Riots ruining the retail sector

Riots ruining the retail sector

The retail sector is part of the backbone of the country's
economy. But the sector is ailing now, as retailers see their
operations shrinking and delay expansion due to the economic,
political and social storm that has swept the country. The
Jakarta Post's team Benget Simbolon, Budiman Moerdijat, Devi M.
Asmarani, Ida Indawati Khouw, Primastuti Handayani, Reiner
Simanjuntak, Sugianto Tandra and P.J. Leo uncover the fears and
tribulations afflicting the industry's players here.

JAKARTA (JP): Once was enough for siblings Hendra and Aming,
when they decided in July to rebuild their razed electronics shop
located in the heart of the Jakarta Chinatown district, Kota, in
West Jakarta.

Pelangi Audio, a family business built up in the last 20
years, was looted and destroyed by angry mobs in the mid-May
unrest.

Hoping to avoid similar misfortune, which had cost them Rp 900
million (US$121,621) in losses, the brothers furnished the new
store with fireproof materials for the front door and the roof,
like many of their neighboring shopowners.

Tragedy, however, seems to be dogging their path.

When more unrest erupted on Nov. 14, a day after a fatal
military showdown quashed a massive student protest, the store
became a target again for the riotous mobs. This time, it was
saved from total destruction.

A week later the brothers found their business in the teeth of
another round of rioting as a clash between ethnic groups in the
Ketapang area, West Jakarta, intensified into a church-burning
and property-destruction orgy.

"We are so traumatized by the experiences that we don't dare
display all our merchandise in the store anymore," Hendra said.

Customers are now only shown catalogs before they decide on
their choice during transactions, prior to the items being picked
up from a house in Grogol, West Jakarta.

Apprehension stemming from heightening political tensions has
forced retailers to limit the display of goods in their stores.

This is especially felt among the ethnic Chinese community,
which largely controls the retail sector, and which for decades
has been targeted during social disorder.

Retailer Tatang Setianto says he too no longer displays all
the merchandise in his electronic components shop in Tangerang,
West Java.

"I place some of them, especially the expensive items, in the
store room. I will only serve customers who are seriously
searching for an item," Tatang said.

Deborah, who runs the Concorde Toys baby and toy products
outlet at the International Trade Center (ITC), Mangga Dua in
West Jakarta, says she is particularly reducing the inventory of
imported products at her store.

But even as shop owners are getting smarter and more cautious,
it does not mean they are free of daily worries over more riotous
outbreaks.

Deborah said retailers are on constant alert against possible
upheaval.

"The mass media particularly TV and radio are our sources of
information. But we have also developed a kind of information
network among retailers here," she said.

Anxiety affects their sales, as the unrest has deterred
customers from shopping in certain riot-prone areas like the
bustling commercial district of Chinatown.

Deborah said the tempest in the last two weeks had caused a 70
percent drop in turnover.

Setyadi Surya, the director of human resources and public
relations of PT Ramayana Lestari Sentosa, said unrest had largely
affected customers psychologically.

"Riots and high crime rates disturb the people's peace, even
when shopping," Setyadi said.

Ramayana, one of the country's largest retail chains, had
suffered the most in the May riots.

Twelve of its outlets were burned, and 14 were looted and
vandalized, incurring up to Rp 100 billion in total losses.

The store did not suffer any material losses in the last two
outbreaks.

The 14 stores which were looted have begun operation again,
while the 12 razed ones had not been rebuilt.

The publicly-listed Ramayana had planned to open a new outlet
in Cengkareng, West Jakarta to replace the burned outlets, but it
is delaying the plan until security improves, Setyadi said.

Security

It is general knowledge that retail businesses cannot survive
without political stability.

"Retail business in this country is actually promising because
of the large population, but without security it's nothing," says
Rudi Sumampow, a spokesperson of the Matahari department store.

The lack of confidence in the government and its ability to
ensure security has delayed many expansion or even reconstruction
plans in the retail sector.

Matahari, a competitor of Ramayana, had no plans to rebuild
its six stores burned in the May riots, Rudi said.

Three of Matahari's six outlets are located in Surakarta
(Solo), Central Java, and another three in Tangerang. The chain's
seven other outlets in Jakarta were also looted.

Says Kustarjono Prodjolalito, the executive director of the
Indonesian Merchants Association (Aprindo): "It's good enough
that we can survive through this episode."

Aprindo's members have suffered about Rp 7.5 billion in
financial losses since the four-day Special Session of the
People's Consultative Assembly on Nov. 10. The losses come from
both inactive businesses -- those generating no revenues -- and
the riots.

This amount is in addition to Rp 661.52 billion losses
suffered during the May riots, in which at least 125 stores owned
by the members were burned and 119 others were looted and
vandalized.

Many retailers have chosen to wait until the end of 1999 after
the planned general and presidential elections while some may
just have to close down some of their branches and dismiss some
of their employees for survival's sake.

Some retailers are placing their hopes on the coming four
major events -- the Christmas, New Year, Idul Fitri and the
Chinese New Year celebrations -- to regain the profits they've
lost in the recent disturbances.

After the holidays, however, the stores would likely reduce
inventory again as the country is gearing up to complete its
political agenda, which has proven unrest-sensitive in the past.

Laurensius S., the manager of the Lotte Branded Center at ITC,
said he planned to reduce inventory by 50 percent after the Idul
Fitri Holiday as a cautionary measure against possible unrest in
the run-up to the general election in May.

Kustarjono said some retailers are considering moves to safer
places like the tourist haven Bali or the commercial island of
Batam, and some are planning to leave the country if conditions
do not improve.

Setyadi said he placed "great hope in the Armed Forces" to
secure stability.

But he might be one of the rare people with such optimism in
the military, whose image has been tainted by its violent
handling of the student movements and by allegations of human
rights violations in the past.

While mobs were looting and vandalizing properties in mid-May,
security personnel reportedly did very little to stop them.

Recent findings are pointing to the involvement of some
elements within the military in the May riots.

Laurensius said he was very disappointed by the government,
which had earlier promised that there would be no repeat of the
May horror.

"They've given us false hope. The government's credibility is
now questionable," he said.

Similar hopelessness is envisioned by Tatang: "There's no
longer hope of doing business here, so how can we open our shops
when we are always in fear of being targeted in riots again?"