Southeast Asia’s Top Homegrown Brands based on Productivity

Top 10 Brands

Introduction

With over 330 million internet users in Southeast Asia (SEA)[1], e-commerce fashion has flourished rapidly with homegrown brands sprouting throughout the region.

This report focused on the top 10 local brands (ranked by size of assortment) for insights on their performance, benchmarked against the leading international brand, Zara.

Brand Positioning

Size of Assortment: Zalora topped the list with almost 17,000 SKUs, followed by Pomelo Fashion and Something Borrowed. The rest of the brands hovered between 2,000 – 4,000, a decent online presence in today’s fashion landscape.

Median Price: Love, Bonito had the highest median price (2% higher than Zara), followed by Pomelo Fashion. These two brands positioned themselves at a slightly more premium level than the others, focusing on design and quality in their assortment offerings.

New In: Pomelo Fashion, Berrybenka and Penshoppe had more than 40% of newness respectively, driving fast fashion positioning.

Note: [1] https://www.techinasia.com/talk/southeast-asia-ecommerce-potential

Fall 2018 Newness

Pomelo Fashion, Berrybenka and Penshoppe had the highest new in rate for the quarter, also known as Fall season.

These brands reflected micro trends found in Zara, which were commercially interpreted with less layering to suit the local climate and culture.

Key trends observed:

1. Denim jackets
2. High-waisted pants
3. Belted styles

Focus on Replenishment

Generally, all brands were active on replenishments, which explained the lower new-ins compared to Zara. The average replenishment and sell-out rates for the 10 brands were 68% and 59% respectively, resulted in a gap of +9%, with replenishments far exceeding sell-out.

Winners

Half of the brands performed well in this quarter. Pomelo Fashion came through with high replenishment rate of 79% against a decent sell-out of 74%.

Sharing similar outlook were Love, Bonito, Berrybenka, and Penshoppe with replenishment vs. sell-out below the 5% gap.

Losers

The wide gap between replenishment and sell-out rates mainly came from Zalora and MDS. The former had the highest replenishment rate at 68% (11,000 items), against a lower-than-average sell-out rate of 39% (6,500 items).

Pricing Overview

The average median price for the 10 brands was US$19.75, which was considerably lower than Zara at US$32.99 – highlighting the low spending power of the critical masses.

Winners

Brands, with a median price above the average of US$19.75 and achieved above an average sell-out of 59%, were Pomelo Fashion, Love, Bonito and Poplook.

Losers

Zalora and Berrybenka achieved slow sell-out at 39% and 47% respectively, despite the lower median prices.

The underwhelming performance can be attributed to the soft post-Eid trade,  coming out of 2nd quarter where Zalora and Berrybenka hit 65% and 60% sell-out respectively. Eid took place in mid-June this year, and was the biggest festivity cum shopping period for Indonesia and Malaysia.

Conclusion

Main Findings

Fast Fashion Positioning: Top 3 homegrown brands with the most newness launched this quarter were Pomelo Fashion, Berrybenka and Penshoppe (41%-44% vs. Zara’s 48%) .

While Pomelo Fashion and Berrybenka justified high newness with strong sell-outs, Berrybenka’s sell-out for the quarter fell below par. With that said, the brand maintained its standing with lower replenishments, in line with the sell-out rates.

High Sell-Out: Majority of the homegrown brands surpassed Zara in terms of sell-out performance. Despite having lower median prices, the result indicated that consumers of the region were supportive of homegrown brands, which largely cater to the Asian silhouettes and styles.

Seasonal Collections than Items: Brands that launched themed seasonal collections, the likes of Pomelo Fashion and Love, Bonito, were able to command high sell-out on above average median price. Consumers related better to the story-telling and inspirational messaging behind a themed collection, leading to an increased appreciation of its design elements, which ultimately translated into purchases at higher price points.

Key Takeaways

When To Replenish: A product that sold out over a festivity may not see the same results once the celebrations wane. Similarly, a bestseller over a season may not be in demand if replenished in the next season.

Therefore, brands need to be cautious about the timing of replenishment to avoid overstocking issues.

Muslimah Opportunity: SEA continues to have an appetite for Muslimah wear, a market segment that is not fully explored by many homegrown brands.

Poplook and Zalia, the only two Muslimah brands in our list, had high sell-out rates respectively, which demonstrated a strong demand in the segment.

Convergence: While SEA may be diverse in terms of consumer demographics, the homegrown brands observed are blurring the lines, taking their brands across borders as seen in the success of Pomelo Fashion (Thailand-based), Love, Bonito (Singapore-based), Something Borrowed (Zalora’s private label), and Poplook (Malaysia-based) – all with over 70% sell-out in the region.