Myanmar is currently recording robust year-on-year economic growth and increasingly, this is changing national consumer shopping habits. New reports indicate that gradually, major luxury goods firms are turning their attention to Myanmar, as its population slowly becomes more affluent.
Myanmar’s economy stagnated during the latter half of the 20th Century. However, the nation’s economy has started recording robust growth volumes during the past five years, with the rate of annual economic expansion climbing from 5.6% in 2011 to 7% in 2015. A report from the Asian Development Bank forecasts that Myanmar will be the fastest growing Asia-Pacific economy in 2016.
Several factors have contributed to the rapid expansion of Myanmar’s economy. Crucially, it has attracted major foreign investment volumes over the last five years. Second, despite traditional reliance on cash, its population is gradually embracing credit cards, facilitating more big ticket purchases. Finally, profits from Myanmar’s oil, gas, mineral and timber industries, are powering the nation’s urban property markets and high end jewellery trade, which is appealing to big global brands.
Emerging luxury market
It is important to note that Myanmar is far from a luxury goods haven. Most of its population still patronises small local shops. Consequently, big international luxury brands have never had a strong presence in this South-East Asian country but due to economic progress, this is slowly changing.
In 2015, Myanmar saw robust property development activity, with new high rises and shopping malls appearing on Yangon’s skyline, broadening its retail landscape. Most of Yangon’s new retail spaces are designed for low-to-mid range consumers, but the city is also starting to draw brands which sell luxury items, such as watches. Swiss luxury watch firm Franck Muller, for instance, recently opened a new branch in Yangon’s Sedona Hotel, becoming the country’s first monobrand fine watch store.
Commenting, Franck Muller Director Nicholas Rudaz was quoted by the Business Standard saying that “It’s nice to be there at the very beginning… And, of course, this is a long-term investment.” With this statement, Rudaz echoed the view held by many experts on the future of luxury goods in Myanmar.
Yangon’s total retail space, even with the addition of new malls, is still tiny. The city is dwarfed by larger retail regional hubs such as Singapore and Bangkok. Indeed, when they are not purchasing luxury goods online, many Myanmar consumers flock to these larger retail markets to purchase high-end items. But one day, Myanmar’s luxury goods sector could come to compete with its regional rivals.
Antony Picon, the Myanmar Managing Director for commercial property firm Colliers, suggested that it could take another decade for major luxury goods companies to enter Myanmar. Picon admitted that some high end cosmetics firms may establish branches in Yangon’s more luxurious hotels, as they have done in other emerging nations. In the long term, financial services firm Myanmar Capital Partners’ Managing Partner Gregory Miller argued, the country’s luxury goods sector could come to resemble Thailand’s, due its abundance of resources, resulting in explosive market growth.
Attention on Myanmar
The slow growth of Myanmar’s luxury goods market is highly indicative. Consumers only purchase high end items, such as luxurious watches, when they possess large volumes of expendable income, suggesting that certain sections of Myanmar’s society are becoming more affluent. Myanmar’s luxury goods sector is still microscopic, especially compared to regional rivals, but it is easy to see why the country is regarded by high end companies as a long term investment market.
If Myanmar sustains economic growth, consumer purchasing power could rise significantly long-term, creating a big new market for luxury goods. Furthermore, Myanmar’s government is constantly striving to increase foreign direct investment, which it hopes to raise to US$140bn by 2030, developing an ever-more favourable regulatory environment for global firms. Within this context, it is clear that there is enormous potential for Myanmar’s luxury goods sector to expand significantly in future.