Mon, 14 Jul 2003

Indomaret aims to fight competition

Kornelius Purba, The Jakarta Post, Surabaya

Fifteen vocal groups, including five groups in the children's category, tried their best to sing the jingle of Indomaret mini market chain and their own favorite songs in Surabaya on Saturday, because the two best performers from the adult's and children's categories respectively would compete with other vocal groups from Yogyakarta, Bandung and Jakarta in a festival grand final next month in Jakarta.

It may seem strange that PT Indomarco Prismatama, the company that runs the country's largest mini market chain and franchise, under the brand name Indomaret, organizes such a festival in the cities where its 747 convenience stores operate.

According to Laurensius Tirta Widjaja, the company's operations director, the festival is only a small part of the company's overall strategy in facing fiercer competition in retail business. Although for the moment Indomaret is still the largest operator, other national competitors are now aggressively entering the lucrative retail market. The Hero supermarket chain now is also quickly penetrating the mini market sector. Sampoerna, a giant clove cigarette maker, has also been aggressive in expanding its mini market chain Alfa.

The success of French hypermarket giant Carrefour in Jakarta to dominate the market just within just a few years will clearly encourage more foreign retailers to come.

"Now we are still leading. But from now own, the competition will be more severe. We have to take more care with the customers, not only by offering cheaper and better quality products," Laurensius told The Jakarta Post.

Since its establishment in 1988, the company has been accused of monopolistic practices, due to its close relationship with Salim Group, the owner of the country's largest food manufacturer, Indofood.

Traditional markets protested the presence of Indomaret shops because the traditional shops could not offer cheaper prices. Warung (small shops operating in neighborhoods) are also affected by Indomaret. The controversies are fading now, partly thanks to the presence of other similar companies.

"Frankly speaking, you cannot ignore the necessity of our community development program. Now times have changed. We must be able to convince people that our presence will benefit them," Laurensius said.

When the economic crisis hit Indonesia in 1997, PT Indomarco Prismatama owned 236 shops, mostly in Jakarta. Then it introduced a franchise system and approved two franchisees. In June this year, the company operated 442 shops and another 305 franchise outlets, including 511 shops in Greater Jakarta. It has nearly 10,000 employees.

However, aggressive expansion is not always followed by the same speed of human resources development. In many shops, the attendants or cashiers often ignore customers who need help finding certain items or just to say thank you to the buyers. "Human resources development becomes our concern," Laurensius said.