Hong Kong fashion retail group Rue Madame prudent about 2019 prospects

By

Anaïs Lerévérend

Translated by
Nicola Mira

Published
Jan 7, 2019

While 2018 was a satisfactory year for the Rue Madame Fashion Group, a Hong Kong-based fashion retail specialist, in the last few months there were signs of a slow-down which might be felt in 2019 too. This is the opinion of Ariane Zagury, founder of the group which distributes high-end fashion brands like American Vintage, Phase Eight, Whistles and Hobbs on the Asian market, where it also operates its own label Clemence and long-established multibrand fashion retailer Rue Madame.

 
The group has become a specialist in affordable luxury fashion in Hong Kong, Macao and Singapore, where it operates a total of 23 stores. In 2018, the group’s revenue reportedly grew by 28%, and by 15% in like-for-like terms. A positive year altogether, driven in H1 by favourable exchange rate effects, though in H2 it was affected by the uncertainty fuelled by the trade war erupting between China and the USA, and more generally by fears of a slow-down in Asia’s economic growth.
 
According to Ariane Zagury, the same tensions will be felt in the year which has just begun: “We aren’t worried about our own business, we hope to generate a small comparable sales increase, but we aren’t expecting double-digit growth for 2019. Having a small organisation will be an advantage in a year that could be a troubled one for our markets. Larger players may struggle. Purse strings will have to be tightened, after some operators invested extensively in the euphoric climate prevalent before the second half of 2018,” said Zagury.

Though the Rue Madame group is “prudent” about its 2019 prospects, it still intends to carry on investing, and its target is to reach thirty stores in the course of the current year. There already are several openings in the pipeline, with notably two new American Vintage stores on the cards, making it five franchised stores operated in total by the group with the French fashion label in Hong Kong and Singapore. As for British brand Hobbs, the latest to sign a distribution deal with Rue Madame, it plans to open five stores in the region.
 
Finally, multibrand retailer Rue Madame will broaden its reach in 2019. In addition to the e-store launched two years ago, the three Rue Madame stores will diversify and adopt more of a concept store format. One of the stores will be enlarged to reflect the retailer’s new lifestyle direction.

“If I had to sign up a new brand today, it wouldn’t strictly speaking have to be a fashion label," Zagury added. "Our [fashion] range is sufficient as it is. I'd rather focus on the opportunities offered by lifestyle, beauty, accessories and, why not, athleisure labels. But once again, our keyword for 2019 is prudence.” Zagury sees competition growing more intense in its preferred market segment, affordable luxury fashion, and the Asian market, once portrayed as an El Dorado, is looking tense this year.
 
“I think larger players that already have a well-established distribution network, like SMCP [which Zagury used to distribute in the past, before selling her share in the joint-venture company back to the French group], will manage, but 2019 will be a more complex year for others in Asia,” said Zagury.