Tale of two shops: Markets and malls

Tale of two shops: Markets and malls

In recent years, customers have been spoiled by the ever-
increasing number of modern shopping centers that often engage in
price wars to win customers. The Jakarta Post's Maria Endah
Hulupi, Ida Indawati Khouw and contributors Prapti Widinugraheni,
I. Christianto and Tri Hafiningsih look into the issue of smart
shopping.

JAKARTA (JP): What makes a shop popular? Friendly staff, cheap
prices, air-conditioning, ample parking space, after-sales
warranties? In a perfect world, all of these. And in these
seemingly hard times, you would think competitive prices were
most important.

As it turns out, the aesthetic sensibility and wallets of some
Jakarta residents are still as deep and as padded as they were
before the economic crisis; these people will pay to shop in
comfort. Not surprisingly, responsive retailers have no qualms
about giving great service and loyalty perks to high rollers --
like in the good old boom days.

Not far down the road, other shoppers believe price is king
and comfort can be compromised. In fact rubbing shoulders with a
crowd of strangers, sweating and haggling for a piece of
merchandise is seen as an art in itself.

"It's worth it. If you earn 'just-enough' income, but you
still want to look fashionable and trendy, get your clothes at
the market. Just make sure you inspect very closely the details
of everything you buy, like the neatness of the sewing on
clothes," says Wilandari, an academic, referring to the Mangga
Dua and Tanah Abang markets where she shops for most of her
clothes.

These markets are among the biggest wholesalers in Jakarta for
clothes, textiles and other items. Parts of Mangga Dua and almost
all of Tanah Abang have no air-conditioning. They are poorly
ventilated, almost always crowded and full of stalls that are
crammed in together, separated by narrow aisles. It's wise,
Wilandari says, to wear old clothes and no jewelry when shopping
there. The more inconspicuous you are, the better.

The same goes for shopping at Jakarta's electronics hub. An
executive at Glodok in Central Jakarta who requested anonymity
admits that vendors of electronic goods occupying Glodok
electronics center and surrounding buildings have nothing going
for them except cheap prices and plenty of choice. Even then,
customers must bargain if they don't want to be duped.

"Most of our tenants are wholesalers and almost all retailers
in Indonesia get their supplies from here, including some
department stores," he says.

For the individual consumer, the only advantage is getting
cheap goods through haggling. "But still, you must be smarter
than the vendor. Look around beforehand and make sure the price
you settle on -- after bargaining -- doesn't exceed the 'market'
price," he says.

Comfort shopping

Shopping in such places is no doubt for the brave at heart.
For timid souls who sport a reasonably thick wallet or desire to
shop in comfort, there are more appealing shops. These are the
clean, air-conditioned and brightly-lit places where customers
may expect to be greeted and have their complaints resolved.

Some of these stores are oldies making a comeback, such as
Ratu Plaza, a shopping center popular in the 1980s which shut
down in 1995 and reopened last September. Plaza Slipi Jaya, a
victim of the May 1998 riots, is now also back into full swing.

No doubt, these are signs of a return of boom-time consumerism
so shopping hubs are once again scrambling to look pretty and
inviting to customers.

The Metro Department Store group, managed by PT Metropolitan
Retailmart, sends its sales staff to training programs that teach
them how to greet customers, take care of personal appearance and
handle complaints.

Metropolitan Retailmart finance director Handonowarih
Nitiseputro says the company makes sure that defective goods are
replaced within seven days of purchase, while all complaints
should be dealt with within three days.

Gatot Praptoriadi, the company's business process improvement
manager, says that if a certain product receives more than one
complaint, Metro will give a warning to the product's supplier.
If the vendor continues to disregard Metro's demands then the
company will look for another supplier.

Up one level on the complaint chain, building managers must
look out for customers who complain about the retail shops that
occupy the building.

Henny Udy, tenant and guest relations senior manager of PT
Plaza Indonesia Realty, the operator of Plaza Indonesia in
Central Jakarta, says: "We want to make sure that the customers
of our tenants are satisfied with the services they receive while
visiting Plaza Indonesia."

Henny says the company has strict standards for tenants'
product quality and services. Since most shops at Plaza Indonesia
sell branded goods, customers are mainly members of Jakarta's
upper-middle to extremely-wealthy class. No doubt these are
people who would not hesitate to give meaning to the saying "the
customer is king".

Some of the most common issues raised by customers include
questions about the authenticity of products sold by a tenant.
But similar questions also come from branded goods-sellers upon
hearing that another tenant is selling their goods, says Henny.

Customer loyalty is an increasingly important issue in the
face of competition. Many retailers these days offer perks that
can be gained through "exclusive club" memberships or similar
programs.

Sularno Karyanda, the sales promotion manager of Pasaraya
Department Store says the store has launched membership cards
allowing holders to enjoy advantages like getting points for a
certain amount of purchase, receiving prizes after collecting a
certain number of points, being invited to special events and
receiving latest information on sales promotions.

"Since we target customers from the middle to higher-income
bracket, we focus on serving with comfort -- we have spacious
shopping centers with carefully-arranged displays. We also have a
customer relations division which can immediately handle problems
of customers," he says.

Is the price right?

While some people do not mind spending heaps in order to shop
in style and buy pieces of branded merchandise, there still
exists in Jakarta a level-headed, middle-income class that
believes that price should come second after a sensible degree of
shopping comfort is assured.

Stores that cater to this group focus their promotion more on
prices than on product brand.

Sri Purwanto, the marketing and communication manager of PT
Alfa Retailindo Tbk., the operator of Alfa stores, says: "Our
strategy is focused on lowering prices so we can guarantee to pay
the difference if people can prove that (for the same product)
other stores have cheaper prices -- with the condition that the
products are not on sale."

Sri adds, however, that very few customers have made use of
this advantage. "I think it's because people don't want to go
through the hassle for the sake of a little difference."

Another strategy involves reducing prices as the volume of
shopping increases. Not surprisingly, such pricing policies are
responsible for the store's meager profit margin. Through cross-
subsidy and by focusing on the quantity of goods sold, it expects
to get higher profits from otherwise less-valuable merchandise.

Alfa also tries to gain customer loyalty through membership
cards which allow the holder to get a three to five-percent
discount for selected items, get free movie tickets, enjoy
discounts at certain hotels or restaurants and other perks.

Evidently, it's a tough life for retailers like this. Head of
public relations and organization division of the Association of
Indonesian Retailers (Aprindo) Rudy Sumampouw admits that pricing
policy is perhaps the biggest problem of the retail business in
Indonesia.

The free market has led retailers to engage in unfair
competition, price wars and even the selling of merchandise at
prices below production cost. This is particularly true with the
influx of international-chain retailers.

One example is Carrefour, an international chain with outlets
spread across Jakarta, that claims that goods sold at its stores
are cheaper than elsewhere. At the same time, it can afford to
operate at sustainable levels.

Carrefour Public Relations Officer Triono, says: "As a big
retailer, we always get our supplies in large quantities. We have
authorized suppliers and we establish mutual good relations with
them. We see them as partners ... This good relationship has
allowed us to get bigger discounts from them and, in turn,
enabled us to sell the goods to consumers at lower prices."

Rudy Sumampouw points out that competition between local,
small-scale retailers and international chains like this is
aggravated by the fact that there are no rules of the game.

"We don't have any kind of 'code of ethics' for pricing and
competition," he says.

Such devastating pricing policies by smaller retailers are
usually made for the sake of image and market domination. "But to
sell below production cost for a long period requires huge
capital that is unfeasible for local retailers whose businesses
are built on bank loans," he says.

Regardless of the retailers' plight, at the end of the day it
is the customer who benefits from the situation.