Premium international brands eye Vietnam’s growing middle class

Last weekend nearly 1,000 people lined up at a shopping mall in HCMC’s District 7 to buy limited edition designer toys from Beijing-based Pop Mart, which was opening its first store in Vietnam.

Each person was given 15 minutes to buy toys priced at VND1-10 million (US$39.3-393), and the store managed to sell 4,000 items that day.

Jeremy Lee, the company’s senior regional sales manager for Southeast Asia, described Vietnam as a market "full of vitality" and "potential."

Many high-end foreign retailers have arrived since the beginning of this year.

Last month Motherswork, Singapore’s leading retailer of premium mother and kids products, opened a store at a mall in HCMC’s Thu Duc City.

Its founder and CEO Sharon Wong said it is the company’s third market after Singapore and China.

In the high-end fashion market, French jeweler Cartier and Spanish fashion house Loewe both opened their first store in Vietnam earlier this year.

The number of mid-priced and high-end international brands entering Vietnam has been rising recently, according to property consultancy Savills.

CBRE, another property consultancy, said the retail real estate market in Vietnam saw a rise in both rents and occupancy rates last quarter thanks to international brands entering and expanding in Hanoi and HCMC.

Luxury brands already in Vietnam, like Italian footwear company Rene Caovilla and Singaporean watch retailer The Hour Glass, have been opening new stores this year.

Foreign retailers in the fast-fashion segment such as Muji, H&M and Uniqlo are also planning to expand.

Last month Uniqlo opened a new store in Thu Duc City and announced plans for two more there later this year.

"Despite economic fluctuations in the past two years, both domestic and foreign retailers are expanding in Vietnam," Do Thi Xuan Trang, retail manager at Avison Young Vietnam, said.

Steady market growth and rising demand from the middle class are what draw foreign brands to Vietnam.

The retail market saw sales of goods and services rise by 8.5% year-on-year in the first four months of 2024, a rate retailers consider appealing.

Though some consumers are tightening their belts, the demand among middle- and high-income groups is increasing.

Vietnam’s imports of luxury goods grew between 2018 and 2022 -- by 8% a year in the case of jewelry and watches, and 26% and 6% in the case of cars and wines -- according to Knight Frank’s Luxury Investment Index.

The middle class accounted for 13% of the country’s population in 2023, according to the Ministry of Labour, Invalids and Social Affairs.

"The middle class is growing, disposable income is increasing, and there is a rising interest in pop culture, which opens up a promising future [for Pop Mart]," Lee said, adding that more well-earning and willing-to-spend people have helped the designer toy maker build a community of collectors "eagerly awaiting the release of each new design."

Vietnam currently has 19,400 millionaires, 58 of them with more than $100 million in net worth, global wealth intelligence firm New World Wealth said in a February report.

The nation would see a 125% jump in wealth over the next decade, the largest expansion in terms of GDP per capita and number of millionaires for any country, it said.

The recovery in tourism is another factor prompting foreign brands to consider entering Vietnam.

In the last four months the country received 6.2 million international tourists, up 68.3% from the same period last year.

Online travel platform Klook said the average spending by tourists rose by 13% year-on-year in the last quarter, indicating they are willing to spend more on goods and services.