Malaysia’s catalogue of luxury designers is attracting the region’s bargain hunters
Filipina Fidelia Sol was a picture of radiant joy as she practically skipped out of the Salvatore Ferragamo shop in Johor with a pair of pink heels and a leather belt, bearing testimony to the perplexing power of luxury retail therapy.
Sol, who spent $2,000 within her first hour of arriving at the Johor Premium Outlet, is exactly the kind of shopper Malaysia is now hoping to attract.
The centre, the first of its kind in the country, is part of a new push to boost Malaysia’s stalling tourism industry. It hopes to draw on the rapid growth of high-end brands in Asia to lure mainly Southeast Asian luxury shoppers to its shores.
Positioned in the southern state of Johor, the 16,000-square-metre Premium Outlet boasts 80 stores, a large food court, cosy cafes, a bank, a post office and, of course, cash machines.
Prime Minister Najib Razak, who attended the outlet’s official launch late last year, called the project “one of Malaysia’s leading tourism projects”, adding the government aims to establish the country as a “shopping haven of branded goods”.
In 2009, 24.6 million tourists spent $18.8 billion in the country, making tourism Malaysia’s second-largest industry after manufacturing.
The sector has been steadily growing since 2000, with international arrivals rising almost 9% every year. However, foundering numbers in 2010 forced the government to revise its earlier target of 25 million tourists down to 24 million. It now hopes the new outlet will help reverse the slump.
“Since opening, attendance has been beyond expectation,” the prime minister said in December. “Within the first year, the place could possibly draw as many as three million visitors.”
The luxury market has fared relatively well during the global economic slowdown. Unemployment and falling incomes have not impacted high-end consumers in the same way it has ordinary shoppers. On the contrary, sales of luxury goods have hit record highs during this period.
This trend has been particularly strong in Asia, with the region leading the boom in demand for high-end goods.
Luxury brands witnessed a near doubling of demand from Asian consumers by the close of the third-quarter last year. Richemont, the world’s second biggest luxury group and the company behind brands including Cartier and Montblanc, reported growth in the region significantly higher than analyst expectations.
Meanwhile, Asia accounts for almost half of all Prada and Richemont sales, and 37% of total Gucci sales in the third quarter of last year, pushing revenue up by nearly a quarter from the previous year.
In order to tap into such demand, Malaysia is trying to rebrand the country from one associated with conservatism and cheaper Chinese-made goods to an upscale luxury-shopping haven.
“I am quite impressed with what I see as they have a fairly good variety,” said shopper Paul Black, a shipping merchant from Singapore, a country that provides Malaysia with more than half of its foreign tourists. “I’m sure my girlfriend and I will be coming here more often.”
A joint venture between Malaysia gaming operator and property group Genting and US-based Simon Property Groups, Premium Outlet offers prices up to 65% less than mall prices for past season items. It is a model that has proved successful in the United States, South Korea and Japan.
The $47m outlet houses names such as Burberry, Coach, Ralph Lauren, Canali, Michael Kors and Tumi. “In my experience of opening premium outlets across the US,” said John Klein, president of Simon Property Groups, “I’ve discovered that the excitement of finding great bargains has no boundaries.” It could be a fever soon to grip the country, with Najib having already announced the approval of a second $31m phase, with 60 new shops and a 2,000-room hotel.
“Honestly, I am surprised that there would be such large crowds of designer shoppers here,” said Indonesian Lily Putri, who had to queue for nearly 30 minutes to get into the Coach outlet. “But I’m really glad they have caught on the designer goods shopping bandwagon,” she said, waving her new Armani sunglasses. “Now I don’t need to travel too far to get my shopping fix.”