Tue, 16 Mar 1999

Promodes opens retail operation despite crisis

JAKARTA (JP): France's Promodes Group will push forward with expansion plans in the country despite the ongoing economic and political crises, its country representative said on Monday.

Jean-Luc Montembault said it would open its third US$5 million hypermarket retail operation in Jakarta at the end of July.

"Indonesia is among a few countries where this kind of business will develop in the future," he announced at a news conference following the grand opening of the firm's second hypermarket operation at Pluit Megamal in North Jakarta.

He was convinced the hypermarket retail business would survive the economic crisis because it provided quality products at discounted prices.

"During a crisis, customers want a discount system." Concerning political uncertainty, Montembault said: "We have already calculated the risk."

Indonesia is scheduled to hold a general election on June 7, touted as the first fair and free polls after 30 years under the authoritarian rule of Soeharto. The prospect of elections has raised jitters among many citizens in the wake of bloody unrest and rioting in many areas nationwide. Disturbances have often been marked by looting and arson of retail outlets.

The 19-month-old economic crisis has catapulted about half of the country's more than 200 million population into poverty and led to massive layoffs in major cities like Jakarta, with both the banking and manufacturing sectors in serious trouble.

The French retail giant, established in 1961, now has various retail operations in Europe, South America and Asia, particularly Indonesia and South Korea.

The group opened its first retail operation in Indonesia last year by forming a joint venture with PT Sinar Kilat Buana, a retail unit of the giant Sinar Mas Group, called PT Contimas Utama Indonesia. The French firm owns 51 percent.

Promodes, the second French retail chain to operate in Indonesia after Carrefour, provides more than 15,000 different products at discounted prices in a shopping area covering about 8,000 square meters.

Its first hypermarket operation outlet, called Continent, opened in South Jakarta last October.

Several supermarket operations have criticized its presence in the country, alleging Continent operated on a dumping strategy by selling its products below manufacturer prices.

Montembault denied the allegation and said the company was merely slashing profit margins in the hope it would be compensated by large sales volume.

"We'll keep our low margin strategy," he said. (rei)