Shopping malls are the centre of attraction in big cities in Indonesia. If you have been to shopping malls in Jakarta, you’ll see that global high-street brands like Zara, Topshop, H&M, Uniqlo, Mango, and Body Shop occupy most of the space in Indonesia’s shopping malls. Local brands, unfortunately, are not key players in the retail landscape in Indonesia.

Although Indonesia’s fashion industry has progressed tremendously in the last decade, it is not progressive enough to be the major players in the retail landscape. The fashion industry in Indonesia is classified into five categories: the manufacturers, the wholesalers, department stores, the independent fashion business, and traditional markets.

Indonesia has been one of the manufacturing destinations for global brands due to its cheap labour. Traditional markets are another main income source for wholesalers and distributors. Traditional markets are deeply rooted in the Indonesian culture, with Tanah Abang and ITC Mangga Dua the most notable ones. They now occupy buildings but retain the traditional market format. In other big cities, markets are very much part of the daily routine for many people. The style offered in traditional markets is very limited since traders have the same distributors and they tend to follow what their peers are doing.

Enter the independent fashion business including online shops, boutiques, high-end designers and high-street brands. High-end brands such as Peggy Hartanto, Tex Saverio, Biyan and Anne Aventie are paving their way to the international fashion scene. Anne Aventie has been stocked at Net-a-Porter while Tex Saverio has dressed Lady Gaga on magazine covers. Hollywood celebrities wore Peggy Hartanto’s designs on the red carpet. Then there’s Biyan, who is in a league of his own.

High-street fashion brands, on the other hand, are struggling to set their feet on Indonesia’s retail space, let alone the global scene. Indonesian brands have smaller space compared to global brands that could take up to three floors. Global brand outlets are strategically placed at shopping malls, usually on the ground floor where traffic is the highest. Hiring power creates further gap between local and global brands as global brands employ merchandisers at every store to make sure the display is always up to date. Changing front display and editorial image could drive more traffic to the store. Indonesian brands that started with physical stores--Minimal, (X)S.M.L, Body&Soul, The Executive, Colourbox, to name a few--are facing tough competition from online shops and independent online brands like DUMA, Shopatvelvet, and Nikicio. However, online presence can go as far as building brand identity since Indonesian shoppers need to touch the product before making a purchase. Unsecure payment getaway and lack of digital efficiency amplify the trust issue. Brands with physical stores are more trust-worthy for Indonesians, which is why traditional markets are still thriving. Fit and quality issues also make purchase decision harder for customers. Local brands usually have smaller measurements compared to global brands. To avoid stocking too many inventories, ‘free size’ is the norm. These issues then bring us to the return policy, another issue worth noting. Racked.com said that free return drives online sales. Websites like Zalora and Pomelo offer free 30 day returns if buyers are not satisfied with the products. Pomelo even stepped up their game with free 365 day returns. How does return and exchange solve the fit problem if the product is ‘free size’? Free return and full refund are double edge sword to brands since they could potentially hurt the cash flow of independent brands. On a side note, shipping service provides regular pick-up and return if a brand is already a registered company.

Research also found that millennial shoppers have an attention span of three seconds. They get bored easily compared to previous generations. Style and speed are the new weapons. Global brands feel the heat in order to win over customers. Uniqlo recently announced its plan to restructure production process to compete with fast-fashion juggernaut, Zara. H&M shifted its business model in the 1980s to fast-fashion. British fashion retailers have always been up in their game since day one. ASOS has new products everyday and BooHoo gets new style up on its site in 13 days, which is even faster than Zara. Both British fashion retailers get their designs from street style, bloggers and social media. If a product works, they will tweak the design and add more similar style. ASOS’ and BooHoo’s product pages seem endless and the price is affordable. Selling fast is one of ASOS’ appeals. If you don’t check out fast enough, the product you add to cart might be sold out in 10 minutes. Zara and Hermes also adopt the limited quantity strategy and it works well for them. Purchase decision in those retailers is made instantly because shoppers get the impression that if they don’t buy it now, the product will sell out tomorrow. Indonesians, unlike those retailers, are known for being adopters. Many local brands stock similar styles with similar vibe and branding because it works with their peers. When customers get bored with the selection, they turn to global retailers for fresh new looks. Speed is a hurdle since the cost of stocking hundreds of new inventories every week will be over the roof. Previous inventories need to go to keep the cash flow positive and make room for the next collection. While independent fashion brands may have better quality, they can’t afford to slash the price as they don’t produce or buy products in bulk.

With the competitive advantages the global retailers have, adopting their strategy will require billions of funding. The other way to compete with them is to have groundbreaking ideas and problem-solving mindset. Go-jek created a modern platform for traditional transportation that successfully lifts the drivers’ economy while bringing convenience to Indonesians. Zara pioneered the fast fashion when it took six months for design houses to get the clothes from runway to the stores back in 1970s. The fashion industry in Indonesia has to bring different concepts to the table instead of recycling the same styles, branding and offering. Pricing war does more damage than solves long-term problems. Lack of focus from brand owners that often have to split between their full-time job and running a brand is hindering industry growth. Global retailers take the fashion business seriously since the beginning, unlike Indonesians that view the fashion business as the underdog, a view that couldn’t be more wrong since the world’s third richest man earns his fortune from fashion and so does the richest man in Japan. A lot of overseas fashion starts-up receives funding before they even sell anything. Some venture-backed fashion firms have gone public to raise funds for expansion. Indonesia has yet to catch-up with it since investment in the country is mostly directed toward commodities, construction and property. Funding could boost fashion industry growth. Indonesia has the resources to be a major player in the fashion industry in the areas of manufacturing, labour cost and market size. It has not reached its full potential yet. The fashion industry desperately needs a facelift.