PHNOM PENH, CAMBODIA — With a Porsche dealership opening this year, a new retail space housing the likes of Brioni and Hugo Boss, and three stories of duty-free shopping in Siem Reap dedicated to Chinese tourism, Cambodia appears to be reshaping itself to cater to local — and foreign  —  consumers with high-end tastes.

One of the poorest countries in the region, the Southeast Asian nation has seen rapid annual growth above 7 percent over the last decade — considered the sixth-fastest such growth in the world — with development indicators pointing to a country bordering on the lowest end of middle-income status. According to The World Bank, the country’s average per-capita annual income has more than doubled since 2004, going from $400 a year to the current $950.

And retailers, anticipating a rise in local purchasing power and increasing high-end brand awareness of Cambodia’s elite, are getting in early.

In 2014, leased space for luxury brands increased dramatically, according to Laszlo Fulop, a senior retail consultant for real estate company CB Richard Ellis (Cambodia). High-end watchmakers, like Rolex and Cartier, accounted for less than 10,700 square feet, and were located in hotels and Phnom Penh’s only casino, NagaWorld, where the bulk of foreign tourists venture, he said.

But with the recent opening of Vattanac Tower, Phnom Penh’s newest skyscraper, the total amount of leased retail space for luxury products has jumped to almost 54,000 square feet.

Still, the luxury market is just emerging and it is difficult to put a finger on exactly how much Cambodians are spending locally. Fulop estimates that about 95 percent of luxury items purchased by Cambodians are done so abroad.

“Cambodia is in a very immature, unsaturated state in terms of the [luxury] retail market,” he added. “In fact, the definition ‘luxury’ is distorted, and can cover foreign brands in general.”

An example of this is Aeon Mall, the country’s largest shopping center that was launched in July, which Fulop said could be considered a high-end shopping destination by locals as the majority of them would not be able to afford the Levi’s jeans and Puma sportswear sold there.


The Japanese-owned Aeon also features a department store selling fragrances from brands such as Gucci, Givenchy and Burberry, but these firms may need to wait a few years for Cambodia’s growth to translate into disposable income, as the sales floor is usually empty.

Shops in Vattanac Tower are similarly bare of customers. Marketed as a luxury commercial space, its first two floors opened in January and are home to brands such as Brioni, Longchamp, and Hugo Boss — where a dress can retail for $1,500.

The retail industry is also hoping to benefit from Cambodia’s high tourist numbers, with China Duty Free Group launching a 48,400-square-foot luxury duty-free store in December in Siem Reap, where the country’s famed Angkor Wat is located.

The Ministry of Tourism projected five million foreign arrivals in 2015, with more than 500,000 of them coming from China. Second only to Vietnamese tourists, the number of Chinese tourists has increased by 20 percent in 2014, compared with 417,000 arrivals the year before.

Luxury travel retailer DFS Group also revealed plans in December to open a T Galleria store in Siem Reap by 2016, which will most likely be a hot spot for Chinese, Japanese and Korean tourists.

John Zhao, managing director of CDFG in Cambodia, said his company was counting on Cambodia’s robust relationship with China to attract more visitors.

Most notably, Chinese airlines — such as Shandong Airlines and Tianjin Airlines — have recently launched services to Cambodia, driven by the rising number of Chinese travelers. “Our group wants more Chinese people to go to other countries…and Cambodia has a good relationship with China,” Zhao said.

CDFG’s store in Siem Reap features cosmetics and accessories from more than 200 brands, including Dior, Estée Lauder, Bally and Tissot, and the company is set to open another outlet in Phnom Penh’s NagaWorld casino before the end of this year. Zhao declined to provide projected revenues for this year but acknowledged that in the three weeks the store has been opened, there were fewer visitors than expected.
The absence of foot traffic inside the malls belies the growing spending power of Cambodians, which could be more properly reflected in yearly car sales.

According to Pily Wong, chief executive officer of Hung Hiep Group — a car dealership that distributes Mercedes-Benz — about 28,000 cars were sold in Cambodia in 2014, and the country has been enjoying a steady annual increase of 20 percent in car sales for five years.

Prices for new pickup trucks and SUVs — Cambodia’s most popular type of vehicles — can range from $20,000 to more than $200,000 each, and Wong said the majority of his customers pay up-front in cash.

“We see a constant rise in sales numbers, in terms of the total car importations,” Wong said. “In the next couple of years, it would be the new rich [purchasing the automobiles]. I would say the middle class, plus those who are in between, will surely get more income in the next couple years as the country continues to boom.”


Russian Boulevard, a busy main street connecting the city’s center to Phnom Penh International Airport, is lined with auto dealerships displaying Audis and BMWs — most of which were nonexistent just five years ago. German car-maker Porsche is planning to open a showroom later this year, while Rolls-Royce launched one last year featuring its Phantom, Wraith and Ghost models, with prices starting at $450,000.

Peter Brongers, ceo of BMW Cambodia, said the number of potential customers in Cambodia for the brand totals only about 10,000, as the majority of the country’s 15 million are still poor. As Cambodians’ tastes evolve — the Lexus used to be the norm for the elite — Brongers believes that young businessmen are looking for more “elegance.”

“The profile [of BMW’s clients] is that they often travel, so they pick up experience from other countries,” Brongers said. “They go to Singapore, they go to Bangkok, and they see what’s being driven there.”

In addition, social media appears to be fueling an increasing awareness of name brands in Cambodia. Thai Phary, a 26-year-old who collects a salary of roughly $1,000 a month, said the makeup brands she uses are Yves Saint Laurent and Lancôme, while her fragrance of choice is by Chanel. She believes that people in her age group purchase cosmetic brand names because of online advertisements, as well as the knowledge it is better for the skin, instead of the powders and foundations sold in local markets.

“Even in the last five years, I didn’t know what Chanel was,” Thai said. “And now, I know that there are so many good brands in the U.S. and we can buy it online.”

Guech Heang Lim — who runs a store in Phnom Penh that imports Dior, Chanel and MAC cosmetics from the U.S. — believes the desire for luxury makeup brands is attributable to Cambodians’ willingness to pay more for quality. Last year, Lim sold almost three times the amount of products she sold in 2013.

Whatever the reasons for Cambodians’ evolving tastes, BMW’s Brongers is optimistic about the future.
“There’s only one direction this country can go, and it’s up,” he said. “It’s a poor country, but it won’t be poor forever.”

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