Collective Brands looks to Indonesia
US footwear group Collective Brands has announced plans to open 15 franchised stores in Indonesia in 2011.
The company has begun sourcing from Indonesian producers in a push to reduce dependence on China, where costs are rising. Matt Rubel, chief executive of Collective Brands, told the Financial Times the company expected steadily to raise output from subcontractors in Indonesia to approximately 12 million pairs a year by 2015.
“The utopia for one-stop sourcing for quality and low price has been China ... but utopias never last,” Mr Rubel told the Financial Times in an interview. “Today we have to do more work in redeploying to wherever we can.”
China’s share of output is currently at about 80%, but Mr Rubel said he expected that to fall to about 70% over the next two years, and then to about 60%. Collective Brands sold almost 170 million pairs of shoes during 2009, with revenues of $3.3bn
Collective Brands reached a franchise agreement with PT Mitra Adiperkasa in October 2010. The first Indonesian businesses will open in the second quarter of 2011 in Jakarta and Denpasar, Bali, according to Fetty Kwartati, corporate secretary. Stores are also planned in Malaysia and Singapore.
After being virtually wiped out by the 1997-98 Asian financial crisis, Indonesia’s manufacturers are bouncing back, and the economy is growing at 6%. Shoe production is back at pre-crisis levels. In 2010, Indonesia is expected to make 300 million pairs worth $2bn-$2.5bn, according to Gita Wirjawan, head of the country’s investment co-ordination board.
