Retail sales to expand 25-30% next year
Zakki P. Hakim, The Jakarta Post/Jakarta
The country's retail sector is projected to continue enjoying strong sales growth of between 25 percent and 30 percent next year on the back of robust consumer consumption and increased purchasing power of households as economic growth accelerates, according to an industry association.
Indonesian Retail Merchants Association (Aprindo) chairman Handaka Santosa said on Tuesday that plans by the new government to push economic growth higher and create more jobs would increase the purchasing power of the public, which in turn would increases the sales of retailers.
"We are optimistic that sales will expand by between 25 percent and 30 percent next year," Handaka said.
The economy this year was expected to grow by around 4.8 percent and accelerate to around 5.4 percent next year as investment started to recover and consumer spending remained strong.
The national retail industry had an annual turnover of Rp 600 trillion ($65.22 billion), according to an AC Nielsen survey, positioning the second in Asia Pacific after China.
Retailers here are reaping healthy sales revenues as consumers continue to be willing to spend their money. The relatively benign inflationary environment was helping improve consumer purchasing power and allow the central bank to cut interest rates, prompting banks and consumer finance firms to offer cheaper loans to consumers.
Handaka said that retailers will also continue to expand their operations to take advantage of the strong sales outlook.
Over the past couple of years, local and foreign retailers here have been aggressively opening new outlets. From 1998 until the first half of this year, five hypermarket operators opened 54 outlets in greater Jakarta alone.
Earlier report said that five giant retailers, including Carrefour, Alfa, Makro, Giant and Hypermart, had plans to expand their businesses in big cities outside Java island, such as Medan, Palembang, Pekan Baru, Balikpapan and Makassar.
Elsewhere, Handaka said that the expansion plans by foreign retailers would force local retailers to become more efficient, which would in turn benefit customers.
"Through fair competition, we might have a better chance of merging with foreign retailers or even competing against them in their home countries, as we already have experience of competing against them here," he said.
Handaka opposed suggestions that the government should protect local retailers against competition from their foreign rivals.
"If you never let a baby out of her cradle, the baby won't never be able to walk on her own," he said.
However, he said that one vital factor that needed to be improved was human resources, as a Chinese sales assistant, for example, was far more productive than an Indonesian one.