Hero to open 36 outlets next year

Anissa S. Febrina, The Jakarta Post/Jakarta

Consumer spending continues to drive the Indonesian economy and retailers are positioning themselves to take advantage of the situation.

Despite fears that people's purchasing power could begin to decline amid high inflation and interest rates, retailer PT Hero Supermarket is so confident in the market that it plans to open 36 new outlets next year.

Among the 36 planned outlets are six new hypermarkets under the Giant name and 10 Hero supermarkets.

According to a study by AC Nielsen, the country's retailers shared a profit of about Rp 660 billion (about US$66 million) last year.

"We are still focusing mainly on Java because the market here is still open," Hero corporate secretary Vivien Goh said on Thursday.

Hero president director Ipung Kurnia said the expansion would require about Rp 260 billion in capital expenditures, half of which would come from bank loans, with the rest coming from the company's internal reserves.

In addition to opening new hypermarkets and supermarkets, the company, established in 1971, will also open 20 additional Starmart minimarkets.

The company reported that in the first nine months of 2005, sales grew by 13.6 percent to Rp 3 trillion, compared to Rp 2.6 trillion in the same period last year.

PT Hero currently has a total of 260 outlets across the country.

Aside from its major expansion plan, the company has also reportedly accepted a tender offer from Pan-Asian retail group Dairy Farm, through its subsidiary Nalacca BV.

The tender offer resulted in a change in Hero's ownership composition.

PT Hero Pusaka Sejati now owns 50.10 percent of the company's shares, while the Mulgrave Corporation BV -- another subsidiary of Dairy Farm -- holds 12.23 percent, Nallaca BV holds 32.31 percent and retail investors the remaining 5.36 percent.