Jurisdiction - China
Reports and Analysis
Asia Pacific – Lifestyle Brands In Region To Rocket By 277 Percent.

21 May, 2014

 

Legal News & Analysis – Asia Pacific

 

Growth of disposable income offers huge opportunities but significant risks according to international law firm.

 

Research commissioned by retail experts at international law firm Pinsent Masons has found that ‘lifestyle’ brands have overtaken ‘luxury’ brands as the best prospect for growth in the retail sector. The report, prepared by retail analysts Conlumino, found that consumer spending on lifestyle brands is likely to grow by some 277 percent in Asia Pacific by 2018.

 

The research highlights the extraordinary potential for growth of lifestyle brands at home and overseas, particularly as the product category has overtaken luxury brands as the next key battleground in the international retail market.

 

Lifestyle brands tend to offer premium products priced to be more accessible to mid-market consumers. These brands appeal to shoppers by suggesting a certain identity, embodying an attainable lifestyle for consumers with increasing levels of disposable income. Examples include Mulberry, Nespresso and Cath Kidston.

 

However, Pinsent Masons has warned that brands looking to capitalise on potentially lucrative markets must exercise caution.

 

“What is more challenging is getting the entry strategy right. As the Hong Kong market amply demonstrates, luxury brands have established relationships with many of the biggest local players who can open doors and, for instance, plug brands into the right shopping outlets,” said Peter Bullock, a Partner from Pinsent Masons.

 

“Lifestyle brands will need to carefully examine access points, contractual arrangements, intellectual property, financial and potential equity investment to tap into international opportunities without diluting their brand and losing control.”

 

There is also a growing appetite for British lifestyle brands at home and abroad. For example, Hong Kong- and Japan-listed Fast Retailing has approached UK-brand Cath Kidston’s private equity backers about acquiring its 65 percent controlling stake in the company. With 75 outlets most of which are outside the UK, Cath Kidston has an established presence in Malaysia, Hong Kong, Indonesia, Singapore, Japan, Taiwan, Thailand, Korea and China. Cath Kidston sells home furnishings and related goods with an emphasis on floral prints.

 

According to the report, growth of the emerging lifestyle sector has increased by 84% since 2008 in the UK, with the category now valued at GBP 31bn – compared to the luxury brand market that’s worth some GBP 22.7bn. Consumer demand for lifestyle brands will drive growth by 81 percent by 2018 in the UK.

 

“Lifestyle businesses tend to be more nimble compared to the luxury sector as the market is bigger and fast-moving. Luxury brands require significant financial backing to develop and maintain, meaning that associated marketing and store costs are hefty. There is every indication that luxury sub-brands or diffusion lines will appear to break into the lucrative lifestyle sector,” added Bullock.

 

Pinsent Masons

 

For further information, please contact:

 

Peter Bullock, Partner, Pinsent Masons

peter.bullock@pinsentmasons.com

 

Peter McHugh, Partner, Pinsent Masons

peter.mchugh@pinsentmasons.com

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