Hypermarkets compete to keep food prices low

Hypermarkets compete to keep food prices low

Anissa S. Febrina, The Jakarta Post, Jakarta

The recent fuel price hike has prompted people to seek out the
cheapest prices for their daily needs, particularly food staples,
something that has prompted price competition among hypermarkets.

For housewife Budi Astrini, going to a hypermarket means she
will be able to spend less.

"Shopping in hypermarkets is far cheaper than in traditional
markets, especially this week. Prices at traditional markets have
soared unbelievably high," the 42-year-old resident of Pamulang,
Tangerang, said while filling in her trolley with rice, eggs and
other groceries.

She was not the only one who preferred to go to hypermarkets
with the big retailers being able to keep increases in basic food
prices to below 10 percent.

Last month, Minister of Trade Mari E. Pangestu warned that
food prices might rise by over 10 percent following the fuel
price increases due to higher transportation and production
costs.

"We have yet to increase the prices of basic foods. If there
is any adjustment (in prices), it would not be as high as in
traditional markets," said PT Matahari Putra Prima public
relations manager Dewi Susilowati last week.

Matahari operates 13 hypermart outlets nationwide. The company
has complied with suggestions from the trade minister that
hypermarkets assist the government in stabilizing the economy by
keeping their prices low.

Dewi said this week alone, Matahari outlets were giving a
"best price" guarantee on basic commodities such as cooking oil,
flour and rice. "We will come up with different promotions on
different products next week," she said.

Entering the competition in May 2004, Hypermart claims that it
has a 20 percent share of the market, and plans to open four more
outlets before the Idul Fitri holidays that will fall on Nov. 3
and Nov. 4.

French giant Carrefour, meanwhile, has taken a more aggressive
strategy by freezing the prices of 387 food items -- including
rice, eggs, cooking oil, margarine and sugar -- until Nov. 4.

"We realize that this is a difficult time for many
Indonesians," said PT Carrefour Indonesia spokesman Joseph
Buntaran, adding that the retailer was aware that the Ramadhan
fasting month and Idul Fitri holidays were the most important
time of the year for the great majority of the people in this
predominantly Muslim nation.

With 19 outlets nationwide, Carrefour leads the market by
providing 40,000 stock items from 2,500 suppliers.

Meanwhile, field observations at the second largest
hypermarket, Giant, shows that food prices have increased by as
much as 10 percent.

"There has been a very slight increase in the prices of basic
foods, ranging from 5 percent to 10 percent," said Cindy, deputy
supervisor at a Giant outlet in Plaza Semanggi, South Jakarta.

There are 11 Giant outlets throughout Indonesia.

Hypermarkets are able to keep their prices low because they
order supplies months ahead of time.

"We place our purchase orders three months ahead," said
Hypermart representative Dewi.

With such ability, it is estimated that fast-growing
hypermarkets will control 38.5 percent of all retail market space
by the end of this year.

And while traditional market vendors are grumbling, consumers
like Budi can only say, "Who would not want cheaper prices?"