The sporting goods industry continues to see strong growth figures around the world as sport and fitness increase in popularity and there is no better example than the current boom taking place in Indonesia.
This article from our partner WFSGI explains how the global apparel industry is watching this market with a keen interest.
Sports and fitness in urban lifestyles
Well aware of how long shifts in the office affect their health, more and more city dwellers in Jakarta and around the county are signing for gym memberships. Fitness First, Celebrity Fitness, Gold’s Gym and others are rapidly expanding as more Indonesians can afford this investment into their well-being. Bodybuilding, yoga, pilates and aerobics are all gaining in popularity. Outside the gym, football has pretty much replaced badminton as the national sport. Millions of Indonesians keenly follow their favourite teams (including foreign ones like Manchester United or Bayern Munich), but they are taking to the pitch themselves, as evidenced by the growing number of football academies. Football’s increasing popularity bodes well for sales of jerseys, footwear and FIFA-approved footballs.
Both running and cycling are finding dedicated followers, who often connect with one another through Facebook and Twitter and congregate to take over the streets of the capital on car-free Sundays, when vehicles are banned from some thoroughfares for a couple of hours. Running may well be the fastest-growing sports trend in Indonesia today, with running communities popping across the country.
A dynamic market
Athletic apparel is one of the most dynamic categories driving apparel sales globally. In Indonesia, sportswear posted current value growth of 10% in 2013. This is owed to an expanding middle class with rising disposable income as GDP per capita has risen from US$2,984 in 2010 to US$3,468 in 2013 and is projected to reach US$5,000 by the end of 2014 (World Bank). Within the South-east Asia region, Indonesia is at the forefront of this trend, with a middle-income segment that is expected to double in size to 140 million people by 2020.
Sportswear brands, led by Adidas and Nike, are well aware of this opportunity. However, global players like Adidas, Nike, Puma and Asics are confronted with local competition in Indonesia. Jakarta-based SPECS Sports designs, manufactures and retails shirts as well as shoes, bags and equipment for popular sports including football, badminton, tennis and running. Its range extends to futsal, the indoor version of football played in smaller teams. Futsal’s recent popularity in Indonesia is something global brands need to adapt to.
Piero Indonesia builds on Indonesia’s craftsmanship in shoe-making, selling a range of casual to sportive shoes for skate-boarding and other lifestyle activities, while Eigerindo Multi Produk, better known as Eiger specializes in adventure sports, with products ranging from hiking boots and rugged sandals to climbing gear and backpacks.
Modern retail: challenges and opportunities
New rules for retail in Indonesia have the potential to make life harder for importers in the future. Ministry of Trade Regulation No. 70/2013 mandates that at least 80% of the amount and types of goods sold in modern stores (as opposed to traditional markets or kiosks) be domestic products. The regulation fails to define precisely domestic products. Retailers were given two years’ time to comply with the rule. Exceptions may be granted, however, and as of August 2014, the Trade Ministry was reviewing the controversial regulation. It is therefore recommended to work with experienced local partners such as Mitra Adiperkasa Tbk through its Planet Sports retail outlets and Panatrade Caraka who distribute local as well as international brands such as Mizuno through their FISIK stores.
Online retail, while still in its infancy in Indonesia, has enormous potential for growth. Buying products at the click of a mouse should be readily embraced by Indonesia’s Internet savvy generation of young consumers, the very generation that is on the radar of sportswear makers. A number of global and local companies already offer sportswear online. While competition is set to intensify, the market is still underpenetrated and has ample upward potential. Sportswear is also likely to outperform overall retail sales in the future.
Click here to read the original article from our partner WFSGI.