Granger Whitelaw and Carey Zesiger discuss Retail In Vietnam. Part 2 of our 3 part series on Textiles: Manufacturing, Retail, and Fashion In Vietnam and S.E. Asia. Carey Is the Co-Founder of Shooz, Geox, Furla, and Gosumo.vn – all success full retail and e-commerce brands In Vietnam. His Insight both Online & Offline gives him a unique view of the Consumer industry In Fashion Retail. Sit back, turn up your speakers and Enjoy!
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Granger Whitelaw: Good morning. Thanks for joining us at a Lotus talks. Today is part two of our series on manufacturing and retail in Vietnam and Southeast Asia. Last week, we had the pleasure of speaking with Bill Watson at coats. I’m not sure if you’ve had the chance to listen to it, but if you haven’t please do, it was a great interview.
Granger Whitelaw: Today. We have the pleasure of speaking with a gentleman who has been in Vietnam for quite a long time. A very successful retailer Carey Zesiger. Carey, Good morning.
Carey Zesiger: Good morning.
Granger Whitelaw: How are you today You’re up in Mui Nei I understand for the holiday break.
Carey Zesiger: Yes. We’re enjoying a little, a beach, the beach weather here. Beautiful day at a Mui Nei.
Granger Whitelaw: Great. It’s great to get out right after, you know, all the craziness over the last month and it’s just, it’s great to be able to travel and go actually support the local community as well and get those travel and tourism dollars going.
Carey Zesiger: Definitely.
Granger Whitelaw: So last week, Carey, I spoke with Bill Watson. who’s at Coats. I think, you know, bill a great interview. He’s very insightful, always. – a three-part series, your number two, which is retail. You were a retailer in Vietnam, but you came here originally, working on global standards. Right? And, 20 years ago was that?
Carey Zesiger: Well, 25 somewhere around there. yeah, actually my first, my first, career was in journalism, So freelancing writing for, you know, local papers, international magazines and stuff like that, and then went from there and to publishing. And then into a, as you said, Global Standards, a social audit work, and then the retail, we started around 2003, 2005. Really Where you got a, we got going.
Granger Whitelaw: Right. So it was about a 16 year old company now. And that’s that’s with your wife Chau correct ?
Carey Zesiger: That’s right. That’s right. So we’re a we’re a Vietnamese, you know, local retail company, which is basically what you want to be, you know, for, for retail here. It’s a, it’s been kind of a protected industry for quite some time and still is to some degree.
Granger Whitelaw: Well, that’s great. So, and you married Chau, how long ago?
Carey Zesiger: that was 2001, Yeah. 19 years.
Granger Whitelaw: Now you have two beautiful daughters and a, just a fabulous family. You’re very blessed.
Carey Zesiger: We are very lucky. Absolutely. And especially lucky to be in Vietnam. I think these days with all that’s going on in the region around the world.
Granger Whitelaw: Absolutely. Absolutely. So your company is Ha Vang, is that correct? Do I yeah. Ha Vang, Okay. And how long are golden summer is targeting the fast growth retail market in Vietnam. You guys have about 25 brands, including your big ones, which are Shooz, Geox, Furla and then you have a e-commerce play called go Sumo. Okay.
Carey Zesiger: That’s right. Yeah. Great. Yeah. Yeah. So we, we started, 2005 with Furla, that was the first one that we got going, and that’s remains to this day, the high end for us. so it’s, you know, it’s affordable luxury is usually how it’s described, but, for Vietnam, it’s, you know, it’s still a premium price point, you know, we’re talking, you know, $500 handbags, that sort of thing, Italian leather, so I mean, it’s affordable if you compare it to say Gucci or Chanel, but it’s, it’s still, you know, an aspirational buy for a lot of Vietnamese.
Granger Whitelaw: Sure, and beautiful. So it’s mostly handbags, right Furla, that’s a handbag wallets that kind of in a couple of accessories that you can get as well.
Carey Zesiger: Yeah, we do. I mean, we’ve got some sunglasses and scarves and watches, but the core is really handbags and wallets.
Granger Whitelaw: Yes, I’ve been in the Stores, they are beautiful. And, so Furla was the first and then,
Carey Zesiger: And then we launched Geox two years later, which is also an Italian brand. Although some people don’t know that, but it’s a, it’s, you know, headquartered and founded in Italy. And, it’s a, you know, very popular obviously in Italy and all across Europe. And it’s been growing quite nicely in Asia as well.
Granger Whitelaw: Big US brand too. Right. I mean, Geox is just a phenomenal shoe tennis shoe and running shoe. Yeah.
Carey Zesiger: Yeah. The, the shoe that breathes was the, was the, the tagline when we started. and it’s, you know, got a patented technology for breathable shoe soles and a bunch of other, a bunch of other patents and stuff around that breathable
Granger Whitelaw: Breathable Shoe soles. That’s pretty cool.
Carey Zesiger: Yeah. Well, the story goes the, the, the founder now, his family is actually in wine-making, but, he was in a conference in Las Vegas and went jogging, jogging, sorry. And he was, you know, sweating like crazy and, you know, couldn’t stand it and decided to punch some holes in the bottoms of his shoes. and then from that he developed this technology and then, you know, the whole business and, you know,
Granger Whitelaw: It’s a big company now, right. Revenue’s gotta be in the hundreds of millions of dollars. If not more.
Carey Zesiger: Oh yeah. It’s, it’s, it’s, it’s huge. She’s, it’s listed in Italy. He’s I think the top five or 10 richest guy in Italy he’s done well.
Granger Whitelaw: Wonderful.
Carey Zesiger: Yeah.
Granger Whitelaw: So Ferla, Geox and then you rolled out Shooz as a retail, more lower price. Play?
Carey Zesiger: Yeah. So Shooz is our own, Shooz.vn, if you want to look us up, but, it’s, it’s a, multibrand more affordable, you know, shoe portfolio, that we put together and that launched, I believe 2014. So, we’re talking six, seven years now. and that’s a, you know, is, our own, that’s our baby, as it were. So we’ve been growing that and building that up over, over the recent years and, you know, we’ve added brands to that. We’ve taken some away. We do mostly our own exclusive brands, but, we also have some, you know, major brands that are, that are non-exclusive, like Adidas that joined us almost two years ago now. And, actually coming this month, we’re launching with Nike. So,
Granger Whitelaw: wow. Really
Carey Zesiger: That’s another big one.
Granger Whitelaw: Wow, eoNike Adidas. And then you have private label, you sell Geox in there and other brands that are brilliant, a full, a full spread of a product for the consumer.
Carey Zesiger: Yeah, definitely. And, and we’ve got about 20 retail points of sale and we’ve got the online and, it’s been growing, you know, quite nicely. And, you know, we get, you know, we’ve gotten more brands than we know what to do with, at this point. We have a lot of, you know, new brands come knocking and, it’s, it’s become a nice platform for launching brands and distributing across Vietnam.
Granger Whitelaw: Ya, that’s great, you could test out different brands too. So that’s a big advantage of having your own kind of shoe store or your own, your own brand effectively, right. To try different platforms. So now you have 20 stores you said, is that just for Shooz because I thought you had about 40 stores in Vietnam, total
Carey Zesiger: That’s right. So 20 plus for Shooz and then the balance are for Geox and Furla.
Granger Whitelaw: So the last five years or 10 years or so have been constant growth for you, right. You’ve seen tremendous consistent growth. you can tell me about your percentage of growth that you’ve seen year on year, but pretty steady growth. A lot of opportunity middle-class is growing as we all know, which is, a big, help for that growth. And, and, and now we’ve hit a little, a little bump in the road. So, can you kind of tell me about the growth of their business and retail and, and then we can kind of transition into today.
Carey Zesiger: Yeah. so, well I guess, you know, the, the quote that comes to mind is, you know, it was the best of times. It was the worst of times. that’s sort of where we are right now. It’s a, you know, the, basically that 2000’s, you know, we’re, we’re a very fast growth period. and that was a time when, you know, basically we started with one or two department stores and then, you know, shopping malls came in and the retail really blossomed and took off. And, you know, so that was the real start.
Granger Whitelaw: So what Time period was like the real launch of retail in Vietnam. Because it certainly happened fast, but it didn’t happen, at this over long period of time, right. There was like a trigger and then retail kind of exploded here.
Carey Zesiger: Yeah. So, I mean, when we launched Furla in 2005, the place to be, you know, hands down was Diamond Plaza. And so that’s where we went. and then shortly after that you had Parkson opening their first location. And then from that, they ramped up to five, six locations, before they started contracting again. And that was due in, in large part, I would say, due to competition from, you know, the shopping malls. So, you know, Vincom began opening malls, I would say maybe 2007, something around there if my memory serves, and, you know, has obviously grown enormously since then. And, you know, for our retail, our price position is, is definitely on the premium side, and so our focus is predominantly Hanoi, Ho Chi Minh city. you know, we have a shop in Danang, we’ve had a shop in Nha Trang, but you know, the two main cities are really still the core market. And, you know, the next tier is just starting to get to the level where it’s becoming interesting for our consumers.
Granger Whitelaw: Okay. And the next tier, meaning the, the, tertiary provinces around the major cities.
Carey Zesiger: Yeah. The second-tier cities, which, you know, Danang, Hai phong, you know, maybe Can tho that’s that there’s about four or five major cities that are kind of the next level down.
Granger Whitelaw: So you’re in Saigon center, Vincom, Diamond Plaza. Are you in the Aeon malls Also
Carey Zesiger: We do. We do go to Aeon mall, and you know, that’s a little more of a suburban play, but, they have quite good traffic. and we found, you know, some of those locations work well for us.
Granger Whitelaw: Yep. That’s fantastic. So constant growth, you saw retail really start to grow in Vietnam and Southeast Asia. but you’re, you’re really focused on Vietnam and selling to the Vietnamese. So, as you saw COVID hit in February, right, early February COVID came, Coronavirus. It started affecting businesses significantly. How much did that impact you guys?
Carey Zesiger: Yeah. So you were asking about growth. So, you know, I would, I would say from 2005, you know, for about 10 years there, we were looking at, you know, very strong, double digit growth, you know, 20%, 30% plus percent, kind of numbers, that were, you know, very, you know, very nice to have obviously, the market’s more mature now. So, you know, the last five years I would say were kind of, you know, the retail as a whole in Vietnam is, is more to kind of like the 7% to 10% range, I would say. Okay. and then, you know, this year obviously has been a major, you know, setback for all of retail. And so what we saw was, you know, starting, there’s also a lot of seasonality in retail in Vietnam. So basically December, January is, peak season for us.
Carey Zesiger: That’s like a big sales period. And then February after Tet, it historically it drops off every year, but this year, what we saw was a deeper drop and then it didn’t recover basically. So, you know, we had a, quite a weak February and then we had a, you know, terrible March and April, you know, we’re talking, you know, we were talking like numbers, like minus 70% minus 80% from last year. So I mean like really
Granger Whitelaw: year on year,
Carey Zesiger: Ya, year on year. So really, you know, really deep, downturn. And then obviously there was the, you know, kind of shut down, stay at home period. There where, you know, people couldn’t go shopping and everybody was, you know, basically locked down at their house and the malls closed for not quite a month.
Granger Whitelaw: Yeah, yeah. Just under a month. And then you kind of had a, they opened back up, people would start going out – June. I think, you know, a lot of retailers saw, several positive numbers finally going into July, before the, this last, wave, if you will, of the outbreak in Da nang that’s slowed things down. So you had some recovery.
Carey Zesiger: Absolutely. So what we saw then is, you know, Vietnam mounted quite a nice recovery, and so we had, you know, quite a decent may, June, July, and that was, you know, we were seeing, months where we were almost catching up with last year. We were only down maybe by single digits. and so, you know, that was good to see relatively speaking compared to, you know, what we’d seen before. And then unfortunately we had the second wave that came, you know, right at the end of July, which started in Da Nang and has impacted Hanoi and everywhere. And again, we’re, we’re seeing what looks like, you know, a building back. So, you know, we had a, kind of a very sharp pullback and then week by week, it seems to be building back. And actually, we just had a national day holiday here and sales were up, almost 20%,. So that’s, that’s good to see now.
Granger Whitelaw: Yeah, that’s good news. I mean, you know, it’s, it’s been a major impact on many people. You guys maybe are on the luckier side, having be able to sustain through it. I know that, you know, really other than the sales, you know, you look at real estate, right Your, your rent, your, your, all the different stores that you have, or a retailer has not just you, but anybody, and how that affects your, cashflow and, and then your employees having to kind of lay people off or put them on partial salary and, and continue to pay them. I, I think you were trying to do that. You had told me when we had a visit one time, but, you know, doing the right thing right. And supporting people through the hard time.
Carey Zesiger: Yeah. Yeah. So, yeah, I mean, obviously that’s been challenging and difficult for, for us and everybody in retail. you know, the, during that shutdown period, you know, fortunately we were on rent waivers. so, you know, the mall stepped up and, and, you know, waive the rent during that closure period. But you know, the there’s, you know, there’s the slowdown period before that and the slowdown period after that, where, you know, everything is a negotiation and that’s a, that’s a lot more challenging. As you said, you know, we’ve tried, you know, not to lay people off. We tried to keep everybody on salary, even if we have to reduce, to say four days a week or cut back shifts or do things like that. And you know, it’s, it’s a, it’s definitely harder times for, for all retailers. you know, I mean, there, there are some silver linings, there are some, you know, there are some, some good, good spots there. Our own eCommerce is up something like 500% this year. So that’s a, that’s nice to see.
Granger Whitelaw: That’s gosumo.vn.
Carey Zesiger: Yeah. Primarily GoSumo and also the shoes.vn.
Granger Whitelaw: Okay. Well, you know, I think, you know, as you talk about e-commerce right, the retail market certainly has changed. Southeast Asia is still said to remain one of the fastest growing economies in Southeast Asia. Vietnam should do very well compared to others. If you look at India and Indonesia, even APAC, China, South Korea, et cetera, Vietnam is showing a lot of strength, which is great. You know, before you said, we’re lucky we’re here. We’re not only lucky we’re here because of the government’s quick reaction to COVID and really a phenomenal job at getting the word out. And the Vietnamese people as a whole coming together and wearing masks, washing hands, and doing the right thing to stop the spread of COVID, which I am just completely amazed by how the Country works together. But now getting back to work, getting the stores open, trying to get tourism going, and, and I think we’re going to see growth.
Granger Whitelaw: Hopefully it will continue, but consumer has changed. The behaviors changed a bit, right. So, you mentioned e-commerce, which has been a big growth area. I’m really interested to see your thoughts on retail. You have these retail outlets, these stores, you know, is retail dead. Is it really going to continue to, to contract, or do you think people want to go out and shop, you know, Is e-commerce going to take over, you’re a guy who’s incredibly well positioned to answer and look at both of those sides since you’re successful in both areas. And I’d love to really hear your thoughts on that.
Carey Zesiger: Yeah, well, I think, you know, the, the death of retail has been proclaimed many times and, and probably a bit prematurely. Also, you know, what, what may be the case for retail and the US or a developed market is not necessarily the same situation with a growing emerging market like Vietnam. So, I think that’s an important distinction. I would not say retail is dead by any means here. I think there’s still, you know, a, quite a ways to go in terms of growth.
Granger Whitelaw: But why, why is that?
Carey Zesiger: Well clearly is that, well, I mean, you already mentioned, I mean, Vietnam has been growing, you know, GDP at, you know, 7% a year or so obviously this year, we’re going to get a, a bit of a cut to that. I think they’re saying more 4 or 5%, something like that.
Granger Whitelaw: He said a 4.8%, but I think we’re probably at about 2.8% in reality.
Carey Zesiger: Yeah. So still a positive number and the retail, you know, will grow probably something around what the GDP grows maybe plus or minus. And so I think, you know, that certainly, you know, a lot of people have also said that COVID is an accelerant or an accelerator. and I think that’s very true. It’s, it’s speeding up trends and changes that were already taking place. Sure. Yeah. So, so, you know, clearly e-commerce is an example of that, you know, work at home as an example of that, you know, technology and, and all of that is getting sped up, and probably that means also, you know, shifts to retail that are moving faster than they might’ve otherwise. So, you know, I would think, that includes like Gen Z and millennials, you know, stepping up and, and becoming more and more important in the retail picture and their taste and their preferences, I think, are going to become more and more important. and that’s, you know, part of our thinking also behind, you know, our shoes portfolio is to, to target that younger consumer, and, you know, really offer products that are suited to their tastes.
Granger Whitelaw: Yeah. It products to categories like mouthwash bodywash facial tissues, hand sanitizer, right So the products have changed that people are focused on, but, but going back to retail, like people say it’s dead or it’s declined, or what have you. And of course it’s declined a bit because the, the way people approach shopping now is a little different, right? There’s more of a health issue. So you have to really be conscious about how many people are in the store and making sure you have sanitizers for people to clean their hands or have masks available and things like that. But to me, especially Vietnamese who love to go out together and they’re very social still, right Maybe much more than some other countries, US et cetera, but they love to be social. They love to go together and it’s an event, right. You’d like to go out and shop.
Granger Whitelaw: And when I go by the stores today, and I see the Highlands coffees and the Starbucks full, I, you know, people are going to the grocery stores. People are walking around shopping. I don’t see retail dying at all here. I think that I think it’s strong and will remain strong because people enjoy the experience. And there are things you can do customization, right? You can go walk in and get your clothes size to you and have it delivered by grab, or what have you. And there’s some cool things you can do that way to make it a different type of shopping experience. But yeah, I think e-commerce certainly has been accelerated here. There’s a convenience side to it and for those kinds of products people will use, but I think people enjoy shopping Carey.
Carey Zesiger: Oh, absolutely. Totally. And, and, you know, I mean, something, you know, retail is a very big space, obviously, right? But in fashion retail where we are, you know, people like to touch and feel the product, they like to try it on. They like to, you know, look in the mirror and see how it fits for them. You know, things like that. So the shopping experience, I think is definitely important and that’s not going away. which, you know, is not to say that people won’t also shop online. I think they’re complimentary. So, I mean, we see it very much as, you know, one supporting the other. And the, the online e-commerce, you know, is a driver to promote our brands and promote our stores and get people, you know, to, to go to the shop and try things on. And it’s also, you know, vice versa, you know, people may go try things on and then come home and order it online. So, you know, there’s been a lot of talk about Omni-channel and things like that. I think they really feed each other and there’s a synergy there.
Granger Whitelaw: Yeah. Well, I think Omni-channel for sure, is there, and one is marketing to a large degree, and the other is, is just convenient shopping, right. Speaking of which GoSumo, which is gosumo.vn your, is it a discount or I’m not sure?
Carey Zesiger: Yeah. Yeah. So basically that is our clearance channel. So that’s an outlet, a concept. And what we did is we’ve opened, two physical stores. So we have one in Hanoi, one in Ho Chi Minh, and then we have the website.
Granger Whitelaw: Where they?
Carey Zesiger: the Ho Chi Minh outlet is, right across from the airport at a, what’s now called menace mall, formerly known as CT Plaza. Okay. and in Hanoi, it’s at the garden. Okay. So, so, you know,
Granger Whitelaw: And so that’s an outlet like the Sax fifth Avenue outlet in the United States are the premium outlet malls that are all over the U S it’s an outlet concept. Yeah,
Carey Zesiger: Exactly, exactly. Okay. So, so that’s, you know, past season product, you know, maybe limited size, limited selection, but, you know, at a deep discount, and that’s a way for us to access and attract new customers who may not, might not be willing to pay full price, but who are still interested in the brands and the products and, you know, hopefully cultivate them so that in the future, you know, they’ll step up then and pay full price.
Granger Whitelaw: Or those who just want a good deal. Right. I mean, you’ve shopped at outlet malls, right?
Carey Zesiger: Yep. Absolutely. I’m a, I’m a fan of outlet malls for sure. And you know, our timing on that was very fortunate, obviously. you know, clearly when we started this about a year plus ago, we had no idea COVID was coming. and we also had no idea that, you know, one of our major e-commerce channels was going to disappear. So, you know, a year ago we were doing a lot of business with Le Flair and that was one of our main outlet clearance.
Granger Whitelaw: Yeah. Big blow up there. Huh.
Carey Zesiger: And they just blew up and disappeared. and we’re
Granger Whitelaw: A lot of people. Yeah. There’s a lot of people.
Carey Zesiger: Yeah. But we’re very fortunate that, you know, with goSumo, we’ve been able to not just replace those sales, but to, you know, grow them even further.
Granger Whitelaw: So like Le Flair, I mean, poorly run, obviously we don’t need to talk about that, but goSumo it’s for your products, but will you let other, vendors sell on that platform through your system?
Carey Zesiger: That’s exactly what we’re starting to do. So, you know, it started, you know, purely for our own brands and our own inventory, but we have started to welcome other brands and other retailers to, to join our platform. And, you know, so we’re starting to, you know, step by step to, to, to grow that. And, you know, they say, you know, you know, crisis kind of meets opportunity, right Sure. You know, the fact that Le Flair has gone away has left a lot of retailers with a gap. And fortunately, we filled that gap for ourselves and now we’re in a position to, you know, help to fill that for some other retailers as well.
Granger Whitelaw: Oh that’s fantastic. And a great organization you have with a lot of history and understanding the supply chain all the way through logistics and retail. You guys couldn’t be a better partner for those people. So that’s, that’s fantastic. I wish you all the best of luck with that.
Carey Zesiger: Thank you.
Granger Whitelaw: Yeah. Well, so looking forward, carry, in Southeast Asia and in Vietnam over the next five to 10 years, any, any thoughts on what retailers can do, what people can look at, for growth and how they can be successful.
Carey Zesiger: Well, I mean, I can speak best to Vietnam really. you know, I think Vietnam will continue to grow. I think, you know, clearly we’re going to take a little bit of a hit this year, but, you know, I don’t see any reason why Vietnam won’t be back to 7% growth, you know, if not next year, then the year after. And you know, I think, for retail as well, that that growth will, will, will come back again. There’s still a lot of second tier cities and provinces and locations to be developed. you’ve got in Ho Chi Minh city area. You’ve got, you know, the new subway line that’s going to be coming online sometime in the next few years. You’ve got, you know, kind of, growth in the suburbs and district two and district nine. so you know, those,
Carey Zesiger: There’s, there’s a lot of people and a lot of potential I think for, for, for that to keep growing. and you know, the, in terms of, our focus, premium retail fashion, you know, we’re looking at the top of the pyramid basically. But the good news is that the pyramid grows every year and the number of people in that segment at the top of the pyramid grows every year. And so that’s really where the growth is for us, I think, and for many other retailers
Granger Whitelaw: and you have the discount, outlet side also covered. So you really have all three sides of the pyramid coverage.
Carey Zesiger: We’re, we’re trying our best. Yeah,
Granger Whitelaw: Yes great. Well, that is exciting. Thank you so much for your time today. Really it’s I know I had to twist your arm a bit to get you to come on, but I it’s been really enlightening and it’s just great to hear from you and hear from somebody who has really been here so long and ingrained in retail. And I think there’s a positive outlook and it’s great to hear you, reaffirmed that for everybody. So thank you, Carey.
Carey Zesiger: Thank you. It’s been a pleasure.
Granger Whitelaw: Thanks so much for listening today, everybody, we will be having a part three follow up with Betty Tran, Betty Tran is a fashion designer. We’ll be speaking to Betty next week here at the Lotus talks. In the meantime, please stay safe and best to all of you: Its Granger Whitelaw