A sign of good taste; a statement of class; and a symbol of social standing – these are the epitomes of having luxury goods in one’s repertoire. Although not considered essential products, luxury goods have always had long-standing presence in any society to differentiate the rich from the richer. The consumption of luxury items have always had been confined to the elite class, but such is not always the case. The concept of luxury has generally been diffused over the masses to encapsulate more market share, leading to concepts such as ‘mass luxury’ or ‘niche luxury’ markets. Sarawak is no stranger to this movement as a wider variety of luxury brands – particularly in the form of accessories – make their way into the capital of Kuching, and later on into the rest of the state. According to the Oxford Business Group (OBG) in The Report Malaysia 2012, Malaysia has already been classified as an upper-middle-income nation by the World Bank, with the country’s gross domestic product (GDP) per capita targeted to increase from US$9,686 in 2011 to US$14,020 in 2015, when the population is expected to surpass 30 million. “The government’s 10th Malaysia Plan targets an increase in the monthly mean income of the bottom 40 per cent of households from the US$465 of 2009 to US$740 by 2015,” it further added. OBG opined that the rapid urbanisation and related lifestyle changes associated with these demographic shifts are likely to have a big impact on the retail sector as younger, more mobile consumers see their disposable income rise. That said, with the increase in consumer spending as a result of the rising disposable income, it is no surprise that there is now a rising demand for these luxury accessories in Sarawak, especially now that the government has relaxed its import duties on luxury items. Although Malaysia has been a major market for many luxury products over the years, the move to make most luxury goods duty free has resulted in a steady stream of new entrants into the market here. “As of mid-2012, Malaysia was home to a substantial amount of leading international brands including Prada, Giorgio Armani, Chanel, Van Cleef and Arpels, Cartier, Jimmy Choo, Burberry, Bulgari, Hermes, Louis Vuitton and Rolex, among others. “Many of these brands are relatively recent additions, having set up shop specifically to take advantage of the country’s duty free status,” the OBG noted. In addition, Euromonitor International noted that as a result of strong economic growth in the country, the Malaysian ringgit remained strong against major currencies such as the US dollar and the euro in 2012. “In combination with increasing household budgets with economic recovery, the strong ringgit has made luxury goods more affordable for an increasing number of consumers over the years, supporting sales of luxury goods,” Euromonitor International opined. As a result of this, many Sarawakian consumers have been found to not only be able to afford Malaysian luxury accessories, but also those imported from overseas. A good example include the luxury jewellery collection from international trader Pandora which opened its first outlet in Sarawak back in 2011 at tHe Spring Shopping Mall. In fact, most Sarawakians do not rely on the luxury brands that can be found in Kuching alone as they are able to travel easily to West Malaysia to purchase other branded luxury accessories. This is made easier by local airlines which constantly offers cheap fare promotions throughout the year. Overall, Euromonitor International opined that the luxury goods environment in Malaysia is expected to continue on its strong growth trajectory over the forecast period. “Growth in the population and the number of households will also support growth in demand for luxury goods, continuing to raise the overall buying power of Malaysian consumers. “Marketing through media will also continue to capture consumer interest, particularly among young people, further supporting sales of luxury goods,” it opined. With that, BizHive Weekly takes a look at local retailers selling luxury accessories and their opinions on the Sarawakian market for such goods. Demand for luxury bags, wallets driven by fashion Few know the market for luxury branded bags and wallets better than Cynthia Chau and Gwen Chia, co-owners of TheTreasureBox (TTB), the sole boutique in Kuching and perhaps the whole of Sarawak which sells authentic luxury designer bags and wallets. Having first started up two and a half years ago, the retail outlet is now a thriving business catering to the growing demand for branded bags and wallets, with customers not only from Kuching, but also from other parts of Malaysia. “We attribute the increase in demand for luxury designer bags and wallets to the fashion sense in this region,” Chau and Chia commented. The entrepreneurs found that many Kuching friends are becoming more brand conscious while those from other parts of Sarawak are also catching up with the trend. Most of them are smart consumers as they normally do their research before making any final purchases. “The reason why they usually go for TTB is because we are a home grown boutique that is able to offer quality products with authenticity assurance at a more reasonable price,” they highlighted. The entrepreneurs have noticed that there is a growing demand of luxury items as many consumers are getting particular in terms of what they are wearing and carrying nowadays. “Needless to say, owning a piece or two of an authentic designers’ items will boost one’s image in more ways than you can imagine. “This is especially the case for those who have wider social circles, both locally and overseas,” they opined. TTB has customers coming from a myriad of backgrounds, all of whom appreciate the real value of a genuine designer’s work and who have high expectations on the quality and design of the bags or wallets to complement their image. “We offer various designer brands to accommodate the different pricing preferences in the market ranging from a couple of hundred ringgit and up to thousands of ringgit,” they said. As mentioned before, TTB offers a wide variety of luxury designer brands to its customers. Among the popular brands preferred by their customers are Louis Vuitton, Chanel, Gucci, Prada, just to name a few. Overall, the co-owners believe the choice of luxury items is something personal. They are of opinion that preferences are likely to be based on the design and uniqueness of the handbag or in some cases, to serve the need of a customer for a particular occasion. In terms of their customer base, it is not limited to just Kuching. In fact, TTB does have walk-ins from other parts of Sarawak such as Miri, Sibu, Bintulu and others, mostly while they are on their holiday visits to Kuching. TTB also receives online orders from other states of Malaysia. One of the effective online channels they have been taking advantage of is through their Facebook page at facebook/TheTreasureBox.my. “We love to interact with our customers and as such, we have been very active on our Facebook page, especially when we have new arrival updates in store. “While updating our pages, we will also spend time responding to our TTB’s friends’ enquiries and valuable feedback,” the co-owners emphasised. Despite the success of their shop in Kuching, they have yet to make plans to expand and set up shop in other parts of the state. “We are just a humble startup of two and a half years and as such, we are still learning to better fulfill our customers’ needs,” they explained. They added: “Unlike most luxury items resellers, we emphasise on the personal touch to our customers because as we said before, everyone is unique in their own style and preference when it comes to designer items.”. For the immediate term, the co-owners of TTB are more than happy to continuously bring the best to their customers, with the aim of going on for organic growth. “After all, our business is about trust and friendship borne from a common passion in authentic designers’ works,” they enthused. In the meantime, TTB is open to invitations from fashion related retailers in Borneo to work together and to participate in fashion fairs or roadshows in promoting the local fashion industry in the near future. Watches – An indispensable accessory Owning a watch has long been one of the most basic accessories for a person – both for men and women – as these timepieces make a fashion statement and for some, to show the status of their wealth. With a wide variety of watch shops in Kuching, consumers can generally walk into any shop to pick out a particular brand of watch which is guaranteed to be within their budgets. One particular watch company which has been here in Kuching for more than 80 years is Hung Cheong Jewellery & Watch Sdn Bhd (Hung Cheong), whose headquarters is at No. 40 India Street. Including this outlet, Hung Cheong currently has four branches spread all over Kuching, with its latest branch at CityONE Megamall having just opened in May this year. According to managing director Ho Chum Fong, as far as Kuching is concerned, there is an increasing demand for luxury watches. “From my observations, Rolex watches are the most popular among successful businessmen, while the brands Tag Heuer and Rado are more in demand by the middle class segment,” Ho pointed out. Not forgetting the younger generation, he also noted that the G-Shock line from Casio are extremely popular with youngsters. “In terms of the market over the past 10 years, and from our observation of our regular customers, perhaps about 30 per cent still go for the same brands, another 30 per cent may choose to go for other brands of the same price range, while 40 per cent will prefer to upgrade to a higher end branded watch,” he opined. Ho believed that people eventually went for the higher end brands mostly because they want to upgrade their image. Despite selling a variety of high-end luxury watches, Hung Cheong mostly makes its sales from mid-range branded watches, as that is currently the brand segment that is in demand and can be afforded by the majority of the Kuching and overall Sarawak market. Although their outlets are only based in Kuching, Ho said they constantly have customers coming in from other areas such as Sibu, Bintulu, Miri, and others. “We even have customers from Kota Kinabalu and Kuala Lumpur visiting our shops,” Ho added. As for tourists from other countries, it is not surprising that Hung Cheong also has international customers visiting their shops, considering that their outlets are strategically located to attract all types of visitors. A new player in the scene, All Watches, which sells mainly luxury brand watches – primarily the Rolex brand – found that there definitely is a market for these high end timepieces partly because of the resale value. “So far, in regards to Kuching’s reception of high end watches, a lot of customers still prefer the Rolex brand, compared to other lesser known brands such as Panerai. “The reason for this is because the trade-in value for the Rolex brand is quite high, better than other brands,” All Watches manager Bryan Kho explained. He highlighted that in terms of the resale value, Rolex is ranked first in the world in that context. When buying a new Rolex watch, the owner can resell it two to three years later, at a price of about 80 per cent of the original price they had paid. All Watches, which sells both new and used watches, found that their customer base is not limited to just high net worth customers. For example, with their Rolex watches, some are priced at less than RM10,000 which he opined can generally be afforded by mid-range consumers. “For some of our vintage watches – which are more than 20 years old – priced at around RM3,000 to RM4,000 and above, we have found that there is a market for these preowned watches, especially as they are still in good condition,” Kho pointed out. All Watches does not limit itself to just selling via its physical retail outlet. It also sells its watches online, thus allowing them to further penetrate the Sarawak market. “We also have customers from Sabah, Kuala Lumpur, Penang, Johor, and other parts of West Malaysia, and Singapore, too,” he added. All Watches generally has a very wide market because its prices are technically lower than those retailers selling in West Malaysia. The costs of having a retail outlet here in Kuching, compared to in West Malaysia, may be a factor in the lower pricing. “This may also be due to the demand here which restricts us from putting a price that is too high for the consumers,” Kho explained. Overall, he agreed that the spending power here has gone up over these past ten years, especially with the ease of payment via credit or debit cards and online bank transfers nowadays, instead of previously when customers had to bring a lot of cash when making purchases. KKDC: Luxury jewelleries still a blooming market Jewellery stores have been a common sight in the Sarawak market over the years, catering to consumers of all ages. One can find them scattered, usually in the form of goldsmiths, all over Kuching and also in other parts of the state. There is no doubt that there is a market for luxury jewelleries in the state here. Over the past few years, one can easily observe that many West Malaysian jewellery companies have set up shops in Kuching and other parts of Sarawak, with the aim of increasing their market share here. With the onslaught of luxury jewellery stores in Kuching, BizHive Weekly talks to Sarawakian jewellery company KK Diamond Centre (KKDC), which was first established back in 2003. “We are a local-based jewellery company, but on an international level. “By being on an international level, we mean to say that all of our stocks come from foreign countries such as Hong Kong, Italy and Belgium,” branch manager Kenny Sim of KKDC explained. Over the period of 10 years, he noticed that there has been quite a good reception to KKDC’s jewelleries, with its customer base constantly expanding as the years pass by. “In terms of our high end jewellery, there is definitely a market here. For example, when consumers purchase couple rings for weddings or anniversaries, they do not spend just RM1,000 or RM2,000 on a set. “As it is a once-in-a-lifetime occasion, these couples are willing to spend RM3,000 and above on a set of wedding bands. In fact, they are willing to fork out more because they are more interested in the design of the rings,” Sim observed. KKDC offers custom-made services, catering to the middle to high-income customers who prefer to choose their own designs. “Unlike ten years ago when people just simply purchase a set of couple rings, customers nowadays are looking at the designs of the rings,” Sim reiterated. In fact, he found that these buyers will survey the market first, not only visiting KKDC, but also going to other jewellery companies before making their final decisions. However, his jewelleries are not just restricted to that particular segment. In order to cater to consumers from all walks of life, sometimes KKDC has jewelleries going for as low as RM69 during the promotional period. This is also an attempt at attracting the younger consumer market. Surprisingly enough, KKDC does receive customers of the younger generation (in their 20’s) who are able and willing to spend RM3,000 and above for couple rings, an indication of their high spending power. In terms of the jewellery metal preference here, Sim pointed out that although there is demand for platinum, the market for it in Kuching is still quite small. Despite having just entered the platinum jewellery market two years ago, KKDC has to date found the response to their platinum jewelleries encouraging. “As platinum is quite rare, it fetches quite a high price in the market. In fact, it is two and a half to three times more expensive than 18K white gold,” Sim reiterated. Due to the higher price of platinum, consumers here still prefer the 18K white gold metal. For a normal white gold ring, the prices can start at RM999, while for a platinum ring casing, the prices range from RM2,000 to RM3,000 and above. Overall, KKDC often receive customers from other parts of Sarawak, and even international customers. The reason being that its KKDC branch at the Riverside Majestic Hotel (Riverside) is a strategic location whereby not only tourists, but also business travellers from Kuala Lumpur, Penang and even Singapore, will usually drop by their outlet and make purchases during their stay here in Kuching. “These types of customers will usually be of the medium to high-end segment. This is also the case with visitors from other parts of Sarawak such as Bintulu and Miri. “In Bintulu and Sibu, we do exhibitions there every two to three months and as such, we do have customers there. When they come here for holidays, they will visit our outlet here and purchase from us,” Sim explained. While it definitely has a luxury jewellery market in these other parts of Sarawak, KKDC has yet to decide on expanding to these areas as it has not found any appropriate shopping centers suitable for its outlet. It has, however, expanded in Kuching recently, in the form of its second outlet in CityONE shopping mall at the ground floor. KKDC decided to open an outlet there because they noticed that most of their customers live around that area. By setting up an outlet there, it is more convenient for their regular customers living in that area instead of having to drive down to the outlet at Riverside. “In Kuching here, we do not need so many branches yet. This is because of our population, which currently numbers at about 600,000 and after factoring in the competition from West Malaysian companies, we find that having two branches is enough,” Sim outlined. In terms of differentiating itself from other West Malaysian luxury jewellery companies, KKDC has the advantage of adjusting their prices due to their flexibility. “Franchise companies have a fixed margin cap, whereby for example, the manager can only give 20 per cent discount on the jewelleries. “As for KKDC, if customers were to ask for more than 20 per cent discount, we can decide on the spot to let go of the jewelleries at that price. On the other hand, franchise managers will need to call their headquarters first before making such decisions,” Sim emphasised. On a side note, Sim shared with us that KKDC also sells solitaire diamonds, which is actually good for investment. For example, if a customer buys a three carat solitaire diamond, five years down the road, the value will have increased, thus rendering the price to be higher than before. “A lot of people out there do not realise this, but aside from yellow gold, diamond is actually a good investment, too. “Even a diamond with a carat of 0.30 is considered an investment,” Sim highlighted. In fact, KKDC is willing to buy back the diamond if interested parties want to upgrade to a larger diamond. As long as the customer brings back the jewellery item with the receipt, the shop is willing to take back the stock at a certain discount. “With this concept, customers will not need to fork out a large sum of money in one go – for example RM8,000 – to pay for a larger carat diamond. “After deducting the trade-in price, maybe the customer only needs to top up with RM2,000 when buying a bigger diamond. This is generally one of the flexibilities we offer our customers,” Sim explained. He found this to be a common trend with customers regardless of age, especially if for example, they find that they are bored with the jewellery’s design. In fact, he noticed that most of their customers from Sibu and Bintulu often follow this trend of trading in their jewelleries. “All our KKDC branches accept trade-ins from customers, as we encourage people to trade-in to upgrade,” Sim reiterated. Read more: theborneopost/2013/09/29/the-market-for-luxury-accessories-in-sarawak/#ixzz2gEindkf5
Posted on: Sun, 29 Sep 2013 00:20:32 +0000
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