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Luxury loses its luster
Vietnam’s moneyed set are curtailing their spending on luxury goods, after their income from property and the stock market was dramatically reduced over the course of this year.
Nguyen Thi Mau, the owner of a jewelry shop at the Saigon Tax Trade Center in Ho Chi Minh City’s District 1, said the number of customers willing to pay thousands of dollars for luxury jewelry had dropped by almost half in the past few months.
“The reason is they haven’t earned any huge windfall profits from real estate or stocks like last year,” she said.
The real estate market, which was booming last year, started running out of steam in January. At the same time, double-digit inflation and high loan interest rates have pushed many medium and small developers to the brink of bankruptcy.
The stock market has also been in free-fall, plummeting more than 58 percent so far this year.
Zen Plaza, a shopping center that sells high-end cosmetics and clothes, reported a drop in sales of most luxury brands from June to August.
Last month, the shopping center’s revenue rebounded after a 10-day promotion, deputy general director Trieu Thi Huong Giang said.
Nguyen Thi Kim Thuy, a regular customer of many luxury shops in HCMC, said she used to buy whatever she felt like because “several thousand dollars spent on shopping was a small amount compared to my income from stocks and real estate.”
“But it is different now,” Thuy said, saying she had to consider her spending more carefully to the extent of halving her beauty budget.
“Upper-middle class consumers, including the nouveaux riches who acquired wealth from investing in property, stocks or gold, have split into two groups – those who go shopping less often and those who switch to products that cost less,” said Tran Quoc Chung, general director of perfume distributor Phuong Phat Company.
Chung said a market research company once forecast the consumption of luxury goods in Vietnam would increase by up to 30 percent this year, or 5 percent lower than 2007.
But in fact, sales of several products have dropped by up to 25 percent year-on-year.
A general director of a large company, which holds the distribution rights to 23 luxury fashion brands from France, Italy, the UK and the US, said domestic consumption in the luxury segment was currently 25 percent lower than the same period last year.
The same trend was occurring in other Asia-Pacific countries, the general director said.
This year, Vietnam was named the world’s most attractive emerging market destination for retail investment in the Global Retail Development Index report released by A.T. Kearney in June.
Vietnam’s annual retail sales are forecast to increase by an average 13.6 percent between 2008 and 2012, according to multinational market research firm RNCOS.
Thanhnien
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