Retail industry enjoy $3.5b turnover: Survey

Tantri Yuliandini, The Jakarta Post, Jakarta

The domestic retail industry is expected to enjoy sales turnover of approximately Rp 36.7 trillion (about US$3.5 billion) in 2001, of which 32.3 percent will be generated by hypermarkets such as Carrefour and Makro, according to a survey conducted by the Business Intelligence Report (Biro).

Biro said in a statement on Wednesday that over the next four years turnover would more than double, reaching Rp 87.5 trillion in 2005.

By that time, hypermarkets will account for 38.5 percent of the total sales turnover, causing a contraction in other retail categories such as supermarkets, department stores, mini-markets, and convenience stores, Biro said.

Hypermarkets are large retail stores with around 7,000 to 15,000 square meters of selling space, offering between 15,000 and 50,000 items including food and general merchandise.

The survey was conducted over a period of three months, between August and October, among 1,855 outlets owned by 532 companies, which were categorized under supermarkets, department stores, mini-markets, convenience stores, and hypermarkets.

About 83 percent of the retail outlets are concentrated in Java while the rest are spread across Indonesia. More than half of the total are located in the Greater Jakarta area.

Biro said that the growth of the retail business was due to market expansion, increased buying power, and the higher prices of goods that are expected in the next four years.

"The retail business is one that experienced the fastest recovery after the crisis, where a giant retailer can already achieve net profits after experiencing two years of losses, and an increased turnover of about 30 percent in 2000," Biro said in a statement.

To be able to achieve the Rp 87.5 billion in turnover expected in 2005, some Rp 12.3 trillion in extra investment would be needed to build 1,900 new outlets.

Foreign retailers, while only holding 8 percent of the total number of retail outlets in Indonesia, account for more than a quarter of the total turnover generated by the outlets, Biro said, adding that foreign retailers usually came in the form of hypermarkets.

In Asia, Indonesia's retail business is ranked seventh out of 10 Asian countries outside Japan, while India -- despite having lower income per capita -- is ranked second after China. Biro did not mention the other seven countries.