Makro to expand its Indonesian retail operations

JAKARTA (JP): PT Makro Indonesia, a subsidiary of the Netherlands-based retail chain operator SHV Holdings, is to open six more outlets within the next two years to further strengthen its wholesaling network in the country.

The company's president Simon Collins said here on Thursday that three new outlets would be opened this year in Jakarta, Semarang and Surabaya.

"We will open our store in Semarang next month, while our second store in Surabaya will be opened in June. By the end of this year, we will open another store somewhere in Jakarta," Collins told reporters in a media briefing.

He said the company would open three more outlets in the country's major cities next year as part of the expansion plan. "We hope we will be able to open two or three stores a year in prospective cities such as Makassar, Yogyakarta, Bogor," Collins said.

Collins declined to reveal the amount of investment allocated for the expansion plan but he said that opening a wholesale outlet in Jakarta would cost about US$10 million to $11 million.

He estimated that opening an outlet outside Jakarta could cost the company up to $7 million.

Makro, which began its operation in Indonesia in 1992, currently operates 10 outlets in Jakarta, Bandung, Semarang, Medan and Bali.

Makro, which is 83 percent owned by the Dutch retail chain operator SHV Holdings, started its operation in 1992 when its first outlet opened in Pasar Rebo, East Jakarta.

Collins, who replaced Van der Lely as Makro's president in February of this year, said the opening of the new outlets were long-term investments, given the uncertainty in the country's political and economic situation.

"We're under pressure now. But, we do believe the country's economy will be better soon," he said.

Makro is one of the chain wholesaler companies that maintains a complete database on all its corporate customers, keeping them informed through a fortnightly newsletter which includes any changes in the prices of the goods being sold.

Commenting on accusations from local retailers that the company's expansion plans would threaten major local retailers like Matahari, Hero and Alfa, Collins said Makro did not compete with retailers.

"We don't target end-users and our stores are not located in the heart of the city," he said.

Different from hypermarkets and retailers which target retail market share and are mostly located in the heart of the city, Makro locates its stores only in suburban areas. It also sells 85 percent of its goods to retailers and corporate buyers.

With the opening of the new outlets, Makro expects sales growth to reach 25 percent this year as compared to 20 percent in the previous year.

Collins said sales growth in the first quarter of this year had already reached 25 percent but he refused to reveal any figures. (03)