Sarinah shopping center survives tough competition
Sarinah shopping center survives tough competition
By Ahmed Kurnia Soeriawidjaja
JAKARTA (JP): The Sarinah shopping center, a 14-story building on Jl. MH Thamrin in Central Jakarta, was a symbol of modernization and affluence when it was built in 1963.
Sarinah was the first Indonesian shopping center equipped with air conditioning and taught many Jakartans the skill of getting on an escalator.
It became a tourist site, a place where people with limited funds could at least sightsee if not shop.
Now, 30 years later, Sarinah has persevered by maintaining its charms in the memories of older Jakartans. Although many modern and sophisticated shopping centers have sprouted in the city, it has survived.
It may be because the largest McDonald's in Indonesia chose to set up business in the building, or, because the Hard Rock Cafe absorbs one floor. The eateries and the two floors of Indonesian handicrafts draw more than 1,500 foreign visitors to the store a day. The basement food court is a favorite with locals because it offers traditional food and sweets like rujak Cingur from East Java and pempek from Palembang.
Sarinah constantly tries to retain its Indonesian image in the face of globalization. Its motto, "To Serve You And Your Family", denotes its effort to deliver on its commitment to public service.
Ilham Asid, director of operations, told The Jakarta Post, that Sarinah does not consider the modern shopping centers as main competitors.
"Sarinah is located in the city's most strategic place. Moreover, we offer distinctive items including unique handicrafts from the country's 27 provinces. Our target market is middle and upper income clients as well as foreign tourists," Asid maintained.
Local batik, wooden and stone carvings, and rattan products have become Sarinah's mainstay. About 40 percent of its Rp 150 million daily turnover comes from the sale of handicrafts.
Improved management boosted annual revenue from only Rp 37.1 billion in l991 to Rp 54.2 billion in l992. Revenue continued to rise from Rp 67.4 billion in l993 to Rp 79.7 billion last year. The management expects to bring in Rp 90 billion this year, of which Rp 6 billion will be profit, Asid said.
Aside from retail, Sarinah has set up joint ventures with a number of financial institutions since 1980 to support the craftspeople who supply the store. The institutions include Bank Dagang Negara, Asuransi Ekspor Indonesia and Danareksa.
Minhad Moefti, Sarinah's finance director, said that by the third quarter of this year, Sarinah had provided Rp 5.2 billion in working capital for 300 craftspeople. By the end of the year, Sarinah is expected to extend Rp 7.5 billion to these small-scale entrepreneurs.
"We also help promote and market their handicrafts," Moefti added.
History
Sukarno, Indonesia's first president, came up with the idea of building Sarinah after visits to several countries. He believed that Jakarta, a growing metropolis, needed a department store.
After a feasibility study was made, construction commenced in April 1963. Funding came from Japanese war reparations. Tenants began selling on April 15, 1966, although the building was not completed until May 1967. The shopping center was named after Sukarno's babysitter, Sarinah.
Since then, the state-owned enterprise has established itself as the pioneer of Indonesian retail.
Sarinah has had its share of misfortune. In 1984 a fire broke out on the sixth floor, spreading quickly to offices on the 14th level. The fire consumed 45 percent of the company's total earnings acquired from office rent.
Even though the department store was spared from the fire, it suffered losses. For safety reasons, all business had to stop during the renovations. The fire threatened about 1,000 jobs.
However, Sarinah made a comeback, its magic not weakened in the eyes of consumers. In early 1990 Sarinah was declared a healthy state-company.