Aprindo sees positive impact of foreign retailers

Aprindo sees positive impact of foreign retailers

Zakki P. Hakim, The Jakarta Post, Jakarta

The expansion of global retailers into the country is positive,
as it will force local players to up their game to compete,
industry associations say.

Indonesian Retail Merchants Association (Aprindo) secretary
general Tutum Rahanta said local retailers would learn from the
international players, especially about efficiencies in running
businesses.

"Without healthy competition, local players will not develop,
they would run business just the way they always have. With
global competitors in the country, the domestic retailers will be
forced to improve themselves. Eventually, the customers will
enjoy the benefits," Tutum told The Jakarta Post over the
weekend.

Retailers like Hero Supermarket and Matahari department Store
were among the local retailers that had managed to boost their
operations to be able to compete on a level footing with foreign
companies, he said.

"Matahari and Hero have learned their lessons well," Tutum
said.

By studying the success of global chains, it would be possible
for local retailers to open their branches in, for example,
Singapore one day, Tutum said.

Britain's premium department store Debenhams opened its first
store in this country here on Friday to compete with SOGO and
Metro for the high-end customer. The store is Debenhams' second
in the Far East.

Both local and foreign retailers have been aggressive in
expanding their operations in the country to take advantage of
the huge domestic market and strong consumer consumption, which
during the past few years has been the main engine of economic
growth.

Tutum said currently there were only three major retailers in
the high-end market.

"More are (likely) to come to exploit the segment. Japan's
premium department stores, such as Takasimaya for example, may
well consider entering the country," he said.

Tutum acknowledged the expansion of modern retailers such as
department stores, minimarkets, supermarkets and hypermarkets was
eroding the market share of traditional retailers.

Experts have said the government should assist traditional
retailers to adapt to a more modern way of retailing, to solve
skill shortages and capital-gap problems.

"It is inevitable, the world is moving toward modern
retailing. It is a global trend, the traditional market must
adopt the modern way of retailing to survive," industry analyst
and AC Nielsen director of retail and business development Yongky
Surya Susilo said.

An AC Nielsen survey shows the number of traditional retailers
is still growing but at a far slower pace compared to modern
ones, particularly in urban areas.

However, traditional markets still dominate the country,
selling 73.7 percent of goods in Indonesia.

French retailing giant Carrefour started the hypermarket hype
here in 1998, opening its first outlet in Kuningan, South
Jakarta, and offering a range of about 50,000 products -- from
screwdrivers, clothes, televisions, meat, fruit and vegetables,
to fresh-from-the-oven pastries.

The success of Carrefour has prompted Hero and Matahari to
also expand into the hypermarket business. A report says Matahari
is planning to open about 50 new hypermarkets in the next five
years.

There are currently more than 50 hypermarkets operating in the
Greater Jakarta area alone.