Uniqlo to Open One of Region’s Biggest Outlets in Jakarta

Francezka Nangoy

[Updated on Thursday, February 14, 2013]

Japanese apparel company Fast Retailing will
open the first Uniqlo clothing store in Indonesia to tap into Jakarta’s
middle- to upper-income spenders.

Naoki Otoma, chief executive
of Uniqlo Asia Pacific, said that the store will open in Lotte Shopping
Avenue, a shopping center at Ciputra World in Kuningan in South Jakarta.
At 2,680 square meters, the Jakarta outlet will be one of the largest
Uniqlo stores in Southeast Asia.

“Indonesia for us is a very
important market as the fourth most populous country in the world,”
Otoma said in Jakarta on Wednesday. “The fashion market in Indonesia
grew rapidly in the past few years and we see great potential here.”

The
archipelago nation, Southeast Asia’s largest economy, is home to 240
million people. Indonesia’s per capita income almost doubled in the past
six years to $3,562 last year.

Otoma said that the store will
open in the middle of 2013 and that the company is aiming to open a
total of 10 Uniqlo stores in Jakarta within the next three years. He
refused to disclose the value of investment in the country.

He
said that success in Indonesia is crucial for the company as it aspires
to become the biggest apparel retailer in Asia and eventually the
biggest in the world. At the moment, Fast Retailing is the biggest
clothing retailer in Japan with 848 stores.

Fast Retailing is
the fourth-largest apparel retailer in the world in term of sales.
Spain’s Inditex Group, which owns brands Zara and Massimo Dutti, is the
biggest retailer, followed by H&M and the Gap.

Worldwide, Fast Retailing has a total of 1,206 stores with 90 percent of them located in Asia, Otoma said.

The
company entered the Southeast Asian market in 2009 with one store in
Singapore. Since then it has opened 23 stores in Singapore, Malaysia,
Thailand and the Philippines.

Yasuhiro Hayashi, chief operating
officer of Fast Retailing Indonesia, said that the Jakarta store will
sell clothing for men, women, children and babies. He said that the
pricing in Indonesia would be similar to stores in Singapore, ranging
from Rp 59,000 ($6) for a men’s T-shirt to Rp 699,000 for a men’s
jacket.

This pricing is expected to allow Uniqlo to compete with
the likes of Zara, Bershka and Pull&Bear clothing stores, owned by
the Inditex Group.

Indonesia has been attracting more
consumer-based companies in the past few years as the middle class
expands, boosting domestic demand. Private spending is the biggest
contributor to Indonesia’s economy, which grew 6.23 percent last year.

Otoma
said that while Fast Retailing does not have its own factories, it has
partnered with a few factories in Indonesia to produce its clothing.

Fast
Retailing Indonesia is 75 percent-owned by Fast Retailing in Japan and
the remaining 25 percent is controlled by the Mitsubishi Corporation,
which has been working in Indonesia since 1954.

The two companies also jointly operate Uniqlo in Thailand.

Fast
Retailing aims to increase its sales revenue for stores in Asia,
outside Japan, to 170 billion yen ($1.8 billion) in the fiscal year of
2013, increased from 120 billion yen last year, Otoma said. However, he
said it is too early to estimate Indonesia’s contribution to the sales
target.

Mitra Adiperkasa, the biggest publicly traded clothing
retailer in Indonesia, has brought in 90 international brands —
including Marks & Spencer, Zara and Nine West — into the country.

By
the end of September last year, Mitra had opened 190 additional new
outlets in the past year as higher incomes led to changing tastes in
lifestyle and demand for international brands increased. According to
its latest financial report, revenue in the January-September period
rose 29 percent to Rp 5.44 trillion from a year earlier. Net income
climbed 24 percent to Rp 282 billion.

Other Japanese retailers
such as MUJI have already set up shop to take advantage of Indonesia’s
growing consumer base. MUJI has five stores in Jakarta and one in
Bandung.

A survey by Bank Indonesia on consumer confidence in
January indicated that Indonesians remained optimistic on economic
growth. A separate central bank survey showed that an index on retail
sales rose by 15.7 percent in December from a year earlier.

By comparison, Japan’s retail sales by value rose 0.4 percent in December.

Economists
in Jakarta such as Anton Gunawan from Bank Danamon Indonesia, say that
the investment upgrade in the country’s credit rating has prompted many
investors to put money into the country.

Moody’s Investors
Service and Fitch Ratings, two of the three large global rating
agencies, raised their rating on Indonesia’s sovereign debt to
investment grade more than a year ago.

“The investment grade
status also leads to a rise in investor confidence, driving larger
foreign direct investment inflows,” Anton said.