October 4, 2012

MBF October Picks

Looking at all of today's uncertainties and changing economies, it is no surprise that companies around the world are frantic about where to take their businesses next. The roles between those formerly in power and those less predominant are reversing. Among them, the obvious economic growths in China and Brazil as well as strengthening markets in Mexico, Kazakhstan, Russia, Canada, and India. So what does the future of the global market look like? And who will be the prevailing players leading us there?

photo via NY Times

Despite China’s continued growth, the country is starting to see an overall decline in economic expansion. However their influences remain vast as many western companies continue to move into the powerhouse like Forever 21 in Shanghai and Gap Inc.'s outlet stores. Similar to Hermes pioneering efforts with its Shang Xia concept shops, Estée Lauder plans to introduce an entirely new brand targeted specifically towards its Asian customer base called Osiao. The new cosmetics line, which combines traditional Chinese ingredients with english labeling techniques and marketing, is researched locally in Shanghai and manufactured in Japan. The Asian market is one of Estée Lauder's fastest growing regions, so why not invest now? According to the CEO, Fabrizio Freda, “It will be a brand with a unique position, a brand that will give consumers a sense of being local, of being really dedicated to them."

photo via Financial Times

As China slows down, Mexico is experiencing a manufacturing revolution in everything from cars to appliances to computers. Not only does Mexico partake in free trade agreements with over 44 countries, but through NAFTA, is binded to the U.S. and Canada. For the U.S., "Made In Mexico" is an opportunity to shorten supply times by cutting costs and delivery times, especially as Mexican labor becomes more skilled. According to HSBC, a decade ago, Mexican wages were 391 percent higher than that of China. However, with China's rising labor costs, Mexico's labor is only 29% more and that is expected to decrease over the next five years, with predictions that China will be much more expensive by that time.

photo via WWD

For most of us, all eyes have been on Brazil lately as brands like Coach, Kate Spade, Tiffany's, Sephora, and Prada's new store openings in Sao Paulo (and expansion planned elsewhere if not already in the works) as well as its two fashion weeks, it's pretty clear Brazil is on it's way to establishing itself as a major fashion market. Not only will Brazilians drive growth in the luxury market, but with major increases in its middle class, there will be much more of a demand for fashionable and better quality international mid-market brands. Right now the middle class represents more than 50% of its 200 million citizens, with 50% of Brazilians aged under 30. The presence of these consumers on the web is on the rise too. Using such sites as Elike, which combines a shopping platform with Facebook, a new movement in social shopping is hitting the marketplace to lead Brazilian retail into the future. Despite the government bureaucracy and inconsistent taxation policies creating major issues for foreign brands, these companies will just have to think outside the box in order to successfully capitalize on the Brazilian market.

It seems Kazakhstan is also attracting the fashion minded with a plethora of new store openings as well, from luxury brands like Louis Vuitton to mid-market retailers like Children's Place and Steve Madden. The most recent newcomer, Saks Fifth Avenue has opened up shop in Almaty. Some are even putting Kazakhstan's market up there with the likes of China and Brazil. To put this in perspective for you, in this oil rich country, only a mere 5% of the luxury market is driven by tourists. Kazakhstan citizens have money and they want access to recognizable names featured in magazines. These consumers are fashionable, trendy, and want to show this off as visibly as possible.

photo via Fashion Magazine

Looking to neighboring Russia, Mercedes Benz Fashion Week is nearing at the end of the month and European based Wood Wood, just opened up shop in Moscow. Russian style icons are nothing but new to the fashion scene with names like Natalie Vodianova, Miroslava Duma, and Ulyana Sergeenko gracing fashion magazines and streetwear blogs all over the web. While Russia has been lagging behind in the online e-commerce world, mainly due to a recognizable liking to see and feel goods as well as postal discrepancies, online retail seems to be picking up speed. According to Adrein Henni, co-founder of East-West Digital News, Russia's online retail market is "one of the fastest-growing but the least know and understood on the planet."

photo via Financial Times

There has also been a recent influx of Canadian retailers hitting the U.S. like Aritzia and Joe Fresh while simultaneously American brands have been moving into the northern frontier. Both Nordstrom and Target look to open stores in Canada, which has already been penetrated by J.Crew, Tory Burch, and Ann Taylor. While for the longest time the Canadian market has been weak, it has finally gained some edge with a stronger currency, more stable economy, and better real estate opportunities.

photo via Financial Times

As far as fashion goes, India has made major strides with its first Fashion Fund to promote and support upcoming designers, with six finalists in the running. The award was launched in May by Vogue and the Fashion Design Council of India and is an extension of U.S. Vogue's Fashion Fund idea that originally began in 2003. Looking at such designers as Manish Arora, Naeem Khan, and the infamous Prabal Gurung, India is making it's own name for itself among fashion culture. According to Gurug himself, "The world is more open to the idea of business from Asia, China and India these days. There is an acceptance of different ideas; a growing market and need for design." And now, with India's newly opened economic policy, we will definitely see more foreign brands moving in.

The world is evolving fast – faster than ever with the majority of it out of our control. Currencies are fluctuating, irregular weather patterns surprise us, and companies' infrastructures are continuously hiring, laying off, and developing new ways of doing business. As the U.S. and Europe experience economic obstacles, China slows down, Brazil's middle class quickly develops, and as a result, new countries are on the economic upswing, we will continually see a shift in different markets and more brands looking to a global presence. What we once thought of as the world's leading nations may one day no longer hold true, as we are seeing today. New economies will gain momentum and these nations will lead the global world forward. With all these changes, the individual countries will only further have to rely on innovative concepts, remain open minded to both domestic and new international opportunities, as well learn to collaborate together in both business and economics.

photo via Yahoo! Travel

Now that we've discussed today's leading markets bringing us forward into the future, we'd like to leave you with a list of the world's happiest countries! Enjoy!

No comments:

Post a Comment

Creative Commons License
MBF Trend Talk by MBF Trend Consulting is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 United States License.
Based on a work at mbf-trendtalk.blogspot.com.