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Indonesia Retail Summit 2012 Thursday, May 10 th , 2012 Aryaduta Hotel jakarta Strategy in Fashion Retail The future of fashion retail in Indonesia

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Indonesia retail Summit 2012

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Page 1: Fashion Retail Strategy

Indonesia Retail Summit 2012

Thursday, May 10th, 2012

Aryaduta Hotel jakarta

Strategy in Fashion RetailThe future of fashion retail in Indonesia

Page 2: Fashion Retail Strategy

CHAPTER

1. Background

2. Indonesia Retail Insight 2012

3. Strategy & Approach

4. How to Grow Market

5. Summary

Page 3: Fashion Retail Strategy

Background

• It is regrettable that the Indonesian government signed the ASEAN-China Free Trade Area (ACFTA) agreement which becomes effective since January 10, 2010– Currently Indonesia is not ready to compete with Chinese products

– The fundamental reasons: High cost and in-efficiency (materials, energy cost, logistics, loan interest, low productivity of workers, regional minimum wage, lack of basic materials, spare part supply, etc)

– Impacts toward the industry: declining turnover, industrial production, earning fell, lay-offs, significant decline of Indonesian products total export while import of Chinese product increase significantly

• Indonesia’s economy and export rate is growing, but they are only contributed by coal, natural gas, palm oil, and other sectors which are exported in their raw forms without added value. On the other hand, the real sector is becoming more worrying, especially the textile industry

BACKGROUND

Page 4: Fashion Retail Strategy

Insights on Retail Forecast Scenario for 2012

Indonesia's nominal GDP is forecast to be US$814.93bn

in 2011, and BMI predicts average annual GDP growth of

6.1% through to 2015. With the population forecast to

increase from 242mn in 2011 to 252mn by 2015, GDP per

capita is predicted to grow 67% by the end of the period,

reaching US$5,608 from $3,367 in 2011.

BMI forecasts that in 2011 retail sales will

be worth 19.3% of nominal GDP. By the

end of the forecast period we expect that

there will be a 19.9% contribution to GDP.

According to BMI, a combination of higher

employment, economic growth, large and expanding

population, rising per capita incomes and the

continue development of organized retail

infrastructure support our positive view of retail sales

development.

Source BMI

Indonesia Retail Insight 2012

Page 5: Fashion Retail Strategy

Indonesia Retail Sales Indicators

2008-2015

According to BMI (2012), key factors behind the substantial forecast growth in Indonesia’s retail sales are strong underlying economic growth, an enormous and expanding population (the world's fourth largest, after China, India and the US), rising per capita incomes and the continued development of organized retail infrastructure.

The population's steady adoption of consumerism will also contribute to a trend that is likely to see the value of the retail segment grow from a forecast IDR1,382trn (US$132.82bn) in 2011 to IDR2,289trn (US$219.96bn) by 2015.

Source BMI | f = forecast BMI

Indonesia Retail Insight 2012

Page 6: Fashion Retail Strategy

International Fashion Brands

MANGGA 2

ITC

Page 7: Fashion Retail Strategy

Defining

Strategies and

Prioritize

Processes

Approach

Identifying & evaluating

the company’s SWOT that

are favorable and

unfavorable to achieve a

specific objective

Understanding the future

directions and actions

required by company in

order to fulfill company’s

objectives: setting goal,

options and strategies

formulation

Identifying business

processes critical to

defined strategies and

setting priorities

#2. Understand

Business Strategies

#2. Understand

Business Strategies

#1 . Perform SWOT

Analysis

#1 . Perform SWOT

Analysis

#3. Identify Key/Core

Business Process

#3. Identify Key/Core

Business Process

Strategy & Approach

Page 8: Fashion Retail Strategy

Business Strategy OutlookBranding

• Brand

• Market & Product

• Franchising

• Supplier Relationship Management

Producing• Product

• Packaging

Selling• Location

• Places

• Distribution

• Pricing

• Advertisement

Strategy & Approach

Page 9: Fashion Retail Strategy

Inspirational Indonesian Fashion Brands

Page 10: Fashion Retail Strategy

• Consider these two t-shirts

• The basic materials are almost

the same

• But each has its own different

target market

Strategy & Approach

Page 11: Fashion Retail Strategy

Generic

Strategic

Directions

Cost Led, a cost focused strategy: all areas are streamlines, efficiencies

Differentiated, about value added- finding way to be different from competition in away that customer will appreciate and pay for

Segmented, fulfilling a very specific market segment

Strategy & Approach

Page 12: Fashion Retail Strategy

How to Grow the Market

#2 SHOPPER KNOW HOW

• The product should fit the customers' characters,

based on the store's area

• Promotion should fit customers' characters, based on

the store's area

• Ease of payment (COD, etc)

• Engage customers through social media

• Optimize your CRM (Customer Relationship

Management) tools to personalized each customers#3 REDEFINED RETAIL CARTOGRAPHY

• Categorized product line up based on the target

market

• Use fitting room as a place for experimenting and

delightful experience for your customers, with a

unique design

• Combine technology with the fitting room to spark

call to action

#1 ONLINE EXPECTATIONS | OFFLINE EXPERIENCE

• Exist in both off-line (conventional store) and on-

line (on-line store)

• Make your store (on-line/off-line) unique in

accordance with the product's characters

• Always use the latest technology for your store

(on-line/off-line)

• Product catalogues (touch screen technology, pdf

format)

• Affiliated member card (on-line/off-line)

How to Grow the Market

Page 13: Fashion Retail Strategy

The New Indonesian Consumers

• Indonesia’s economic growth predicted to be an average 6,7 %

from 2012 - 2015

• There are around 130 million Indonesia middle class (World

Bank) or around 48% of the population

• Those 95% of middle and lower middle class is in pursuit to be,

or to be identified, as the upper middle class

Many companies are trying to get the 5% to attract the 95%

5%

30%

65%

Middle Market

Upper Middle

Middle

Lower Middle

Summary

Page 14: Fashion Retail Strategy

Summary

#1CREATIVE #2

DIFFERENTIATION

#3TECHNOLOGY #4

QUALITY ORIENTED

Page 15: Fashion Retail Strategy

THANK YOU

Medina L. Harjani (CEO – Pasaraya)