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LVMH, Puig, Clarins, Burberry and Interparfums, more on peer-to-peer recommendations for market. This is partly because of the regulations will introduce skincare brand Nuxe in Vietnam beauty products, and less on distributors, on foreign ownership. Additionally, retail rents later this year through department store advertising and magazines. “They don’t believe remain a barrier, and setting up counters is distribution and standalone stores, Tran says. in advertising any more, they focus on social expensive, as there are high taxes on importing “Nuxe is a [different] category, and this is the media,” Tran comments. Consumers are also branded store fttings, for example. Traffc in the future of the consumer,” he says. “A few years importing products from abroad and selling most high-end stores also remains low, sources ago, consumers were looking for luxury, but they them on social networks like Facebook, Tran suggest, and recent entrants including Lotte didn’t look at the effcacy and the quality of the says, which is harming offcial distribution. and Robins are reporting slow business so far. brand. The prices [of Nuxe] are very affordable To build the market, Tran says, brands and Takashimaya is expected to enter the market in for the middle class.” retailers will need to focus more on services July 2016, and local operator Vincome Group Indeed, while the prestige market in Vietnam and educating the consumer, especially when is also developing a department-store concept it comes to skincare. “We need to build the dubbed VinDS. brand experience and the quality of the service,” believe in its future potential. “It is not easy Vietnam is a complex market, but many Tran comments. This explains his decision to “ open standalone stores for Nuxe, for example. as this is still an emerging market,” says Luxasia’s Chan. “We are still investing in brand “Standalones work well for skincare brands in The economy will stabilize building to drive sales and recruit customers; it Vietnam,” he says. “We want to provide service as new laws will be for the next category of consumers coming will take time.” While the market is not expected to improve implemented; what we up.” Shiseido operates standalones in Thailand, greatly this year, regulatory changes to be and AmorePacifc-owned Laneige opened a call the new political wave boutique last year implemented early next year are leading to will be installed at the a more positive outlook for 2016 and 2017. beginning of 2016 Retail still underdeveloped “The economy will stabilize as new laws will Otherwise, prestige retail in Vietnam remains be implemented; what we call the new political fairly thin on the ground, with only a handful of wave will be installed at the beginning of ” despite efforts by retail players to grow the again subsequently. n 2016,” says Tran, who expects sales to pick up stores considered up to international standards Phuong Phat Co managing director Tran Quoc Chung has in the past focused mainly on wealthy Vietnam retail at a glance consumers, he claims, such shoppers travel Paris France: 17 perfumeries and can buy products abroad, where they Paris France, owned by Phuong Phat Co, has reduced its store count from 24 outlets several are cheaper. years ago because of the diffcult market climate for prestige beauty, and is focusing on its best- performing stores. Targeting the middle class The future of the beauty market in Vietnam lies Parkson: 8 stores in better targeting the growing middle class, Owned by Malaysia’s Lion Group, Parkson closed one of its two stores in Hanoi in January this observers say. “The young middle class aspires year, citing poor results. It has since decreased its stake in its Hanoi subsidiary. Parkson has to premium brands like Chanel and Clé de several stores in Ho Chi Minh City and one in Danang. Peau Beauté, but affordability is an issue,” says Luxasia’s Chan. “There is spillover largely to Robins: 2 stores mainstream brands like Lancôme, Estée Lauder, Owned by Thailand’s Robinson (Central Group), Robins stores opened in Hanoi and Ho Chi MAC and lower budget brands,” she says. Minh City last year. The latter is reportedly performing well, and the former, less so. Vietnam’s middle-class consumers are also wary of what they buy. “They are very Diamond Department Store: 1 store demanding, and very suspicious,” says Tran. Diamond in Ho Chi Minh City is broadly considered as the best department store in Vietnam, The gray and counterfeit market in Vietnam representing a large proportion of business for certain prestige brands. is estimated to represent up to 60% of the country’s beauty sales. Consumer confdence in Lotte: 1 store product quality and authenticity is low, even in South Korea’s Lotte, which has supermarkets in Vietnam, opened its frst department store, a offcial distribution. 27,000m (290,626ft )outlet in Hanoi, in September last year. So far, industry sources say, the 2 2 The growth of the internet and smartphone store is still seeing slow sales. A branch in Ho Chi Minh City is planned for 2015. usage also means that consumers are relying November-December 2015 - N°24 - BW Confidential 91