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Behind the promotion season
Hoa, an employee of an advertising agency, carefully inspects and compares an X-Series shirt marked down by 20% to VND275,000 with another of Pierre Cardin brand with the marked-down price of VND380,000 at fashion counters in Maximark Cong Hoa supermarket in HCMC’s Tan Binh District. She finally decides to buy both shirts as X-Series is her husband’s favorite brand while Pierre Cardin is a luxurious name and the shirt’s original price is up to VND800,000.
Consumers in HCMC are overwhelmed with discounted goods in the year-end promotion season, which comes earlier and noisier than in previous years. They also enjoy a wider range of commodities thanks to discount programs offered by many local enterprises this year.
However, while consumers may find this time of the year a good chance to bargain for good prices, the sharp discount now shows a gloomy picture for producers.
Real bargains from stores to markets
Walking along Hai Ba Trung Street in District 1, which is widely referred to as the fashion street of the city, pedestrians can be attracted by special discounts of as much as 70% of popular brand names like Viet Thang, NINO MAXX, and Nguyen Long, or products of less-known fashion shops and tailors. When the city lights up, the street becomes more bustling than ever due to large crowds of sellers and buyers busy in the shopping spree.
While well-known fashion brands like Viet Thang and NINO MAXX in colorful fashion stores are now more affordable for average-income consumers, others with smaller income can also be happy with fashion items on sales at traditional markets citywide. Prices have fallen sharply, even in comparison with the sale promotion season at this time of last year, owing to bolder stock clearance at manufacturers.
Traders at markets, where prices of garments are mostly below VND100,000, are also busy with their promotion programs. They buy fashion items in bulk from factories and resell them at soft prices for low-income customers.
Thu, who owns a fashion outlet in Hoang Hoa Tham Market in Tan Binh District, has bought a large amount of stockpiled clothes from a private garment factory. Those items, mostly female T-shirts and blouses, are classified and then sold at around VND15,000-20,000 each.
“I may make higher profit this year as enterprises provide large stockpiles,” Thu says.
At the fashion market near Tan Binh Industrial Park, Hang, worker of a garment factory, chooses some clothes of the Tina brand for relatives in her home town. Items of the brand go for around VND20,000 each while previously the price was over VND50,000 apiece. These days, fashion items at this flea market are displayed in piles to serve customers, most of them workers at nearby factories.
“All of these are stockpiled merchandise,” says a trader who sells long-sleeved shirt at VND20,000 each and short-sleeved ones at VND15,000. “Last year’s prices are VND5,000 higher. This year’s clothes are cheaper thanks to large stockpiles at producers,” he explains.
Cold spell for producers
If the shopping spree in previous years was a time for enterprises to spur revenue when demands went up as the year closed, this year’s sale-off season spells disaster for many producers. Much of the stockpiled goods are now offloaded at any price, generally lower than the production cost, as a solution for companies to ease the pressure of low purchasing power this year due to the economic hardship.
Pham Xuan Hong, general director of Sai Gon 3 Garment Joint Stock Co., admits, “The amount of unsold goods at garment enterprises now is tremendous” that may force many enterprises to their knee.
“Nine out of 12 subsidiaries in a well-known garment corporation are in tough problems with the mounting inventory,” Hong says, without naming the sufferers.
Another leading garment corporation in the city is also facing a huge glut of shirts that used to be best-selling item in previous years.
“Our factories are only carrying out small orders of uniforms for other companies or some outsourcing contracts,” complains the garment company’s leader who does not want to be named.
Nguyen Huu Tuan, a small garment supplier for fashion outlets at markets, says his company has had to scale down production from earlier this year, but traders at market still refuse to take more commodities, leading to huge stockpiles.
“Although I cut off production since early this year, clothes at markets still remain unsold.” Tuan says, adding he has to barter the stockpile away to recover capital and make room for new products.
In a recent seminar on the global financial crisis, a speaker asserts that one of the biggest problems facing local enterprises is the mounting goods inventory, including both raw materials and finished products, making it impossible for producers to recover capital. “If this situation persists, many enterprises may go bust this year,” he says.
SGT
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