Indonesia's new-age local retailers

Written by Ilman Ramadhanu | Read in Indonesian

Over a decade ago, brands such as Warby Parker and Glossier emerged and disrupted the e-commerce industry by pioneering the direct-to-consumer approach. Subsequently, in 2019, social media giant Instagram responded to this business model by introducing "Shops", enabling sellers to create a virtual storefront where they can directly sell their products within the application.

This innovation democratised business opportunities, allowing individuals to run businesses without relying on retailers for distribution. As a result, the traditional middlemen role of retailers became obsolete.

However, in the quaint and niche corner of the Indonesian fashion scene, there has been a recent upsurge of retailers such as Sonderlab, HGL, ASAU and Masari Shop. The difference is that they specialise in the curation of local brands and designers, which enables them to thrive and steer the fashion industry towards enduring economic sustainability.

Fashion-conscious consumers fuel local retailers

The contributing factor that led to the growth of retailers specialising in local brands is inextricably linked to the development of the Indonesian fashion industry itself. Despite being in its formative stage, the industry is rapidly evolving, with new brands surfacing online every minute.

Monica Esther, Director of Sonderlab, explained that this growth is fueled by the increasing awareness among Indonesian consumers in becoming more “fashionable”, a phenomenon intensified by the pervasive influence of social media. The Internet empowers them with information about diverse fashion styles, transforming clothing from a mere necessity into a vehicle for self-expression. This shift prompts consumers, particularly the Gen Z demographic, to seek clothing that embodies a sense of coolness and originality.

Sonderlab event | Source: Instagram @sonderlab

In addition, from her experience organising offline marketplaces, she observed that Gen Z often purchases products without much forethought, driven by a simple impulse for stylish items.

In response to this trend, Sonderlab adopts a lucrative strategy by curating local brands with distinctive designs. This curation approach of showcasing brands and designers that aligns with Gen Z preferences addresses the challenge of standing out in a saturated market. Amidst countless brands, Sonderlab's curation provides Gen Z with easy access to products that resonate with their distinctive tastes.

Marketing is retail’s essential role

But the question still persists, in a landscape where one can easily open a fashion business and directly reach consumers, what makes retail spaces necessary?

The function of traditional retailers is to help brands make their products more accessible to buyers and expand their market reach. The role of these local retailers is no different, as explained by Asti Surya, co-owner and designer of the footwear brand Tigah Home and clothing brand Douche. Having her products placed in multiple local retailers, she emphasised that the biggest benefit is marketing.

Douche campaign | Source: Instagram @ladouchevita

“We want to work with multi-brand stores because they have different market characteristics, which helps us reach a broader audience,” she explained.

However, according to Monica, the necessity for retail companies like Sonderlab in Indonesia is still paramount, as the Indonesian fashion industry is predominantly composed of small businesses with limited ability to conduct large-scale marketing campaigns. Sonderlab, thus, exists to provide assistance for local fashion businesses to expand their market and allow them to focus more on the creative aspect of the business.

Tigah Home campaign | Source: Instagram @tigahhome

Marketing is also an important component for fashion business owners to ruminate when deciding which retails to place their products in. Asti emphasised the significance of retailers' marketing plans, as the branding of the retailers will concomitantly impact her brands in the long run. “If their branding is bad, it is going to negatively impact the sustainability of my brand,” she noted.

Exclusive collection as strategy for overcoming challenges

However, reaching a broader audience or simply having your products carried by retail stores doesn’t necessarily equate to increased sales. This is particularly because the commonly practised business arrangement between local fashion businesses and retailers in Indonesia is consignment as opposed to wholesale purchasing.

In consignment, the seller entrusts goods to a buyer for sale, and the consignee pays the consignor only for items sold. Therefore, even after having the products placed in retailers, there needs to be a continuous cooperation between local fashion businesses and retailers to sustain the joint venture, such as by creating exclusive collections.

The underlying idea behind this is simple: design exclusive products for specific retail stores to generate more profit for both parties; a strategy that has been implemented by Sonderlab as well.

But even by implementing the exclusive collection strategy into practice, Asti recounted her experience where it became a sort of crutch in selling products through retailers. "We did an exclusive release for a store, and it went well for the first month, but then it dropped in the subsequent months. From that, we learned that with that specific store, we have to continuously design an exclusive collection."

Collaboration for economic sustainability.

Having multiple channels of distribution could create a competition between retailers and local fashion businesses. However, both Monica and Asti agreed that collaboration between the two is important to build an economic sustainability for the Indonesian fashion industry.

"The Indonesian fashion industry is still niche, and its nature is volatile, in the sense that from many brands that emerge, only a handful survive. So, a collaboration between us and fashion brands ensures continuity in this industry," Monica explained.

Monica believed that as more local fashion brands and designers emerge with authentic, original and distinct designs, they could contribute to the cultivation of a specific contemporary style indigenous to Indonesia. "Paris has its own Parisian style, South Korea has a very distinct South Korean style, and so does Japan. But we don’t have a specific Indonesian style," she said. This, she emphasised, is crucial in the ongoing effort to ensure economic sustainability in the industry.

This is why, at Sonderlab, she applies a rigorous curating process to create a portfolio of unique brands that could serve as a sartorial identity for Indonesian fashion. Having a tangible visual representation of what Indonesian fashion offers is important to help make the Indonesian fashion industry be taken more seriously by the global fashion industry and, particularly, the Indonesian government.

When it comes to fashion, the Indonesian government has directed more support towards the Indonesian textile industry, leaving the aspect of style underappreciated. According to Monica, this situation prompts many fashion entrepreneurs in Indonesia to independently seek collaboration with international partners.

But, for the Indonesian fashion industry to be financially sustainable, it all hinges on the willingness of all parties involved to work together because, as Monica says, “When the fashion industry is successful, the Indonesian economy will grow as well.”