AN AMERICAN RESURGENCE
U.S. BRANDS PROSPER AS HONG KONG RECOVERS.
Byline: Kavita Daswani
HONG KONG — When a new shipment of James Perse T-shirts arrived in Hong Kong for the pre-fall season, there was, literally, a run on them; one famous local actress came in and bought 20 at one time, at $100 each. (All currency figures in this article are in U.S. dollars). Shortly after, a collection of 36 pieces of modernized vintage dresses by Mo Mo Falan was displayed, and despite retail prices of between $2,000 and $2,500, they sold out within a week.
Such tales might have seemed impossible six or eight months ago in Hong Kong, a city just now recovering from 18 months of severe economic depression. But retailers are noticing a meteoric rise in the popularity of contemporary American labels, as they and consumers alike are switching to a whole different supply source.
Hong Kong, like much of Southeast Asia, has traditionally relied on Europe to fill the wardrobes of the well-traveled and affluent. In what remains a fundamentally brand-conscious society, consumers were willing to pay top dollar for the latest Chanel, Gucci or Prada ensemble.
But shifts in taste levels and an increasingly younger customer base across Asia have swiveled the spotlight onto contemporary American brands, which are now enjoying a new — and surprising — success.
As one executive of an American contemporary brand put it, “Our business is up between 200 percent and 300 percent. We find that whatever works in the U.S. will work in Asia.”
William Yue, regional general manager of Dickson Concepts (Wholesale) Ltd., which represents Ralph Lauren in Asia, said that Polo had a strong following because of its “lifestyle appeal,” while Ralph Lauren Collection stores helped to “showcase the prestige and refinement” of the brand. Polo now has some 45 points of sale throughout Asia.
“In the fall of 1997, we launched in Asia Ralph Lauren’s Polo Jeans line, which, with its bolder and more casual designs and affordable price points, quickly and successfully generated an additional younger following for the brand,” said Yue. “The Polo Jeans line has performed well despite the economic crisis, and we now have 26 freestanding stores and department store corners throughout the region.”
Yue said the company was now concentrating on developing its children’s lines in Asia, with a teen collection (for girls age seven to 16) coming on line in fall 2000.
“Two years after the onset of the Asian economic crisis, there is now every sign that it may already be a thing of the past,” said Yue, explaining the company’s expansion plans for Asia.
“Hong Kong, Taiwan, Singapore, Malaysia, Thailand and the Philippines have now all recorded economic growth, and Japan, an important source of tourist spending for the region, has also begun a modest economic recovery,” he added. “With continued economic growth, we believe that a recovery of the retail sector will begin in late 1999 or early 2000. Our Polo Ralph Lauren business has fared comparatively well throughout the Asian economic crisis, and with the sustained economic recovery in the region, we are confident of the brand’s continued success and popularity in Asia.”
Belinda Tam, marketing manager for HPL-21 (Hong Kong) Ltd., which runs the Donna Karan business in Hong Kong, said Asian consumers were after versatility and comfort. And the decision to move its DKNY store into the Karan flagship was “a strategic move to allow us to market DKNY to our consumers in Central,” she said.
Tam described sales as “stable,” but said they were expected to “grow substantially” as Asia moved out of the recession. The company is also launching its DKNY Jeans and Active lines later this year.
“Hong Kong is the most exciting market in the region,” she said. “With consumers here becoming more affluent and responsive to fashion trends, their high spending power certainly allows retailers to have great business potential, even under the burden of stiff competition and high property costs.”
There are now some 40 points of sale for Karan’s lines throughout Asia, and Tam predicts more to come. But while established American brands — and mainly their diffusion lines — are enjoying respectable success in Asia, it would appear to be the up-and-coming American brands that are witnessing the most spectacular growth.
“Our business in Hong Kong today is exploding,” said Kenneth Weiss, president of New York-based brand Easel, citing a 250 percent growth in the Hong Kong buy.
Easel, like numerous other young American brands — including James Perse and Mo Mo Falan — is stocked exclusively at Lane Crawford in Hong Kong, an upscale boutique department store that launched its contemporary floor only two years ago.
“I don’t know the meaning of a sell-through that is not at least 75 percent at full price,” said Sarah Rutson-Pang, senior buyer at Lane Crawford. “For brands like Easel, I have a 95 percent sell-through at full price, and that is of a buy of 16,000 pieces for our four stores for fall.”
Rutson-Pang, who conceded she was now “treated like a goddess” at American showrooms, said she opted to focus on U.S. brands because, unlike France or Italy, they offer retailers eight deliveries per season.
“And I know my customers so well that I don’t have one dead brand on my floor. Overall, sales in contemporary — which is made up mostly of American designers — have been up 170 percent this year. And no matter how much I increase my buy, there are still waiting lists.”
Rutson-Pang said that the only way to succeed in the Asian market — a market that, she agrees, has had a patchy history with American labels — is to do the buy with a sense of individuality.
“I go into U.S. showrooms and see buying teams of 30 people from the different American stores, all buying by formula — the same white shirts, the same basic jackets and pants. Maybe that’s right for their market,” she said. “But the Asian customer doesn’t want that. The Asian woman wants feminine and pretty clothes with a bit of individuality. They are not interested in suits, which they can find anytime of the season and will probably buy on sale.”
Rutson-Pang’s vision of individuality includes ordering 50 pieces of an ankle-length shearling BCBG coat — at $950 wholesale. American stores, she said, would probably buy one and use it as a window display. The shearling coats “sold out before they hit the floor,” she said.
Juan Montoya, who presents designer Marc Eisen, said sales to Hong Kong have increased 90 percent over last year. The Jill Stuart buy is up by 60 percent, as is that of Earl Jeans. Teresa Feltes, who represents the Plenty label, said a $25,000 buy in spring 1998 has since doubled. Lane Crawford has also ordered more than $100,000 worth of Buzz 18 vintage jeans in the past two months. Betsey Johnson has tripled its business with Hong Kong in the past year, according to Kim Hingley, its vice president of sales and distribution.
Other Asian retailers are equally buoyant about the prospects of American contemporary rtw.
“We’ve been really focusing on the U.S. for the last three years,” said Sarah O’Donnell, chief operating officer of Seibu, which has two boutique department stores in Hong Kong.
American labels now carried at Seibu include Cynthia Rowley, Policy, Max Studio and ABS.
“We are strong in the U.S. contemporary market, which we hope to develop further,” said O’Donnell. We think it works because the fabrics are good for this climate, styles are trendy and American companies ship throughout the year. At the moment, it represents a healthy proportion of our mix, and we are continuing to build volume,” she said.
Joanne Ooi, who represents brands like Daryl K and Katayone Adeli in Asia, said she was looking for a freestanding location for a Daryl K boutique. “It has much more exposure and name recognition here than it once had,” she said, adding that Daryl K now sells to Seibu in Hong Kong, Club 21 in Singapore, a multibrand store in Seoul that concentrates on U.S. designers, and Joyce in Taiwan.
“We are seeing a gradual increase in business, year-on-year around 30 percent, which is pretty good given that a few years ago, no one knew who Daryl K was here,” Ooi said. “But it’s starting to take off now because there has been a percolation of new designs on her runway. It can take up to five years for a brand to get really anchored in Asia, and it’s still a matter of educating people constantly.”
Rutson-Pang added: “Women here like feminine clothes — they are not like the high-powered businesswomen in the U.S. who change for cocktails. They will take a pink sweater over a black one any day.”
There is also the pricing factor. Many Asian consumers find it difficult to justify spending $2,000 on an ensemble from an American designer when they have long been accustomed to names like Giorgio Armani and Jil Sander commanding that kind of money. According to Ooi, Katayone Adeli was dropped by a Singapore distributor because the brand suddenly went upmarket.
“It’s difficult to pass on price increases,” said Ooi. “People don’t accept that in this climate.”
There is also the question of sizing and silhouette. Ooi said that the traditional American names are seen in Asia as being “perennial classics, and not as directional.”
“The Asian consumer wants to see a huge neon flashing light that this is the trend for the season,” she said. “The U.S. market is all about career dressing, with clothes that are timeless. That doesn’t work in Asia.”