RI retailers trying to modernize, branch out
RI retailers trying to modernize, branch out
The Jakarta Post, Jakarta
Major retailers in the country are planning big expansions of
their businesses to get a larger chunk of the country's expanding
economy.
Alfamart, a minimarket operator since 1999, is leading the
charge by planning to increase its outlets by 80 percent from
1,000 to 1,800 locations in the country.
"The momentum can't be stopped, we have to continue
expanding," said Djoko Susanto, a director of PT Sumber Alfaria
Trijaya, which owns Alfamart.
The company's ultimate goal is to establish between 5,000 and
10,000 minimarkets here.
The decision to expand, according to Alfamart managing
director Pudjianto, "will eventually sideline traditional
stores".
Competitor Indomaret, meanwhile, has also revealed its plans
this year to open 600 more outlets, boosting its stores to 1,600.
The presence of the modern markets, however, often violate
Bylaw No. 2/2002 issued by the Jakarta administration on private
markets in the capital, which regulates pricing policies, a
minimum distance from traditional markets and cooperation with
informal businesses.
Supermarkets and hypermarkets are also planning to rapidly
expand their presence, with one of the operators, Hypermart,
looking to triple its outlets to 18 this year.
Industry analyst Yongky Surya Susilo of AC Nielsen said the
retailers growth plans for this year were "realistic".
"The number of retail outlets in Indonesia, which is
(estimated to be) 1.75 million, is the second-biggest in the Asia
Pacific after China with 3.2 million," he said.
A study by MasterCard International in February said Indonesia
was forecast to top the year-on-year retail sales growth for the
first semester with 16.9 percent, compared to China's 12.75
percent.
Yongky explained that Indonesia's consumer spending on 47
major goods increased by 13.8 percent last year.
The Association of Indonesian Retailers (Aprindo) has
estimated that total retail sales in 2004 reached about Rp 300
trillion (US$31.6 billion).
The recent fuel price hike, according to Yongky, will not
affect retail spending as it was still predicted to grow by
between 15 percent and 20 percent this year.
Aprindo data shows that sales in 2,720 modern stores
nationwide experienced a 28 percent growth from Rp 35 trillion in
2003 to Rp 45 trillion in 2004.
Yongky said although spending increased at both traditional
and modern retailers, the growth at modern retailers was 12
percent higher than at traditional markets.
At the current growth rates, the market share of traditional
stores, currently at 70 percent, would drop by 2 percent per
year, he said, adding that the strong growth in the modern retail
sector was because customers obtained more "service and value"
there.
The most recent data from AC Nielsen revealed that the share
of consumer spending at modern markets has increased by 40
percent from 21.8 percent in 2000 to 30.4 percent in 2004. (002)