Earning millions of dollars, H&M and Zara set firm foothold in Vietnam

Officially arriving to Vietnam in September 2016, Zara’s very first outlet in the country follows the successful formula that this fashion brand applies worldwide: luxury, fashionable but still affordable. 

The appearance of Zara marks the arrival of instant fashion brands into Vietnam. The strategy of following new trends and constantly releasing new collections seems to work incredibly well for Zara.

 Zara has chosen a two-storey floor with a total area of 2,400 square metres located in Vincom Center, one of the biggest shopping centers in Ho Chi Minh City to display all of the brand’s latest collections.

Shortly after that, another Zara store was opened in Hanoi city at Vincom Center Ba Trieu at a three-storey floor with a total area of up to 4,500 square metres. 

According to the brand’s sales report, its revenue in Vietnam in first half of this year reached roundly $41 million, which is double the figure in 2017. This is a very positive outcome for Mitra Adiperkasa, an Indonesian retailer cum Zara distributor in Vietnam.

In addition to Zara, Mitra also owns subsidiaries distributing Inditex's other brands such as Massimo Dutti, Bull & Bear, Stradivarius, etc. Earning roundly $41 million in first half of 2018 with just two stores has turned Vietnam into the second biggest market for Mitra, just behind Indonesia.

Another similar brand to Zara is H&M, which was introduced in Vietnam by the end of 2017. Despite its late arrival, HM currently has four stores in Vietnam including two stores in Ho Chi Minh City and other two in Hanoi city.

Although H&M opened more stores than Zara in Vietnam, H&M’s business results are still inferior to its competitor. In particular, in the first six months of 2018, H&M only earned nearly $14 million in revenue in Vietnam. 

Out of many big fashion brands, Zara is one of the very few that are still able to sustain their growth in today fierce fashion environment. In 2017, Inditex, parent corporation of Zara announced a profit growth of seven per cent and a quarterly sales increase in a row.

On the contrary, H&M’s business outcomes partly demonstrate its struggle in the fashion market with a 62 per cent decline in their profit in the first quarter of 2018. This situation is still continued in the second quarter of this year.

Still, the fact that H&M and Zara, two famous fashion brands worldwide earned millions of dollars in Vietnam in just a short amount of time shows the attractiveness of the market.

Having a population of nearly 100 million people, of which most are youth who have income per capita increasing steadily, Vietnam is seen as a very potential market for retail fashion brand.

Forthcoming, Uniqlo, a famous Japanese fashion brand is also preparing to enter Vietnam market.