American Fashion Brands Hitting “Emotional Sweet Spot” In Hong Kong

Younger Consumers Fueling Recent American Brand Influx

Grand opening of the A&F Hong Kong flagship, August 2012

Since American traders moved to Hong Kong in 1842 in the wake of the First Opium War, USA-born-and-bred brands have proliferated in the city to include Levi’s, Calvin Klein, Gap and DKNY. The enthusiasm for the country’s apparel brands has continued with brands such as American Eagle Outfitters, 7 for all Mankind, True Religion, and J. Crew hitting the Hong Kong high street in recent years.

But the craze for American clothing brands soared with the grand opening of the Abercrombie & Fitch (A&F) flagship store in Aug 2012 in Central. In keeping with the label’s tradition, A&F flew in their hottest models hand-picked from global A&F stores for the event, where they flexed and posed for photo ops with Hong Kong’s enthusiastic fans. For an entire week, crowds surrounded the shirtless A&F models parading around various districts in the city and riding double-decker buses through Central.

Younger Consumers Show Strongest Resonance With American Brands

American brands have consistently stood for freedom and independence, evoking the rugged west with the rebel as hero. This positioning seems compelling for a significant minority of Hong Kong’s younger consumers. In a recent survey from Ipsos Hong Kong of 1,000 consumers, 22 percent of consumers aged 15–34 said they liked American casual wear brands. A reputation for being stylish and wholesome (aka down-to-earth) appeared to drive overall liking of American labels amongst consumers in this age segment.

Though adjectives like “fashionable” (72 percent) and “youthful” (67 percent) scored the highest among the 11 possible attributes, these did not have strong predictive influence on overall liking.When buying American labels, this segment of consumers most strongly identifies with the “comfort” (89 percent) and “fit” (48 percent) offered by the brands.

Since comfort and fit come up as strong predictors for overall liking, it is not surprising that the youth (18-24) and working-class (25-34) segments show a strong affinity with American labels. Positive affinity for American brands has room to grow amongst Hong Kong consumers, since only 10 percent of consumers aged 35+ show some feelings of liking these brands and 29 percent indicate some dislike towards American casual wear brands.

Appetite For American Apparel Brands Larger Than Spending

Along with other international brands, American brands command a price premium. Hong Kong youth are willing to pay, on average, 14 percent more for American brands compared to local brands (e.g., Bossini, Giordano). However, since HK youth perceive American brands to be priced at two to three times higher — coupled with a relatively low median monthly personal income of below HK$5,000 (US$644) — young consumers need to get creative about satisfying their appetite for American branded clothing.

In qualitative research, recent Hong Kong university graduates revealed that their parents or part-time work funded their clothing expenses. Young graduates also noted their preference for purchasing with discounts: seasonal sales, borrowing a friend’s VIP card or using a store staff discount.

Club Monaco men's pop-up in Hong Kong

Building a Closer Relationship With Hong Kong Consumers

With the recent re-ignition of the passion for American labels, brands now face the task of deepening their engagement with Hong Kong consumers to gain more share of wallet. Several key drivers will shape consumer expectations and needs in the casual wear category. Like their global counterparts, staying connected and proactive engagement are two key drivers in purchase decisions. As technology enables constant connectivity on-the-go via smartphones or mobile devices, consumers expect equally smooth access on mobile as on PCs, as well as user-friendly websites and apps.

Looking across different customer segments, customers engage with brands in one of two ways. Active participation in conversation by the consumer takes place in social blogs, online forums or discussion groups. Consumers will contribute to topic threads, leave comments and share experiences via product ratings/ reviews. But brands can also play an active role in shaping consumer expectations and perceptions.

For example, Hong Kong consumers show openness for brands to actively get in touch with them via push notifications, and seem willing to be synced in to receive information (news or non commercial information). Given the above trends, mobile shows great potential for brands to more proactively engage with target customers.

Implications

American brands have clearly hit the emotional sweet spot with younger and professional consumer segments. Given the rapidly expanding success of the high-design high-value brands like Zara and H&M, it might be worth considering alternative collections to bring younger consumers into the brand franchise by lowering the cost of entry for the 15-24 fashion conscious consumer.

The market has also seen several successful forays by brands like DKNY and CK into the 30s consumer segment, which has the potential to not only expand the fan base but also to tap into larger disposable incomes. With this two-pronged approach, American apparel brands can continue to grow in their appeal to the Hong Kong market.

Based in Hong Kong, Hiroe Li is a Research Manager at Ipsos Loyalty, the global leader in customer experience, satisfaction and loyalty research with over 1,000 dedicated professionals located in over 40 countries around the world.

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