Indomaret aims to fight competition

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.