More outlets to open as retailers confident of market potential
Tony Hotland, The Jakarta Post, Jakarta
While many industries are taking a wait-and-see stance due to fears of the possibility of trouble during the general election, retailers are determined to go ahead with their expansion plans this year.
French giant hypermarket Carrefour, which currently operates 10 outlets in Jakarta and one in Bandung, has set its sights on establishing four more hypermarkets in the country in the middle of this year.
"We're optimistic that this year's sales will rise. The general election will also be fine, like the last one in 1999. The impact of it, should there be a negative one, will just be temporary," Carrefour spokesperson Triyono Prijosoesilo told The Jakarta Post on Friday.
The four new hypermarkets are to be built in Jakarta, Surabaya, Medan and Palembang, said Triyono.
He said the firm's profit had increased last year, but he refused to provide figures.
Domestic retailers PT Lion Super Indo and PT Hero Supermarket also have plans to open more branches, with expectations of higher sales.
Lion marketing manager Melanie Dharmosetio said the company had put the building of five more outlets in Jakarta and Surabaya on its agenda.
"We do have some concerns about the general election, but we've been through many difficult times and we've survived. Whatever happens, life must go on," she told the Post.
Lion started operations in 1997 and currently has 39 stores, most of which are located in Jakarta, Bandung and Surabaya.
Melanie said the company enjoyed more than Rp 1 trillion (US$117.64 million) in sales last year. She was confident that the company could reap an even bigger amount.
She added that Lion enjoyed an excellent start this year with the consecutive festivities of Chinese New Year and Idul Adha (Islamic Day of Sacrifice).
"We had quite elevated sales during the Imlek celebration, especially in stores located in areas where many Chinese people reside, such as Muara Karang, Kedoya and Bekasi," she said.
PT Hero Supermarket, which owns Hero supermarket, Giant hypermarket, Guardian pharmacy and Startmart minimarket chains, also intends to open three new Giant hypermarkets and two Hero supermarkets.
According to the company's management, it takes about Rp 25 billion to Rp 30 billion to open one Giant hypermarket.
The country's biggest retailer by sales, PT Matahari Putra Prima has also announced plans to open eight hypermarkets this year.
The company currently operates 82 supermarkets and department stores with a total area of 752,000 square meters.
The company recently said its profit margin would increase two percentage points this year as it benefited from a higher sales volume and the closure of 15 not-so-profitable outlets last year.
Matahari estimated its profit to increase by 10 percent in 2003 from 2002's Rp 105.3 billion.
Consumption has become the key driver of the country's economic growth since the 1997 economic crisis, which resulted in a sharp decline in investment.
At least 11 foreign retailers have set up operations in Indonesia over the past five years to capitalize on rising domestic consumption in the world's fourth most populous country.