Competition in retail business

Competition in retail business

In the last five years, the retail industry has grown rapidly. Many shopping centers appear like mushrooms during the rainy season, not only in Jakarta but also in the suburbs, including Bekasi and Tangerang in West Java. There are 46 modern shopping centers -- plazas, malls, supermalls and megamalls -- in operation. Another 16 are being built and will open next year.

These shopping centers, many of which include foreign retailers, compete with local retailers. Apparently the foreign retailers are invited to open stores in shopping centers as a way to attract tenants and customers. For example, Sogo in Plaza Indonesia, Metro in Pondok Indah Mall, the (closed) Yaohan in Senen Atrium, JC Penney and Walmart in Supermall Lippo Village, Tangerang, and Seibu in Pasaraya Blok M, are all intended to be strong drawing points for the shopping centers.

The establishment of these foreign retailers heated up the competitive atmosphere. Today, the local retailers are in a stronger position to compete, although there is no guarantee that they can stay in business, particularly if foreign retailers are allowed to develop chain stores.

Foreign retailers have a greater chance to win the war because they are equipped with high technology, modern and efficient management systems, well-trained employees and high quality products. Moreover, they join with reputable conglomerates.

Our local retailers realize that the only way to survive in this competitive era is to improve efficiencies. So, they hire foreign experts to develop human resources and adopt new technology for their entire systems, such as store operations, distribution, warehousing, and administration systems. Of course the government has to play its role in this competitive business era so that the interests of the local retailers can be accommodated.

SAHAT DAMANIK

Jakarta