Indonesia Fast Fashion Frenzy, CLSA

Fast fashion‟s popularity has been growing rapidly over the last 7 years.
Favourable demographics make Indonesia a lucrative market for fast
fashion retailers. Zara, locally held by Mitra Adi Perkasa (MAPI), is
currently the only one of the top three players to have entered Indonesia.
The potential arrival of H&M and Uniqlo in Indonesia may pose a threat
for Zara. We nonetheless maintain our BUY call on MAPI for its expansion
capability. Media companies will also benefit from increased competition.

Fast Fashion: From the Catwalk to the Masses
 Fast fashion retailers first emerged in the 1980s in the U.S., aiming to deliver
stylish clothes inspired by the latest trends from Fashion Week to mass customers.
 Fast fashion has shifted shoppers’ consumption habits to purchase clothes more
frequently. This is due to frequently updated designs and inexpensive prices.
 The economic downturn has driven customers to less expensive couture options.
Who are the major global players?
 Zara, under the Spanish fashion retailing giant Inditex (ITX SM), is the largest fast
fashion player globally. Its innovation and distribution efficiency are unmatched.
 H&M (HMB SS) is another top player. It also has the latest in catwalk designs but
sells its products at a cheaper price than Zara. Quality however is less durable.
 The other significant player is the Japanese powerhouse Uniqlo, held by Fast
Retailing (9983 JP). Uniqlo provides high quality but less fashion-forward basics.
Indonesia‟s demographics are a recipe for success
 Indonesia’s young and increasingly fashion conscious population entering J-curve
middle class income growth make it the perfect emerging market for fast fashion.
 Interestingly, while U.S. and European consumers are trading down into fast
fashion, Indo consumers are upgrading into it.
 Low consumer credit compared to the region and downward pressure on lending
rates in the banking sector support a further spending surge.
Competition set to heat up
 The potential arrival of H&M and Uniqlo poses a threat to Zara’s current success,
particularly because they sell at relatively cheaper price points.
 While we expect Zara to lose some market share, it should be able to maintain its
leading position due to its operating efficiency and first-mover’s advantage.
 We continue to like MAPI for its ability to acquire well-known brands and expand
high-yielding outlets. Media companies will also benefit from increased ad-spend.
Our top pick in the media space is Media Nusantara (MNCN IJ).

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