Upmarket French store tests local consumer craze

Fashion and lifestyle retailer PT Mitra Adi Perkasa (MAP) inaugurated on Wednesday the Galeries Lafayette, a high-end French department store, at Pacific Place shopping mall in the capital to cater to the middle and upper classes.

MAP spokeswoman Fetty Kwartati said Galeries Lafayette had agreed to open a store here after noting the increased purchase power in the country.

The French department store is also the only one in Asia.

“Some of the prime customers of Galeries Lafayette stores in France are those from China and Indonesia,” she told The Jakarta Post.

“Therefore, Galeries Lafayette’s brand principal agreed to open in Indonesia to better capture the local market,” she added.

Nicolas Houzé, the CEO of Galeries Lafayette, said the size of Indonesia’s market was the main reason for the French brand coming to Jakarta.

According to him, it has taken approximately five years for the brand to open their flagship store in Indonesia, having conducted a number of studies in market preferences.

“We want to make our goods accessible to everyone because the character of our store here is ‘affordable luxury’,” he said.

In addition, Fetty said the average price tag in the four-floor store was Rp 1 million (US$101), with prices ranging from Rp 100,000 – Rp 10 million.

“We learned a lesson from Harvey Nichols, where the average price was Rp 4 million,” Fetty said, referring to the retailer’s previous luxury department store, which has since closed down.

She added that Galeries Lafayette would stock 350 brands, 50 percent of which were new brands and 30 percent of which were French brands.

“The remaining are Mitra Adi Perkasa’s existing brands,” she said.

Fetty said the store’s strategy in providing more affordable prices by offering a wide price range had proved effective, as the number of visitors during the store’s soft opening in June had surpassed its target.

With Galeries Lafayette’s opening, MAP now runs five department stores, the other four being Sogo, Seibu, Debenhams and Lotus.

The new department store is an addition to the 106 new stores the retailer has opened as of May.

“However, the target market of Galeries Lafayette differs from that of Lotus, which aims to attract the middle-low segment, with Sogo, Seibu and Debenhams targeting gradually higher segments,” she added.

Fetty further said that the presence of Galeries Lafayette in the Indonesian retail ecosystem would create a new segment of premium department stores, given that such department stores did not yet exist.

She added that the opening of Galeries Lafayette had been funded by the retailer’s capital expense budget of between Rp 800 —Rp 900 billion.

“We spent only Rp 180 billion, less than 20 percent of our budget, in the first quarter,” she said, adding that the retailer would open new stores and introduce new brands more aggressively in the second half of the year.

MAP, which has a portfolio of 140 brands, plans to add up to 10 new brands this year, after having introduced four as of May.

The retailer booked Rp 63 billion in net profits during the first quarter of 2013, or 9 percent higher than the same quarter last year.

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