Tier 2 fashion brands losing footing in the world

The exit of imported brands is simply beyond the control of local operators


WESTERN fashion brands seem to have lost traction with consumers, with several big names seen to be “under siege” since 2017, which resulted in the closure of branches, and in some cases, a total shutdown of the Malaysian operations.

Sunway Shopping Malls and Theme Parks CEO HC Chan said the closure could also be a sign that these brands are no longer marketable among Malaysians.

Last month, two imported fashion giants Gap and Banana Republic bowed out, joining quite a number of middlerange brands that are no longer part of the Malaysian “retail therapy”.

“This is a norm in the industry, but what made the headlines was the severity and number of closures in that given period. We need to monitor closely if the shakeup continues or has reached its tail end,” Chan told The Malaysian Reserve in an interview.

He said retailers should also observe the closures and understand the movement of the market to remain relevant, although in some cases, the exit of imported brands is simply beyond the control of the local operators.

In 2017, Bloomberg forecast store closures in the US could reach 8,600 stores, compared to the peak in 2008 where 6,200 fashion brands closed down.

“These closures, of course, would have repercussions not only in the US, but in other parts of the world where the brands had a presence, including Malaysia.

“We have seen principals filing for bankruptcy in their home countries, leading to the closure of Malaysian operations,” Chan said.

Retail Group Malaysia Sdn Bhd MD Tan Hai Hsin said there has been a shift in the ever-changing trends in Malaysia, taking it through a transformation in recent years.

“Luxury fashion brands have not really been badly affected by this economic slowdown. The wealthy in Malaysia are still rich.

“There are also very affluent tourists from China, Middle East and India, who enjoy the shopping experience here,” he said.

Another reason for the current shift, Tan said, is the thriving lower-priced fashion stores like Factory Outlet Store (FOS).

“Low-priced fashion retailers are catering to price-conscious Malaysian consumers during this economic uncertainty.

“The pioneer is FOS. A strong competitor is Brands Outlet. There are several other players, including Haulmark,” Tan said.

However, some homegrown brands like Padini have continued to fare well, noting a 14.6% increase in profit for its financial year 2017, while sales growth was up by 8%.

The brand’s investment holding company, Padini Holdings Bhd, could have made a smart move — by opening a concept store where various brands are housed under one roof.

The brands are Padini, Seed, Vincci, Vincci Accessories, PDI, Padini Authentics, P&Co & Miki.

“Customers will always seek out value. Fashion brands that are aspirational and statusdriven tend to fare better,” Chan said.