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?"