Hypermarkets: Lessons from abroad<\/p>\n
Barlev Nicodemus
\nBrussels<\/p>\n
An article that appeared in The Jakarta Post on Dec. 20
\nattracted my attention. The article, When violence is used to
\novercome big business, shed light on an issue that is very
\ncrucial to all of us. The writer said small suppliers were
\ncomplaining about the number of hypermarkets around Jakarta, and
\nwere afraid of being displaced by these massive retailers.<\/p>\n
These hypermarkets are supported by multinational companies
\nwith unlimited capital and world-class management. Because they
\nbuy goods directly from producers in huge quantities, they
\nreceive price reductions, which they then pass on to customers.<\/p>\n
It is no surprise then that hypermarkets can provide goods at
\nlower prices than smaller retailers. This is the key to the
\nretail business. Under these circumstances, small suppliers and
\nretailers really have no way to compete.<\/p>\n
This is clearly understood by the governments of the countries
\nfrom which the hypermarkets come. In their home countries,
\nhypermarkets are allowed to open stores only on the outskirts of
\ncities. The reason is straightforward: to protect local or small
\nretailers.<\/p>\n
Customers therefore have to drive quite a long distance to
\nreach the hypermarkets. They have to spend more time and money to
\nobtain the cheap goods. We have here, as the economists say, an
\nopportunity cost. As time is in short supply, the more time they
\nhave to spend getting to the hypermarket, the less time they have
\nfor other activities.<\/p>\n
As a result, people will tend to go to smaller stores in their
\nneighborhood rather than to big retailers. Only when they have
\ntime will they go to the hypermarket. Obviously, this policy
\nhelps small shops survive and grow.<\/p>\n
As a student abroad, I never saw a hypermarket located in the
\nbusiness center of a city. Take a look Carrefour, for instance.
\nHere in Brussels, you will not find a hypermarket in Rogier (a
\nbusiness center similar to Kuningan in Jakarta). You will only
\nfind them in suburban Brussels, standing on a crossroad.<\/p>\n
In fact, that is how Carrefour got its name. The French word
\n\"carrefour\" means crossroad, and the store took this name because
\nthe markets are typically built on a crossroad.<\/p>\n
This same situation occurs in the Netherlands, where another
\nbig retailer, Makro, operates.<\/p>\n
However, the situation in Jakarta is completely different.
\nCarrefour, for instance, has opened stores in many strategic
\nlocations, such as Kuningan, Harmoni and Ratu Plaza. People can
\neasily reach these locations even when they are on the way home
\nfrom work. There is no disincentive to shopping at a hypermarket.
\nIn other words, here in Jakarta we have conditions that would be
\nunacceptable even in Carrefour's homeland.<\/p>\n
More surprisingly, Makro does not have seem to have the same
\nprivileges as Carrefour. Their shops typically are located on the
\noutskirts of Jakarta, such as in Ciputat, Kampung Rambutan or
\nMeruya.<\/p>\n
Since we have two different situations, which one is correct
\nunder the law?<\/p>\n
I would suggest the problem here is a lack of laws, not merely
\nthe implementation. The fact that President Susilo Bambang
\nYudhoyono plans to issue a decree in the future to regulate
\nwholesalers, as the article in the Post said, is clear evidence
\nof this. There is currently a lack of regulations. The absence of
\nlaws has led to the two completely different treatments discussed
\nabove. Whoever can pay more will probably receive more
\nprivileges. Consequently, we cannot say big retailers are
\noperating under the law because the law is not there.<\/p>\n
Another point I would like to put forward is the way foreign
\ninvestment is perceived. There is generally an overreaction to
\nforeign investment, which is clearly needed to create jobs.<\/p>\n
However, this does not mean Indonesia cannot develop its own
\ndomestic firms. The authorities must realize that when large
\ncompanies enter a country, they can stifle local firms.
\nTherefore, protecting small shops is not a mistake. It is an
\nacceptable practice, even in developed countries.<\/p>\n
There is no reason to worry that such a policy would reduce
\nforeign investment. Indonesia does not want \"a winner take all\"
\nsociety, which would only lead to disempowerment and
\nimpoverishment. Let us hope this belief will underpin all of the
\nregulations on foreign investment.<\/p>\n
The writer is a student at Katholieke Universiteit Brussel and
\ncan be reached at BarlevNicodemus.Marh@student.kubrussel.ac.be.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/hypermarkets-lessons-from-abroad-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}