Islamic modest fashion gaining share in Malaysia’s $5 billion clothing market

Photo: KUALA LUMPUR, MALAYSIA - MARCH 30, 2012: A model displays creation by OMA during AMAED Kraf fashion show at National Craft Complex / Dboystudio / Shutterstock.com

Malaysia’s retail clothing market was estimated at $5 billion in 2015, with 75 percent of shoppers purchasing both online and offline. Islamic modest fashion represents a sizeable market for Malaysia’s Muslims, who represent 61 percent of the total population. With an increasing focus on Islamic modest clothing, what are the opportunities for new players to enter Malaysia’s Islamic modest fashion market?

STRONG CLOTHING RETAIL MARKET

With a GDP growth rate of 5.2 percent in 2015, Malaysia is one of the fastest growing economies in the world (the fastest is China, which grew at 7 percent in the same year). A major driver of this growth is Malaysia’s Economic Transformation Programme (ETP), which is the driver for Malaysia’s efforts to become a developed nation by 2020. As part of the ETP, 12 national key economic areas were identified, including the retail sector, with the aim of strengthening Malaysia’s position as one of the world’s leading shopping destinations.

Malaysia’s retail industry was estimated at $93 billion in 2014 and is projected to grow by 13 percent cumulative annual growth rate (CAGR) between 2014 and 2018, implying a $105 billion market in 2015, according to Euromonitor International. Clothing in 2015 was estimated at 5 percent of the total retail market, or $5 billion, according to Euromonitor.

RISE OF ONLINE SHOPPING

Brick and mortar is the main purchase channel for retail clothing; however, e-commerce is rapidly gaining market share. E-commerce spend was estimated at $1.3 billion by Ken Research in 2014 and is projected to grow by 19.5 percent to reach $3 billion by 2019.

A survey undertaken by Shoppu in 2015 found that 75 percent of Malaysia’s shoppers were purchasing products both online and offline, with 7 percent preferring online purchasing. Fashion and accessories was found to be the most popular category for purchase. The top clothing e-commerce site in Malaysia is Singapore-based Zalora, according to Research and Markets in 2015; however, there are other top general online retailers that have clothing categories, including Amazon, Lazada, and 11street.

Many of Malaysia’s leading modest fashion companies had their beginnings online in the context of the rapid growth of e-commerce.

The top 10 most visited online fashion stores in Malaysia, according to  e-commerce blog Ecommerce Milo last year, five were fashion sites that focus solely or mostly on Muslimah fashion— Bella Ammara, FashionValet, POPLOOK, Sugarscarf, and Zolace.

KEY PLAYERS

“The major players are labels by local celebrities like Naelofar Hijab by Neelofa, Padusi by Rozita Che Wan, and Ayu Raudah,” explains Norzihan Latt, Founder and Managing Director of Malaysia-based Sheikha Hub, an event organizer and online platform for modest fashion.

Naelofar Hijab is a pin-less hijab fashion brand launched by actress and TV host Noor Neelofa Mohd Noor in 2014. It reportedly made more than $12 million in sales from all over the world in 2015, and there are plans to open a physical store in New York.

Padusi Couture is a modest fashion boutique specializing in abayas and hijabs launched by three sisters: Rozita Che Wan, Ayu Raudah, and Rubytah. In an interview with local newspaper Sinar Harian, Rozita Che Wan, who is also an actress, said that she made approximately $50,000 per month from her fashion business.

Bella Ammara is a modest fashion brand created by husband and wife co-founders Carl and Belle Samsudin. The brand has its own online store and has also sold through FashionValet and Zalora Singapore. Bella Ammara sells through several brick and mortar stores around the Kuala Lumpur area as well.E-commerce

FashionValet was founded by husband and wife team Fadzarudin Shah Anuar and Vivy Sofinas Yusof. Launched in 2010, the site stocks more than 300 brands from across Southeast Asia and now offers free shipping to Brunei, Indonesia, and Singapore.

POPLOOK was founded in 2009 by sisters Joanne and Maryanne Low. It is an online fashion site offering about 1,500 designs, including an extensive collection of maxi skirts, loose tops, and headscarves. The site’s customers are mainly from Malaysia and Singapore.

International players are also entering Malaysia’s modest fashion industry. Retail giant Uniqlo launched a modest fashion collection for sale in Indonesia, Malaysia, Singapore, and Thailand, featuring Malaysian celebrities Yuna Zarai, Yaya, and Elizabeth Tan. Following the launch, Uniqlo opened seven more stores in Malaysia towards the end of 2015.

CHALLENGES AND CONSIDERATIONS

With Uniqlo’s entry into Malaysia’s modest fashion market and a rising number of online brands and retailers, it is important to differentiate. “Every celebrity wants to be a modest fashion designer [in Malaysia] these days,” said Norzihan Latt at the inauguration of Sheikha Hub Singapore in November 2015.

In addition to Neelofa, Rozita Che Wan, and Ayu Raudah, other Malaysian celebrities who have tried their hand at the modest fashion business include popular singers Mizz Nina and Siti Nurhaliza.  Given their fan base and media appeal in the local market, lesser-known local or foreign labels may find it hard to gain traction when entering the market.

By way of example, Naelofar Hijab distinguishes itself with its hassle-free hijab designs, while FashionValet has an edge in the fashion-forward market with its luxuriously-packaged hijabs. New players are advised to carefully study the competition and consumer behavior in the specific segment they wish to cater to before entering the Malaysia modest fashion market.

Further, building scale is critical to becoming a financially sustainable brand, and this can be done both through international expansion as well as by expanding into brick and mortar retail. Bella Ammara and Naelofer Hijab have both sought to offer a store presence, and both FashionValet and POPLOOK seek to expand their market to serve customers throughout Southeast Asia.

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