Big chains may cause job losses

Big chains may cause job losses

Zakki P. Hakim, Jakarta

The rapid expansion of modern retail outlets like hypermarkets
and minimarkets in big cities may have forced many traditional
grocery stores to close down, creating huge job losses, according
to a preliminary finding of the Central Statistics Agency (BPS).

The latest 2003 National Labor Force Survey (Sakernas),
published by BPS, reported that jobs in the retail sector during
the year declined by 7.42 percent to 4.24 million from 4.58
million in 2002.

"Our preliminary hypothesis is that the growing number of
hypermarkets and minimarkets probably contribute significantly to
the declining trend," Aden Gultom of the BPS workforce sub-
directorate told The Jakarta Post on Tuesday.

Aden, who had been involved in the survey, said that the BPS
was now in the process of reevaluating the finding. The agency
does not clearly define what it considers a traditional grocery
store.

But Bambang Widianto, a director at the National Development
Planning Agency (Bappenas), said that the decline in jobs in the
retail sector was probably related to the overall poor business
and investment climate in the country, prompting many businesses
to close down and discouraging new investment.

During the past few years, modern retail outlets have been
mushrooming in the country particularly in the capital city of
Jakarta and its surrounding areas, taking advantage of the strong
domestic consumption, which has been the main engine of economic
growth.

The number of convenience stores, for example, increased to
100 in 2002 from only 45 in 2000, while the number of
supermarkets including minimarkets rose to 802 from 737,
according to AC Nielsen data.

Hypermarkets, which are relatively new in Indonesia have
experienced the highest growth, rising to 37 in number in 2002
from 27 in 2000. But the data also suggests that the number of
traditional grocery stores also increased to 1.89 million from
1.88 million in the same period.

The condition in 2003 may have changed particularly as modern
retailers took more aggressive expansion steps. From 1998 until
the first five months of this year, five large format stores
(including hypermarkets and those that require membership) have
opened around 54 outlets.

French company Carrefour has been seen as the most aggressive
(and probably the most successful) in expanding its hypermarket
business in the country.

Carrefour started the hypermarket business here in 1998,
opening its first outlet in Kuningan, South Jakarta, selling no
less than 50,000 goods varying from screwdrivers, clothes,
televisions, meat and fruit to fresh-from-the-oven pastries.

Other modern retailers operating in the country include
Matahari, Makro, Alfa, Hero, Clubstore, Tops, Super Indo, and
Indomart. Indomart has successfully penetrated residential areas.

Industry experts have said that the mushrooming of modern
retail outlets is part of the changing lifestyles in big cities
as occurred in other countries.

But some critics have lambasted the government (which benefits
from taxes and foreign and domestic investment figures) for
failing to protect traditional stores. They say that many in fact
had violated government regulations.

The Jakarta administration has issued Bylaw No. 2/2002 on
private markets in Jakarta, which regulates pricing policies,
minimum distance from traditional markets and cooperation with
informal businesses.

The bylaw stipulates that minimarkets must not price their
goods at rates far lower than those in grocery stores in the area
and must be located outside a radius of 0.5 kilometers from
traditional markets.

Meanwhile, hypermarkets must stock nine basic needs supplied
by small enterprises through a partnership program, and must be
located outside a radius of 2.5 km from traditional markets and
must provide space for informal businesses, including street and
sidewalk vendors, in up to 20 percent of its area.