Sondakh on becoming a retailing hero

By I. Christianto

JAKARTA (JP): Indonesia, particularly the country's capital, will not have to wait until tariffs tumble in 2003 to become a major Asian shopping destination.

Or so says Steve Sondakh, an executive of the Hero supermarket chain. He believes that Indonesia has the ability to achieve the mantle before 2000 as long as the government and local retailers forge closer links to stimulate the country's shopping industry.

"Indonesia has already become a shopping destination. We can compete with Singapore and Hong Kong in attracting foreign shoppers," said Steve, who has spent 25 years in the retail business.

But greater efforts are needed before Indonesia can consider itself on a par with Japan and other major shopping destinations, he said.

Steve said that prices of some goods, including clothing sold at shopping centers and consumer products sold at supermarkets in Jakarta, are now more competitive than similar items sold in Hong Kong or Singapore.

"The prices in Singapore have become more expensive due to the continued increase in the value of the country's currency. Hong Kong has the same problem because of its high space-rental rates," he said.

"And the professionalism of the retail business is improving here," he said.

In Steve's eyes China has the same competitive edge as Indonesia but he feels it is unlikely that it would be able to compete with Indonesia in the retail sector in the near future.

"In addition, China still has some barriers including international language difficulties," Steve said.

A number of leading world-class boutiques have already selected China as their production sites but Steve reckons this will not be enough to turn the country into an attractive shopping destination.

He acknowledged that there are still many problems that must be tackled to make Indonesia as convenient a place to shop as elsewhere in Asia.

Traffic jams and poor services at the airport in Jakarta are the problems that usually annoy foreign visitors.

"Foreign visitors who are here for the first time will return home with a negative perception of Indonesia if they are badly served at airports," he said.

Besides improving airport services, Indonesians should also use their renowned reputation for hospitality to serve the foreigners, he said in reference to the need for improving services in the shopping business.

"Indonesians are well-known for their smiles. They (shop owners) do not smile for business reasons. A dialog is valuable even if there is no transaction," he said.

Steve, born in November 1952, said that foreign retailers' operations in Indonesia could help attract foreign buyers but if not managed carefully they will threaten the local retailers.

"Although the government still -- in its own way -- protects local retailers by barring foreign investors from undertaking direct operations in Indonesia, they will swamp our market which -- we have to admit -- is not yet saturated.

A number of foreign retailers such as Sogo of Japan, Wal-Mart and JC Penney, both of the United States and Mark & Spencer of Britain have already opened their outlets here under technical cooperation agreements with local firms. At least four more world-class retailers will follow suit next year.

When asked about local business' strategies to counter such competition he said, "We have to be aware of it. I don't think we have to be scared but we do have to be a little concerned because there will be possible poaching of employees.

"We have to realize that the pie is still huge, given the continued increase in the people's per capita income," he said.

He also said that Indonesia, which must fully open its retail industry in 2003 to comply with its free trade arrangement commitments with other members of the Association of Southeast Asian Nations (ASEAN), should make proper preparations to enable it to be in a position to compete.

Steve said he was upbeat that Hero, as the leading supermarket chain in the country, would be able to benefit from the ASEAN Free Trade Agreement, given its current strong network.

"We began the business in 1971 with just one outlet. Now we have a total of 66 outlets in 15 cities all over the country. We believe that Hero has its faithful customers.

"A 25-year period is not a short time to establish Hero as a leading retailer. But we think we now know a little about this business," said Steve, who got his formal education in the Netherlands.

It was Saleh Kurnia, Steve's brother-in-law, who founded Hero in 1971 as a small supermarket in Kebayoran Baru in South Jakarta. The second outlet was opened in 1974 in the Chinatown district of West Jakarta and the third one began operating in 1976 in Gondangdia, Central Jakarta.

Hero plans to run 100 outlets by 2000.

Steve said that each of the Hero outlets has a floor space of between 2,000 square meters and 3,000 square meters.

"In our early years, many people considered that Hero was just a place selling junk. The displays were poor. Then we learned how to change the image. Now about 3,000 or 4,000 people go to Hero every day. "The art of display is never thought about at school, but it's important. We studied how to display items and how to make it convenient and easy for shoppers to find what they want. We have also focused on the middle and upper classes as our target market," he said about his past experience.

"We also took examples from similar businesses in Europe, Japan and the United States. But the cultures are different. For example, Hero has to provide small quantities of jamu (traditional Indonesian herbs), even though the price is cheap, because the local customers want it."

Steve, a father of two sons and a daughter who spends his time off swimming and playing tennis, said that Hero needed 15 years to establish its image as a supermarket of the middle and upper classes.

He does not agree that the retail sector has socialized consumerism.

"Indonesians are now more selective. People going to supermarkets make plans. They will buy just what they want. The displays have also to be arranged to facilitate buyers' selectivity," he said.

He also hopes consumerism will not envelop his sons who are studying in the United States. "I recently refused to let my son buy a new car except with money he earned himself."

Education, he said, is very important. However he admitted that his schooling has not benefited his career in practical terms.

"I learned the business of retailing from practice. I did much experimenting before making a manual for Hero. Besides, only logical thinking and not management is taught at school."

"There are theories and manuals on the art of negotiation, for instance, but it is different for different people in different cultures," he said.

He believes that success or failure is determined by other people who know nothing about the overall process reaching their targets.

"It's great if we can reach a target within a particular period."

His target is now to make Hero a supermarket chain offering top quality public services and goods at the right price and in convenient locations.