I'nesia aims to be top destination for specialty retailers

Indonesia, the world’s fourth most populous nation with a young and increasingly wealthy middle class, is highly attractive to specialty retailers in lifestyle sectors, such as accessories, electronics, entertainment, furniture, health and beauty and sports, said Yongky Susilo, an expert with the Indonesian Retailers Association (Aprindo).

“All the world’s giant retailers are setting their sights on Indonesia due to its sizeable young population. These people will become future shoppers for middle-class products and they certainly offer enormous potential for those specialty retailers,” said Yongky.

Indonesia, Southeast Asia’s largest economy, has seen compelling growth in the past years, despite a slowdown over the last two quarters — 5.8 per cent in the second quarter and 5.6 per cent in the third. This rapid growth has lured overseas retailers like France’s Carrefour, Japan’s AEON and South Korea’s Lotte Group to build their stores locally.

The country’s consumer class will triple in size to 135 million people by 2030, when its middle class will have a per capita annual net income of more than US$3,600 (Bt113,500). 

This potential purchasing power could mean business opportunities in excess of $1.8 trillion, according to leading consulting firm McKinsey.

The new trend of specialty retailers entering the market can be seen with the coming of Swedish housewares giant IKEA and electronics and furniture retailer Courts Asia, both of which will open their first local stores next year.

IKEA’s first store, located in Alam Sutra, Tangerang, is set to open on September 17 next year, while Courts Asia will open a store in Bekasi – set to be the firm’s largest in Southeast Asia – in the second quarter next year.

IKEA has its eye on a 7 to 8 per cent share of the $1 billion furniture market in Greater Jakarta, according to IKEA Indonesia general manager Mark Magee.

Meanwhile, Courts Asia, the market leader in Singapore by sales and second-biggest in Malaysia, is aiming to set up 10 stores in Greater Jakarta within its first five years in Indonesia.

It is now laying the groundwork for other stores in urban suburbs in Bekasi and Serpong, according to Roy Santoso, CEO of Courts Indonesia.

Aprindo executive director Tutum Rahanta said that the potential influx of foreign specialty retailers would help the domestic retail market grow, especially through market differentiation.