Large retailers see strong growth ahead<\/p>\n
Viva Goldner, The Jakarta Post, Jakarta<\/p>\n
Three of Jakarta's largest retailers have expressed confidence in
\nIndonesia's economic future, backing the government's prediction
\nof strong consumer spending in 2002.<\/p>\n
Makro president Simon Collins said the company increased its
\nmarket share last year, through higher sales of food products in
\nparticular.<\/p>\n
\"When you look at the GDP per capita in Indonesia, it's quite
\nlow. But sales here last year continued to be strong. They were
\nstrong the previous year as well - we certainly got double digit
\ngrowth in real terms,\" Collins said in an interview on Wednesday.<\/p>\n
Carrefour asset and development director Agus Alwie said the
\ncompany's eight stores were observing a trend of increased sales
\nacross most product lines, while The Club Store general manager
\nRudy Suwandi said growth in 2002 would be primarily driven by
\nmiddle to upper-class consumers.<\/p>\n
\"We hope to gain an increase in sales this year, but it
\ndepends on the political and economic situation of Indonesia,\"
\nRudy said.<\/p>\n
The government aims to reduce inflation to nine percent from
\nlast year's high of 12.55 percent, with domestic conditions
\ncentral to its forecast of 4 percent economic growth.<\/p>\n
Collins said the current pace of reform bodes well for the
\ncountry's retail sector, despite concerns over the impact of
\nregional autonomy on Makro, a company with half its 12 stores
\nlocated outside of Jakarta.<\/p>\n
\"Makro are very confident in the long-term future of
\nIndonesia, although that confidence is shaken every so often,\"
\nCollins said.<\/p>\n
\"With power going to the regions, it gives the possibility
\nthat we have six different tax regimes, and that is obviously
\ndifficult to cope with.\"<\/p>\n
All three retailers stressed the importance of creating a
\nfavorable legal environment through regulation and accountable
\ninstitutions.<\/p>\n
Agus said the government needed to provide incentives for
\ninvestment in the country's retail sector in order to facilitate
\nfuture consumption.<\/p>\n
\"Although exports are still very important, spending by the
\ncustomer will contribute to creating more production, and
\nultimately the wheel of the economy will turn faster and faster,\"
\nhe said.<\/p>\n
Agus acknowledged that recent hikes in fuel and electricity
\ncosts would most affect those in lower- to middle-income
\nconsumers, who represented a significant proportion of
\nCarrefour's clientele.<\/p>\n
\"We have already seen in the first month of 2002, spending
\nhabits are down due to the impact of higher prices for basic
\ncommodities,\" he said.<\/p>\n
With Bank Indonesia forecasting weak consumption and higher
\ninflation, Collins conceded Makro would need to absorb costs in
\norder to achieve 15 to 20 per cent growth in like-to-like sales
\nthis year.<\/p>\n
\"The companies that will win are those that get more and more
\nefficient in their operations - you have to be a low-cost
\noperator in Indonesia. We will be making further savings on our
\noperational costs this year, which will enable us to lower our
\nmargins, and to sell things cheaper,\" Collins said.<\/p>\n
He said the country's manufacturing sector also had to improve
\nproduction and curb hoarding practices.<\/p>\n
\"One of the problems throughout the year has been supply,
\nrather than demand. Supply and logistics are still quite
\ndifficult, and I think a lot of the manufacturers are certainly
\nnot meeting our requirements in terms of supply,\" Collins said.<\/p>\n
While the country faced considerable challenges, Rudy said
\nprospects for Indonesia's retail sector were bright.<\/p>\n
\"The Indonesian retail market is very big - we have over 200
\nmillion people here. So, if political and economic security is
\nrestored, there is going to be a lot of retail activity coming
\nin,\" he said.<\/p>\n
Makro plans to open three or four new stores this year, while
\nCarrefour will open two, and The Club Store will add another
\noutlet to its existing two in 2003.<\/p>",
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