After a year of flourishing post-COVID-19 pandemic (2022), global luxury sales significantly declined in 2023. Fashion houses worldwide, from France's LVMH to Italy's Prada and Switzerland's Richemont, have reported a slowdown in sales growth.
The reasons were attributed from multiple perspectives: on the one hand, the global ultra-rich faced difficulties amidst economic and political issues; on the other hand, brands had increased prices too rapidly. Observers noted that the luxury goods industry had increasingly focused on attracting super-rich customers. Brands seemed to have overlooked the middle class, whereas much of the industry's growth over the past decade was driven by middle-class consumers in the Asian region. According to the Boston Consulting Group, over half of all global luxury goods transactions were conducted by approximately 330 million people spending less than €2,000 per year on expensive handbags, clothing, and jewelry. Meanwhile, only 2.5 million high-end customers had spent over €20,000 per year on luxury goods, accounting for 10% of luxury sales.
This sluggish business trend was also clearly reflected in the 2023 financial results of luxury goods distributors in Vietnam. The majority of luxury goods distributors in Vietnam experienced a sharp drop in sales in 2023 (including both exclusive and multi-brand distributors), except for Tam Son International Joint Stock Company - a distributor representing many premium brands in Vietnam - continued to record growth in 2023, with a 6.5% increase, solidifying its position as the "king" of the industry.
Tam Son
Tam Son International Joint Stock Company was established in 2005, as a subsidiary of Openasia Group. Tam Son served as the exclusive distributor for 31 renowned international brands, including Hermès, Bottega Veneta, Saint Laurent, Kenzo, Boss, Hugo, Marc Jacobs, Patek Philippe, Vacheron Constantin, Chopard, Bang & Olufsen, Bernardaud, Lalique, Rimowa, Alessi, Hanoia,.... with a network of 109 retail stores and product display outlets.
In 2023, despite the overall difficulties in the global luxury industry, Tam Son's revenue still grew by 6.5%, maintaining its leading position in Vietnam's luxury distribution market. However, Tam Son's profit declined by 25%, following the general industry trend.
On April 8, 2024, Tam Son officially launched FRONT ROW, positioning itself as an e-commerce (EC) platform for fashion and lifestyle. The platform owned nearly 20 renowned brands ranging from Kenzo, Maison Kitsuné, BOSS, HUGO, Sandro, Maje, Marc Jacobs, FairLiar, acmé de la vie (ADLV) to Bang & Olufsen, Devialet, Lalique, Christofle, Bernardaud, Diptyque, Hanoia; and planned to expand its portfolio by the end of 2024.
DAFC and ACFC
Duy Anh Fashion and Cosmetics Joint Stock Company (DAFC) and Au Chau Fashion And Cosmetic Co., Ltd (ACFC) were two of the three distributors for numerous luxury fashion brands under the Imex Pan Pacific Group (IPPG) owned by businessman Johnathan Hanh Nguyen. Despite being two of the foremost entities, DAFC and ACFC recorded dismal business results in 2023.
ACFC
With a network of 278 stores located in major urban centers, ACFC distributed 26 international brands such as Mango, Levi's, Gap, Old Navy, Calvin Klein, Tommy Hilfiger, Mothercare, OVS,... Especially, in early 2024, ACFC officially introduced Sunnies Face - a renowned Philippine cosmetics brand - to the Vietnamese market.
However, similar to 2023, ACFC recorded a decline in revenue and profit compared to 2022, with revenue reaching only VND 2,700 billion, a 5.6% decrease. And the company's after-tax profit also dropped by 39%.
DAFC
Previously, DAFC was known as a leading company specializing in luxury goods in Vietnam, distributing over 60 world-renowned brands, with more than 60 stores nationwide. Some high-end brands DAFC distributed included Rolex, Versace, Montblanc, DOLCE&GABBANA, Jimmy Choo, Burberry, and TIFFANY&CO... However, in 2024, the number of brands distributed by DAFC decreased to 38, representing a 37% reduction. Additionally, the company had to shrink its store network to 47 stores nationwide, a 22% decrease.
In terms of business performance, similar to ACFC, DAFC's revenue declined by 16.5% in 2023 compared to 2022 (reaching VND 1,800 billion). Notably, DAFC recorded a nearly hundred billion VND loss, a significant decrease from the over VND 135 billion profit in the previous year.
To reform and improve business performance, by the end of 2023, DAFC launched a series of stores featuring Balmain, Montblanc, Moschino and Moschino Jeans (Italy), Gianvito Rossi (Italy), Alessandra Rich (UK), and Aquazzura (Italy). These brands aligned with DAFC's strategy to rejuvenate its brand portfolio and target the younger, more dynamic Gen Z customer segment. Additionally, DAFC recently finalized distribution agreements with several other renowned European brands such as Frank Muller and Stefano Ricci...
Maison International Retail
Also another long-standing distributor of luxury fashion in Vietnam, Maison has over 172 stores nationwide, distributing 38 renowned fashion brands such as Puma, CHARLES & KEITH, Coach, Nike, and MLB….
With accelerated growth in 2022, Maison's revenue scale ranged from VND 2,600 billion to VND 2,800 billion. However, in 2023, Maison experienced the negative impact of the overall market conditions, with revenue decreasing by 4.2% and after-tax profit dropping by 47% compared to the previous year.
Besides multi-brand distributors, exclusive distributors for specific brands also recorded declining sales in 2023, such as Louis Vuitton Vietnam Company Limited, Chanel Vietnam Company Limited, Christian Dior Vietnam Company Limited, and Gucci Vietnam Company Limited.
After two years of dominating the luxury market in Vietnam (2021-2022), Louis Vuitton VN unexpectedly ceded its top position to Chanel Vietnam in 2023, with a revenue decline of 22.5%, reaching just around VND 1,800 billion, and after-tax profit also recorded a decrease of 38%. Despite operating two boutiques in Vietnam, Louis Vuitton Vietnam still demonstrated the brand's strong appeal by competing on par with industry rivals.
Despite surging to the top of the luxury goods industry in Vietnam in 2023 with nearly VND 1,900 billion in revenue, Chanel VN still recorded a 13.6% decline compared to 2022. The brand's after-tax profit also decreased significantly by 51%. The brand currently owns 6 exclusive boutiques located in prime locations in Hanoi and Ho Chi Minh City.
Christian Dior VN recorded better business results than other exclusive distributors in 2023. The revenue reached VND 1,500 billion, representing a modest 9.5% decrease compared to 2022. Thanks to effective cost control efforts and business operations optimization, Christian Dior VN recorded the highest after-tax profit in the exclusive brand distribution segment, but a decrease of about 30% compared to 2022. Christian Dior VN operates a network of 8 stores in Hanoi, Hoi An, and Ho Chi Minh City, including Christian Dior Couture Boutiques and Parfums Christian Dior Boutiques.
Gucci VN with a smaller revenue scale compared to the three aforementioned major players, was estimated at VND 1,000 billion in 2022, and it decreased significantly by 30% in 2023 to approximately VND 750 billion. And it is a unit that recorded the most decline in profit in the luxury goods market (a 77% decrease compared to 2022). Gucci currently operates three stores in Hanoi and Ho Chi Minh City (including one in collaboration with Adidas).
Prada Vietnam and Ermenegildo Zegna Vietnam are smaller-scale entities, quite distant from the top firms, with annual revenues of less than VND 200 billion. Although the 2023 revenue also recorded a decline in line with other major players, Prada VN was highly regarded for its effective cost control strategy and appropriate business strategy changes, turning from a loss in 2022 to a profit. Meanwhile, Ermenegildo Zegna VN started to be profitable in 2022 after many years in Vietnam. Both Prada Vietnam and Ermenegildo Zegna Vietnam currently have only one store each, located in Hanoi.
However, the decline in purchasing power in the luxury market was expected to be short-term. According to a recent assessment by Savills, the luxury goods market had hit bottom and showed positive signs of recovery due to the return of international tourism and declining inflation trends. Nevertheless, the situation varied significantly across different countries and regions. In Europe, high-end retailers continued to face challenges due to exorbitant rental costs and declining in-store sales. The number of wealthy customers willing to splurge on luxury purchases was decreased, amid a challenging global economic environment and a particularly difficult real estate market.
Meanwhile, Vietnam was still considered a promising market for the luxury goods industry, as the number of middle-class and ultra-wealthy individuals in Vietnam was rapidly increasing. According to World Data Lab's estimates, among the nine Asian countries projected to have the largest number of new middle-class entrants in 2024, Vietnam ranked fifth, with 4 million people. India topped the list (33 million), followed by China (31), Indonesia (5), and Bangladesh (5). The remaining countries were Pakistan (3), the Philippines (2), Thailand (1), and Turkey (1). (According to this organization, middle-class individuals are those spending at least $12 per day in purchasing power parity terms of 2017). Accordingly, the middle class in Vietnam accounted for approximately 17% of the population, and the Ministry of Labor, Invalids, and Social Affairs projected that this ratio would increase to 26% by 2026.
According to Knight Frank, by the end of 2022, the number of individuals with net assets over USD 30 million had reached 1,059. It is forecasted that this figure will reach 1,300 by 2027, representing a 122% increase over a decade. And the number of individuals with assets above USD 1 million is projected to surge by 173% during 2017-2027.
This explains "the influx" of foreign retail brands into Vietnam. This wave started in 2023, with Mont Blanc and Balmain Paris opening their first stores at Trang Tien Plaza, and Devialet also establishing its first store on Trang Tien Street. Additionally, a slew of other big brands such as Victoria’s Secret, Foot Locker, Maison Margiela Paris, Coach, Marimekko, Karl Lagerfeld, Come Home,... debuted at Lotte Mall West Lake Hanoi for the first time. Moving into 2024, the trio of "luxury giants" Cartier, Rene Caovilla, and The Hour Glass Opera simultaneously expanded at the beginning of the year, continuing to “fuel” this trend.
Source: Vietdata's 2023 Luxury Goods Market Report in Vietnam
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