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.