not involved in clothing retail because the market could support only a limited amount of outlets.

“It’s good to come early. You are a mover and building a brand, but you can’t develop quickly,” he said.

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

Each of the three labels has been profitable, Mr Souden said, adding that Sovereign’s three franchises all catered to a middle- and upper-class clientele that he said was 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 had been influenced by exposure to foreign trends and lifestyles through the media and travel.

Acknowledging that the consumer base for high-end fashion was nowhere near as large as in Thailand or Vietnam, Mr Souden said he was still confident Cambodian consumers can support more luxury brand-name retail as incomes grow and consumers become more brand-conscious.

He added that Sovereign was not concerned its products would compete against cheap and, to the untrained eye, sometimes identical knockoffs. Cambodian consumers, he said, “appreciate the real product” and were coming to value both quality products and service that comes with high-end shopping.

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, was 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.

Joanne Clifford, creative director of CADE Advertising, which works with Cambodian companies, said that although brand consciousness is a new concept for many businesses, it is now crucial for local companies to create a brand around their products to cater to the newer tastes of potential customers.

“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 name clothing, it is still unclear how many care whether or not they sport genuine logos or recognizable brands on their shirts and handbags.

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.”

   (Additional reporting by Tim Sturrock)

 

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