Local boutiques not sitting pretty in the crisis

Local boutiques not sitting pretty in the crisis

By Agni Amorita

JAKARTA (JP): Despite trying hard, international currency
speculators praying on our helpless rupiah have been unable to
kill off the international brand boutiques which sprung up in
Jakarta's top shopping malls throughout the early 1990s.

"When the rupiah dropped to Rp 17,000 against the U.S. dollar,
it was good news for our boutiques. Asian and African tourists,
especially those from Nigeria, Japan, and Taiwan streamed into
the country and shopped in our boutiques," said Marcellina
Widjaja who works for PT Kharisma Citra Prima.

The company is the Indonesian representative for 16 top
international brand names from France, England and Italy. Their
clients include illustrious names such as Christian Lacroix,
Claude Montana, Girbaud, Krizia, Romeo Gigli and Genny.

"During that time, Jakarta prices became very competitive
because we had bought our stock long before the rupiah plunged,"
said Yuke Tamtanus, an advisor and public relations manager for
Kelab Duasatu Nusantara, the Indonesian agent for American and
Italian brands including Armani, Donna Karan, Calvin Klein and
Dolce & Gabbana.

The same story was told by Iwan Winanda, the Indonesian
marketing manager for Levi Strauss Inc. He said that sales here
rose at a time when Levi was losing out to competition from GAP
and Guess in the U.S. market.

"We even had to open two new outlets when the rupiah plunged
to a record low of Rp 17,000 to the dollar," said Iwan.

Iwan claimed to have secured large numbers of new local
customers thanks to booming shrimp and cacao exports in South
Sulawesi.

"We now have 14 outlets in Ujungpandang and seven in Jakarta,"
he said.

Iwan reported that sales had fallen since the rupiah became
stable at around the Rp 7,500 level. However, for the long term
outlook of the fashion business, rupiah stability is crucial
because almost all stock is imported.

Marcellina hopes the rupiah will stabilize at the Rp 6,000
level against the dollar so that she can win back the rest of her
local customers and try to encourage brand loyalty amongst them.

"As of this very day, we have no local customers who return
and purchase items on a regular basis," she said.

Marcellina revealed that she has to buy her entire stock and
pay the rent on all her boutiques in dollars. Marcellina runs 16
boutiques and the one in Plaza Indonesia alone costs US$3,000 per
square meter.

Another reason for the drop in sales is the political turmoil
gripping the country.

"Riots and roads being shut off for long periods of time have
caused our sales to drop by 30 percent", Iwan said.

Before the monetary crisis began to bite last year, sales of
Levis here were between 40,000 and 50,000 pairs per month. Now,
the most popular items are the classic 501, which costs Rp
550,000, and the Bootcut 517, which is priced at Rp 299,000.

The most expensive dress in Marcellina's boutique costs Rp 20
million. "This is the current price. Before the monetary crisis
it cost only a third of what it costs now," Marcellina explained.

Before the monetary crisis, Marcellina's boutiques had a
turnover of around Rp 100 million a month.

"Now we are only just managing to survive. There have been no
closures or staff cuts and fortunately, up to now our
productivity hasn't been reduced," Yuke said.

Somehow, those in the business have managed to remain
optimistic. Iwan said he was certain Levi's would not lose local
customers in the long-run because the brand is well recognized in
throughout the country.

"Many fanatics do not mind saving up their money to buy a pair
of Levi's. Although it may take four years for sales to return to
their pre-crisis level, I'm sure things are already improving."

Yuke, who has run 20 boutiques under Kelab Duasatu Nusantara
since 1992, holds out the same hope. She said that if the rupiah
stabilizes, people's purchasing power will eventually be
restored.

"We are sure that business will return to normal if there are
no riots. This business is highly susceptible to insecurity," she
pointed out.

Kelab Duasatu Nusantara has held a number of promotions to
boost sales during the monetary crisis.

"We are trying to expand our business and have run a
continuous advertising campaign. That way we secure a loyal
customer base and attract new customers at the same time," Yuke
explained.

Kelab Duasatu Nusantara has also relocated boutiques in an
attempt to make inroads into new markets. Last month, the company
moved a boutique from Sarinah shopping complex to Plaza
Indonesia.

Another strategy frequently made use of by boutique owners is
to offer discounts to attract customers.

"We have already scheduled our discount sales for the coming
year. That way we can make projections and anticipate
fluctuations in demand," Yuke added.

Marcellina has her own strategy for deciding when to offer
discounts. "We follow the sales held by Plaza Indonesia, which
take place three times a year," she said.

She said she hoped things would change for the better after
next year's general election.

Iwan shared the same hope, adding: "We have already 'right-
sized' our business in anticipation."

Apparently Iwan applies the classic fashion adage to his code
of business. Size does matter.