Retail sales to suffer short slump

Evi Mariani, The Jakarta Post, Jakarta

Already weak retail sales are expected to experience a short-term slump following the Marriott bombing, as people stay away from shopping malls and department stores because of security concerns.

"Retail sales for this year were already experiencing limited growth (from last year). This latest incident (the bombing) adds security concerns and will further depress sales for maybe two or three months," Rudy J. Sumampouw of the Association of Indonesian Retailers (Aprindo) told The Jakarta Post on Monday.

He said the association had yet to calculate estimated losses from the bombing.

An analyst at PT Trimegah Securities painted a similar picture of the retail sector, saying sales would slump for perhaps a month before beginning to return to prebombing conditions.

"I do not think the bombing will affect overall retail sales for a long period," said Arya Satyagraha, a retail sector analyst at the securities firm.

He said sales of primary goods would not change, because despite security concerns people still had to purchase their daily needs.

"Apparel sales will be more severely hit than primary goods because people, in other words potential buyers, will tend to avoid shopping centers temporarily," he said.

Since the bombing, messages have been passed from mobile phone to mobile phone, warning people to avoid particular shopping malls in the city.

The commercial director for food products at Makro hypermarket said Makro was not revising its sales target for the year.

"Our customers are mostly resellers, service providers and institutional buyers who have to buy their primary needs no matter what the situation," Kuswanto Gunadi told the Post.

However, he did acknowledge that Makro sold to hotels directly affected by the bombing.

"But sales to hotels, restaurants and catering services only account for 10 percent of our total sales, so it will not affect our overall sales," he said.

Most retailers had already set conservative sales targets for the year, with the purchasing power of consumers weakening due to the lingering global economic recession, the recent outbreak of Severe Acute Respiratory Syndrome in Asia and rising unemployment at home.

Sumampouw said Aprindo had set this year's sales growth target at below 20 percent, while in "normal" circumstances growth usually reached above 20 percent.

Arya said that since last year retail sales had experienced only one-digit growth, from two-digit growth in 2000 and 2001.