The Philippines is usually deemed unstable due to political risks and this has kept so many luxurious brands away. But due to the growing number of middle class, and a steady economic growth plus an open mind on Chinese tourism a lot of luxury brands are already changing their mind about the Philippines.
GDP Growth and tax cuts is one of the major reasons why there has been a surge in luxury consumption in Southeast Asian countries. Luxury spending is on the rise, and between 2013 to 2018 there has been a 40 percent growth in the number of people buying luxury items according to Euromonitor International.
Euromonitor International is an in-country analyst that is capable of providing in depth information about the local business economy. They help in understanding the international business environment with the help of their global industry specialist teams through consistent research.
Tourism is at an all time high in the Philippines and foreigners have spent $27 million on luxury goods at retail in 2018. Louis Vuitton, Chanel including Christian Louboutin started to change their marketing tactics and created products with local accents to cater to the growing market in Asia according to Vogue Business.
The Philippines has 107 million population, and is one of the fastest growing economies in Southeast Asia. The GDP of the country has increased by 6 percent annually since 2012 after the government reforms have been laid down. Foreign direct investments have steadily grown and the French Chamber of Commerce ambassador has boldly called Duterte's government as the most investor-friendly type of government in Philippine history.
Philippines Appetite for Luxury Increases
Luxury spending in the Philippines, specifically Manila is at an all time high. A total of 1.4 billion dollars was posted in 2018, and many shoppers in the Philippines seem to prefer watches and jewelry when it comes to luxury shopping. Because of this Swiss watch brands and Louis Vuitton has opened more stores in the Philippines.
There is definitely more disposable income circulating the Philippine economy today, as confirmed by Anton Huang, the President of luxury retailer SSI Group, the group that brought Hermès, Gucci and Prada to the country.
Since the Philippines has yet to relax on foreign ownership when it comes to brands, many are considering co-investing or co-partnership. Co investing is a good choice for brands that do not want to risk huge sums of money on a new market. This is the method that Bulgari used upon entry in the Philippines with SSI, but after experiencing steady growth and doing well in the market, they are now operating independently.
Local influencers and Online influencers like Heart Evangelista was also tapped by a new french label Sequoia Paris. Luxury brands are warming up to the online community. The collaboration between Sequoia Paris and Heart Evangelista was an immense success. The bags sold out in the brand's Manila Boutique.
"Sequoia Paris and I are proud to announce the launch of the Heart bag! It is the result of a shared passion between the Sequoia team and I for beautiful materials, vibrant colors and elegant details. The Heart bag is the perfect reflection of the blend between both Sequoia’s and my personal identity."
( Heart Evanglista, Rappler Interview)
This is seen as a good change, more and more luxury brands are now eyeing Philippines. The vicious cycle of needing to travel abroad just to do shopping of luxury goods because there is no option to do so in their own country is changing.
The iconic Christian Louboutin also released a $1,700 Manilacaba bag, that combined high end design with native materials and featured the weaving heritage of the Philippines.
Rise of Integrated Resorts, Luxury Hotels and Malls
Luxury brands are reconsidering the Philippine market due to the steady rise of luxury retailers in Manila. This includes integrated resorts, hotels including the opening of casinos like Solaire Resort & Casino, as well as Resorts World Manila now the home of Rolex and Rimowa shops. The Philippines is making a smart move and following the tried and tested path of luxury markets in Thailand, Macau and Singapore.
Chinese visitors who have disposable incomes that are working on offshoring gaming industry is usually attracted by this type of set up. With developing warmer ties with Beijing, the Duterte strategy is proving effective in Manila when it comes to attracting luxury markets.
Luxury Markets and Digital Marketing
Non-western markets are warming up to luxury brands as more iconic luxury brands are now gearing towards technological innovation and international investment. Brands like Chanel has dropped bias towards social media and has integrated online story telling as part of its marketing strategy and many are predicted to follow suit.
Some luxury brands are already using Augmented reality on their websites including Artificial Intelligence to make their operations faster. LVMH for already integrated the aid of robots and virtual reality and allowed their customers to try on lipstick shades and eye wear online.
Filipino Millennial Spending On Luxury Brands
Apart from being tagged as the woke generation, Filipino millennials are also spending on luxury brands. The Greenbelt Makati boutique is a frequent witness to the exclusive events that are well attended by luxury and lifestyle influencers like Kim Jones.
Luxe streetwear and Off-White as well as the Louis Vuitton for Spring- Summer is also expected to debut well this 2019. The Filipino millenial demographic know the power of luxury goods and the luxe market is very much alive in the Philippines. Manila's young crowd happily snapped up T-shirts ranging from 38,000 pesos to 50,000 pesos during a luxury brand opening in Greenbelt.
According to a report by Lifestyle Inquirer after the successful pre-collection launch of Bernard Arnault's stealth Manila visit in late April of 2018, the chair and executive chief of Moet Hennessy-Louis Vuitton (LVMH) reportedly checked out the Louis Vuitton and Bulgari boutiques in Greenbelt and Solaire.