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Modest Fashion’s Big Asia Opportunity

For a bigger slice of the $277 billion modest fashion market, brands should look beyond the Middle East to dynamic high-growth markets like Indonesia and Malaysia in Southeast Asia.
A model on the runway wearing Indonesian modest fashion designer, Anniesa Hasibuan during Jakarta Fashion Week in October, 2016. Getty Images.
A model on the runway wearing Indonesian modest fashion designer, Anniesa Hasibuan during Jakarta Fashion Week in October, 2016. Getty Images.

More than a decade after setting up a modest fashion business, Vivy Sofinas Yusof has yet to land on a definition of the sector that satisfies everyone it serves.

“Modesty is very personal,” the Kuala Lumpur-based entrepreneur said. “For me, it’s okay to wear a hijab, loose top and skinny jeans, [but] some of my friends don’t wear the hijab and wear sleeveless tops.” Though it is clearly up for interpretation, one loose internal guideline which seems to chime with many of her customers at FashionValet, the fashion and beauty marketplace she co-founded in 2010, is that modest fashion is the kind of clothing one would feel comfortable meeting their mother-in-law in.

The term can be even more ambiguous in a country where 61 percent of the 32 million people are Muslim and modest fashion is the norm for many women in other communities. According to Yusof, “even non-Muslims dress modestly [in Malaysia and have done] for many decades.”

The Malaysian market is just one snapshot of a global modest fashion market estimated to be worth $277 billion, according to growth strategy firm DinarStandard’s Global Islamic Economy Report 2020/21. But the country has outsized influence in terms of trends and homegrown brands catering to the modest fashion market in the wider Southeast Asian region thanks to Islamic fashion showcases at events like Kuala Lumpur Fashion Week, which took place earlier this month. The big prize for global brands looking to tap the modest fashion opportunity, however, is Malaysia’s neighbour.

Indonesia is the fourth most populous country in the world and, since almost 87 percent of its 273 million people are Muslim and a significant proportion of Indonesian women dress modestly, it has become a hub for the sector. “If I were a brand in Indonesia, I wouldn’t want to go anywhere else,” said Yusof.

In two weeks, Jakarta Fashion Week will host a fully digital season featuring modest fashion brands like Nadjani, RiaMiranda, NurZahra and Hattaco alongside non-specialist brands. The main fashion week will be followed by a new showcase called Jakarta Muslim Fashion Week (JMFW), featuring 36 brands on Nov. 18 organised by the Indonesian Ministry of Trade and Indonesia’s Chamber of Commerce and Industry.

The debut edition of JMFW, called Embracing, “will be the launch pad to introduce Jakarta Muslim Fashion Week which will be part of the 37th Indonesian Trade Expo. In the future, JMFW will be held over one week and become a major influencer in its field,” said Svida Alisjahbana, chairperson of Jakarta Fashion Week and expert panel member of the National Muslim Fashion Promotion Committee.

Alisjahbana, a fashion industry veteran who also serves as chief executive of event partner GC Media (and former chief executive of Femina Group), believes that the market is heating up “as modest wear takes a new direction, offering [customers] value in universality and versatility.”

“It’s the diversity of the market segment that allows [modesty wear designers’] creativity to flow, from quirky fashion to luxury ready-to-wear and haute couture and bridal gowns, for example. There are also many different beliefs [within] Islam which [means there are a variety of] different rules or norms for the style and cut.”

Indonesian brand Jenahara's collection at Jakarta Fashion Week 2021. Jakarta Fashion Week/Dachri Megantara.

According to DinarStandard, Indonesia is the world’s fifth-largest modest fashion market and worth $16 billion, after Iran, Turkey, Saudi Arabia and Pakistan. Countries with large Muslim minorities, such as India and many African markets, also offer high-growth potential.

Global brands have already made efforts to explore the market, with players like Uniqlo and Banana Republic launching hijabs through collaborations and capsule collections, and activewear brands Speedo, Nike and Adidas releasing modest fashion collections.

But the category’s subjectivity and ubiquity are just two of the challenges facing fashion brands looking to expand into these markets. Global players, as well as brands and retailers from neighbouring Southeast Asian countries, are coming up against growing consumer loyalty for local players as well as hyper-localised business environments and cultural needs. There are ways that foreign firms can set up rewarding businesses for the modest fashion sector in the region, but brands shouldn’t expect quick wins.

Spotlight on the Southeast

Southeast Asia is fast becoming a focus for fashion and beauty brands looking to boost sales growth, thanks to its young population, high mobile and social media penetration rates, and a growing middle class that is beginning to upgrade to luxury spending, said Ghizlan Guenez, the founder and chief executive of luxury modest fashion e-tailer The Modist, which shuttered during the pandemic.

Moreover, both Indonesia and Malaysia aim to become global leaders in the sector. Indonesia’s Creative Economy Agency, which merged with the country’s Department of Tourism to better represent the country’s creative industry, launched an incubator programme with banks to financially support modest fashion businesses. Meanwhile, a government initiative aims to make Malaysian state Selangor a modest-fashion hub by 2026.

For its part, JMFW aims to become the world’s largest Muslim fashion event by promoting on a global scale the diversity and value of Indonesia’s Muslim fashion exports, Ali Charisma, national chairman of the Indonesia Fashion Chamber, said in a press release.

The opportunity for high-end brands in the region is more untapped than that of other price points as the modest fashion space is largely dominated by more affordable offerings and retailers. “None of the luxury [retailers] online or offline are addressing this segment in a meaningful way,” said Guenez, who is currently working on a new luxury modest fashion business, which will launch in Q1 2022. Luxury brands are increasingly mindful of modest fashion’s global significance but most continue to focus their efforts on the Middle East.

In a flurry of activity across Gulf countries like the United Arab Emirates and Qatar in recent weeks, brands including Chanel, Dior, Armani and Virgil Abloh invested in big shows in Dubai or events elsewhere. Valentino presented a collection of fifteen jewel-toned couture abayas, an outer garment worn by Muslim women in some parts of the Middle East, in Doha, Qatar, just last week.

Fierce local competition

Yusof straddles Malaysia’s premium and mass segments: at around 350 ringgit (around $85) for a scarf, her in-house brand Duck sits below European luxury players like Hermès, whereas her younger basics-focused brand Lilit peddles scarves for a more affordable 30 ringgit (around $7). But the market is flooded with mass-level products selling for 10 ringgit (around $2). During the pandemic, many of her fellow premium brands dropped their prices to cater to a thriftier shopper, resulting in oversaturation. “[The mass market] is harder to penetrate; there’s always someone cheaper,” she said.

There’s no clear winner at this point.

Comparing prices has never been easier for the consumer, thanks to the meteoric rise of online marketplaces like Tokopedia, Bukalapak, Lazada, Shopee, Zalora and Blibli over the pandemic. With investments in logistics, online shopping festivals and K-pop ambassador tie-ins, these players are jostling for a bigger share of the region’s lucrative e-commerce market. Modest fashion shoppers account for 10 percent of Zalora’s customer base; the e-tailer is in the process of strengthening modest fashion offerings through its in-house brands as well as designer collaborations, and has launched a line to cater to sustainability-minded shoppers.

“There’s no clear winner at this point,” said Kendrick Wong, chief executive and co-founder of retail analytics firm Omnilytics.

Competition is fierce across these general-merchandise and general-fashion giants — both in terms of price and assortment — to attract customers to items that can be incorporated into a modest fashion wardrobe. Then there are the modest fashion-focused e-tailers (Poplook, FashionValet, HijUp, Saqina, Evermos), direct-to-consumer brands (Kami Idea, RiaMiranda) and influencer-led players (like Malaysian star Neelofa’s brand Naelofar). As was the case elsewhere, modest fashion businesses that gained ground during the pandemic did so by digitising early on, said Jakarta Fashion Week’s chief content officer Subkhan J. Hakim.

It’s a crowded space, and for many foreign players new to the region, partnering with marketplaces — particularly those with a premium portal, like Shopee — will be the most viable way to reach shoppers. Though most major brands also sell through their own channels, the valuable data on local consumer preferences are a major reason the likes of Shopee and Tokopedia have drawn so many brand clients, said Wong.

High Barriers to Entry

“I’ve had a few brands that are very interested in tapping into [Southeast Asia] but are very intimidated,” said Syama Meagher, founder and chief executive of Scaling Retail, a Los Angeles-based consultancy and marketing agency for fashion start-ups. “To say the hem [of a dress] is five inches longer and now I have a modest fashion brand loses the ethos.”

In addition to the need to operate in several languages, discern diverse wardrobe preferences and understand nuanced differences in the market environment of each multicultural country in the region, brands looking to expand in Southeast Asia face distinct rules when it comes to customs, shipping and taxes, not to mention legal nuances, fluctuating currencies and political issues to contend with. “I’ve always seen huge potential there,” said Emirati modest fashion designer Rabia Zargarpur. “But there are so many challenges. There’s a unique business culture that favours local businesses.”

A commuter in Jakarta, Indonesia. Rendy Novantino on Unsplash.

To overcome these obstacles, Omnilytics’ Wong recommends brands and retailers consult local e-commerce enablers that provide end-to-end services; options include Thailand’s A-Commerce and Malaysia’s Momentum Commerce, but brands will need to find enablers for each market they’re looking to enter. Some marketplaces, like Zalora, have also spawned enabler divisions to ease expansion efforts for brand partners.

But the hurdles aren’t all operational. Style and product preferences differ vastly by market; Malaysian festivewear styles, like the baju kurung and baju kebaya, aren’t typically worn by Indonesians (who have distinctive garments of their own for such occasions, albeit sometimes with similar sounding names), said Malaysian designer and president of the Malaysian Official Designers’ Association, Melinda Looi, but such styles often appeal to Bruneians and Singaporeans.

According to Shasha Ahmad, head of modestwear at Zalora, Malaysian shoppers generally gravitate towards traditional silhouettes. While both Malaysians and Indonesians will sport items like the kebaya, the style varies by country.

For these and other reasons, smaller e-tailers have had less luck expanding into neighbouring markets than the big players with a wealth of consumer data. Indonesia’s Hijabenka and Yusof’s FashionValet have both attempted expanding into Malaysia and Indonesia respectively, but both failed to gain much traction. Yusof is now making global moves and just hired an international team, but is in talks to expand to the UK and US rather than Indonesia, despite how close and potentially lucrative the market is. “Even me, being in Southeast Asia, I’m still trying to figure this out,” she said.

Another factor is that shoppers in markets like Indonesia and Malaysia can be fiercely loyal to their favourite modest fashion brands like Malaysia’s TudungPeople, noted Nur Atiqah Kamarudin, senior business intelligence analyst at Omnilytics. “Independent brands understand the needs of the market and provide more variations — they have styles that are more covered up, looser, longer or shorter.”

The Localisation Game

There’s more to localisation than linking arms with third-party agencies and service providers. Turkey-based modest fashion e-tailer Modanisa, which started betting heavily in Indonesia and Malaysia two and a half years ago, saw growth in the region hit 200 percent year-on-year to October, and 400 percent in Malaysia specifically. But achieving these figures required significant investment for the giant, which dispatches to over 140 countries.

A Modanisa campaign targetting Southeast Asian. Modanisa.

“When you go into a new country like Malaysia, you can’t just turn on the website and add a language,” said Samim Surel, Modanisa’s VP of marketing and brand. To localise in Malaysia, Modanisa hired Malaysian designers, graphic designers, social media editors and marketers, and outsourced to local PRs. The retailer also hires Malaysian models and produces photoshoots in the country to understand nuances like styling, colour palettes and posing.

When coming up against local players with loyal followings, finding a niche or point of differentiation is crucial. For Modanisa, that means items made with European and Turkish fabrics, as well as a wider selection across a variety of price points. For Yusof’s premium brand Duck, it is collaborations with the likes of Monopoly, Disney’s Frozen and Barbie, while her more affordable line Lilit focuses on staples. She also introduced slip-on hijabs with slits for earphones to target a work-from-home audience. “If we tried to do everything, it wouldn’t work,” she said. “You have to choose a niche and focus on that.”

Then there’s the matter of getting the pricing right, which can often stump brands from the West: Southeast Asia’s production prowess means customers are accustomed to lower prices and typically have less buying power than their peers in some markets, but lowering price points can threaten brand positioning in the long-term. Shipping from Turkey means Modanisa’s Surel spends most of his time fixing variable import costs and localising payment methods so customers can avoid extra fees.

When you go into a new country like Malaysia, you can’t just turn on the website and add a language.

“We tell brands, look at your own products first, see where comparables are being carried, where there’s under-supply and over-demand,” Wong advises. Another option, says Meagher, is to develop a diffusion line designed and priced specifically for the region.

As a foreign player, running a modest fashion business in the region requires in-depth research on each target market and local nuances across different provinces, states and cities within each Southeast Asian country. Above all, players need to take a long-term view. “It’s not easy to enter a country, being far away in Istanbul,” said Surel. “But it’s such a huge market [region]. If you put a little bit in, you get it back.”

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