Bonia’s market strategy shift garners positive views from analysts
Bonia Corporation Bhd’s (Bonia) significant change in market strategies which include focusing on the youth market as well as shifting digital brand, garnered positive views from analysts as they opined that the company is adapting to changing retail trends.
In a report, the research team at Kenanga Investment Bank Bhd (Kenanga Research) highlighted: “Bonia is poised for growth through a partnership with the Malaysian subsidiary of a leading Hong Kong based fashion retailer, focusing on the youth streetwear market.
“Furthermore, its shift to digital branding and boutique retailing aligns with the evolving consumer trends.”
It pointed out that Bonia is poised for expansion through a proposed collaboration with the Malaysian subsidiary of a prominent Hong-Kong based fashion retailer.
“This venture involves an initial equity investment of RM10 million, granting Bonia exclusive distribution rights in Southeast Asia for a 10-year period (5+5 years).
“If the above venture materialises, Bonia is planning to focus on marketing apparel
appealing to the younger demographic, particularly streetwear items priced between RM100 and RM300.
“This approach is in line with Bonia’s objective to strengthen its position in the streetwear market, catering to its predominantly sub-40-yearold customer base,” Kenanga Research said.
As for its digital presence, the
research team pointed out that Bonia has been harnessing the power of social media and digital marketing since FY19 to reshape its brand identity.
“This rebranding initiative has successfully aligned with the evolving age demographics of its customers.
“Currently, over 70 per cent of Bonia’s customer base is aged between 20 and 40
years, a significant shift from the previously dominant demographic of those aged 35 and above.
“This shift reflects Bonia’s successful blend of classic elegance with contemporary design, offering a balance of physical and digital interactions.
“This change also mirrors a broader trend in consumer behaviour, with an increasing demand for brands that integrate digital experiences, lifestyle elements, and experiential engagement in their offerings,” it explained.
Bonia has also noted a change in consumer spending patterns in recent years, especially among the younger demographic which now prefer boutiquestyle shopping over traditional department stores.
“Aligning with this trend, Bonia is expanding its boutique operations. As of the end of FY23, Bonia increased its boutique count to 101, up from 99 a year ago, while reducing its consignment counters from 301 to 244.
“This strategic shift is significant, with the boutique segment contributing 49 per cent to Bonia’s total turnover in FY23, surpassing the 37 per cent from consignment.
“Additionally, Bonia is pivoting towards growing its brand distributorships, moving away from its previous focus on licensed business models,” the research team said.
On the current subdued spending environment, it noted that Bonia is not overly concerned over the current soft consumer spending, owing to its strategic position as a premium yet affordable contemporary brand that bridges the luxury and mass market segments.
“With a diverse product portfolio catering to various generations and spending capacities, Bonia is well-equipped to navigate these challenging times.
“The company recognises brand recognition as a crucial factor in this climate. Therefore, Bonia is committed to enhancing the appeal of its brands through continuous product innovation and targeted marketing campaigns, aimed at elevating brand awareness,” it said.
Moving forward, Kenanga Research said the current trend of weaker consumer sentiment is expected to continue through 1H24.
“Nevertheless, improvements are anticipated in 2H24 following more clarity from the authorities on the subsidy rationalisation plan.
“For the full financial year, we expect Bonia to record a lower PAT of RM35.0 million (44 per cent y-o-y) in FY24, with prospects of a recovery to RM47 million in FY25 as consumer sentiment stabilised,” it said.