While surveys in recent months have revealed a shift by shoppers from modern retail outlets to traditional markets since the global economic crisis started, Matahari, the country’s biggest department store chain, expects to buck the trend and grow sales by 20 percent this year.
“While other retail stores have had to cut back costs to the bone and reduced the number of shifts worked, we haven’t,” Matahari’s president and CEO, Travis Saucer, said in an interview at Matahari headquarters in Karawaci, Banten Province, on Wednesday.
He said that in the first quarter, Matahari, owned by PT Matahari Putra Prima, had booked a 6.4 percent increase in total sales, bringing them to Rp 2.62 trillion ($227.94 million), compared with Rp 2.45 trillion in the same period last year. The company had originally targeted a 5 percent rise.
“We are quite surprised, and very pleased, about this achievement,” Travis said, adding that the company was now optimistic it could achieve 20 percent annual sales growth by year’s end.
Regarding the company’s focus on middle-income consumers, Travis said the formula had worked to date and that Matahari had no plans to change it.
“People know us for our good quality and affordable prices, and we’re not going to change that.”
Travis stressed that Matahari customers were very loyal, “so if there’s anything to be upgraded, it will be the facilities we provide in our stores to show our appreciation for their loyalty.”
He said Matahari had reduced the number of stores it planned to open this year from eight to three or four. “The reduction has nothing to do with our cash flow, but is rather designed to save cash amid the crisis so that we don’t have a situation where we are forced to lay off staff or cut back on shifts.”
Matahari’s operations director, Sunny Setiawan, said that customers at high-end department stores had increasingly been switching to Matahari to make their money go farther.
“There’s no doubt that even in a time of crisis, people still have to shop,” Sunny said. “Shopping is no longer something that we do solely to fulfill our daily needs, but is rather something that we do to relax and relieve stress.”
She said Matahari staged regular promotions to attract customers, but added that they did not violate the Trade Ministry regulation on promotions and discounts in the modern retail sector because the discounts only applied to Matahari-label goods.
The Trade Ministry rule, issued in December, stirred up controversy among operators and suppliers by curtailing the rebates suppliers normally pay to modern retailers, but not traditional markets, due to the bargaining power the big retailers enjoy.
Suppliers previously rebated 8 percent of the price of products to modern retailers, but the rule cut that to a maximum of 1 percent.
Big retailers argue that the terms they enter into with suppliers are business-to-business arrangements and that the government shouldn’t interfere.
“If the government wants to create healthy competition between the traditional and modern sectors, that’s fine. But if they also attempt to regulate how the retailers work with suppliers, that’s going too far,” said Tutum Rahanta of the Association of Indonesian Retailers, or Aprindo.Matahari and the Jakarta Globe are affiliate companies of Lippo.