Comparison of Retail Business Development in Indonesia with Singapore

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Comparison of Retail Business Development in Indonesia with Singapore

FOOD RETAIL BUSINESS (GROCERY) VERY PROMISING

Hypermarkets experiencing unprecedented growth  In 2010 the hypermarket industry in Indonesia has grown very rapidly. Indonesian Retailers Association (APRINDO) estimates, the total modern retail spending this year will reach Rp 100 trillion. A total of Rp 65 trillion is spending the rest of food and non-food. Of the amount of the food shopping, hypermarkets accounted for 35 percent, 35 percent and a mini supermarket 30 percent. Food is a basic human needs, inevitably requires us to shop for food and drink each day. This is the reason why the mini market and the rapid growth of hypermarkets Kompas.Com).

The growth of food retail outlets in hypermarkets average 30% per year and 7% per year supermarket and convenience store / mini market about 15%. In 2003, sales of modern food retail sector is controlled by 60% of supermarkets, hypermarkets 20% and the remaining 20% ​​by the convenience store / mini market.

Food Retail Development Potential (Grosery) in areas  Product demand daily needs (consumer goods) is still a major demand. Food products (groceries) accounts for approximately 67% of the composition of sales of goods of retail trade. As for non-food products, clothing and footwear sales accounted for 30% of goods of retail trade, followed by the sale of electronic goods by 12%, and sales of health and beauty products by 11%. The potential development of modern retail market in Indonesia is still relatively large population to total population. The number of modern retail stores per one million population of Indonesia is currently around 52, lower than that of neighboring countries such as Malaysia 156 stores, 124 stores Thailand, Singapore 281 stores, and 74 stores China. The number of modern retail stores in Indonesia occupies only a very small portion (0.7%) compared to the number of traditional shops per one million population of Indonesia reached 7,937 stores.
Format minimarket experienced the highest growth, both in terms of the number of outlet stores and retail trade share of product sales of fast moving consumer goods (FMCG). Number minimarket in Indonesia in 2008 reached 10,607 stores with an average growth of 17.3% per year, the highest compared to other modern retail formats, followed by hypermarkets with an average growth of 16.9% per year. Meanwhile, the share of retail trade mini for FMCG product sales increased significantly compared to other formats, ie from 5% in 2003 to 16% in 2008.  

PT Matahari Putra Prima Tbk (MPP) has taken strategic initiatives to assess and analyze the overall business activity, related to the company's plans to develop core competencies in its hypermarket business. As the pioneer of compact hypermarkets in Indonesia with its proven business model, will continue to focus on the food retail business, through the expansion phase Hypermart to all regions in Indonesia. In addition, the streamlined all other non-core businesses / non-hypermarket business, to ensure that all resources are optimized MPP 100%, to encourage business growth Hypermart. Indonesia is a big country and has a growth potential of the most attractive markets globally among other developing countries. The country with the fourth largest population in the world with a rising middle class segment, which is supported by the economy strong consumer base, increasing purchasing power and generate strong annual economic growth. Until now, strong consumer-based economy has encouraged the growth of the country's GDP and is predicted to continue to grow at an average 5.6% per year until 2014, while GDP per capita is expected to grow by 11.3% until 2014 and going beyond the limit of U.S. $ 3,000 in 2012.

Growth areas in Indonesia also took place rapidly lately, both from the economic sector, tourism and education. Wherein each of the developing regions with the potential of each. Population growth and increased tourism ekspartriat, causing an increase in the amount of imports. Major retailers such as Carrefour Indonesia, Matahari Putra Prima Tbk, and Hero Supermarket managed to increase sales of the brand, through the sale of private label products, exciting promotional offers, and expansion into areas and markets are not yet saturated.

Government Role in the Management of Traditional and Modern Retail Market
The existence of a modern market that includes mini markets, supermarkets, hypermarkets to be unavoidable. To be competitive, traditional markets should be strengthened so that consumers do not switch. Head of Industry and Trade of the Province of Central Java Ihwan Sudrajat argued that in Semarang City, Wednesday (24/6). According to him, the modern market has its own market segment as traditional markets, so that the choice rests on the consumer.

We can not restrict the modern market, since its founding was based on market demand. The thing to do is to protect SMEs and traditional markets. It is the duty of the government. Rules for the existence of a modern market in the Presidential Decree No. 112 of 2008 on Management and Development of Traditional Markets, Shopping, and Modern Stores. Stipulated in Article 5, concerning the location of the modern market of all sizes, from the largest hypermarkets to the smallest mini. In the rule mentioned, hypermarkets are only allowed to be located on the main access roads, supermarkets are not allowed in a residential neighborhood, and mini ramps allowed to be in the neighborhoods in the city.

Meanwhile, the strengthening of the traditional market, the market is done with the Setup program. The trade sector received funding amounting to Rp 335 billion stimulus used for revitalization and renovation of traditional markets of Rp 215 billion and Rp 120 billion warehousing. According to data obtained headline of one of the board members, as many as 123 districts / cities in 11 provinces scheduled to receive stimulus allocation of Rp 215 billion market.
The Government has received at least 600 proposals from 300 regions across Indonesia for traditional market revitalization program. All proposals submitted to the Ministry of Finance will discuss its implementation.

Secretary of the Directorate General of Domestic Trade Gunaryo in Business Competition Supervisory Office said there were about USD 235 billion market revitalization funds channeled through the Special Allocation Fund (DAK) and assistance funds from the local government. Of proposals submitted to the Department of Commerce, the type of revitalization manifold. "There are a total rehabilitation, the bulge area, or renovation," he said. The fund for the revitalization of traditional markets, according to Gunaryo from Rp 3 billion, depending on the area and the magnitude of the case. "It is being discussed in the Ministry of Finance," said Gunaryo.
Proposals rehabilitation of the market, he said, must go through the approval of the Department of Public Works building standards in related areas. Gunaryo added to the traditional market revitalization program starting next year, the Government is committed to increase the budget of local market development. Stimulus funds revitalization of traditional markets this year disbursed through the Department of Commerce through the Special Allocation Fund.

Traditional market weakness that must be addressed:
1. Lack of good market management causes the lid several traditional markets.
2. Less comfortably shop at traditional markets, especially the issue of cleanliness.
3. Lack of capital for traditional retailers to develop their businesses.
4. Prices are more expensive than the prices for certain products in the modern market.

Modern retail business management strategy that is creative and innovative
The retail businesses, both modern and traditional, should further enhance the promotion. According to data from Nielsen Research Institute Indonesia, during the first half of 2010, consumer spending has not been too prioritizing money to buy food, drinks, and a variety of daily needs. Middle-class consumers, actually prefer shopping vehicle or electronics.

National retail sales growth during January to May reached 9 percent compared with the same period in 2009. Figure is far behind other sectors. Growth in car sales topped the highest rate of 73.5 percent. Similarly motorcycles by 35.2 percent. Home electronics sales also increased 32.35 percent, while computers rose 30 percent.

He is currently a shift in consumer attention in monthly spending budget. Especially the upper middle class, still prefer shopping big ticket items (cars, motorcycles, electronics). Indirectly, indicates our society is getting established. As the development of technology, people's lifestyles also change. Before any technology, when there is spare time consumers can go to a shop or shopping. Once there is a phone with all its sophistication, have little free time directly online. Recreation in cyberspace feels more mengasikan, rather than going to traditional markets or supermarkets and hypermarkets though. In 2009, total retail consumer spending for 56 categories of products reached Rp 99, 653 trillion (notincluding eggs, chili, rice, and some groceries). Meanwhile, on January to May 2010, the total money that has been accruing Rp 44.685 trillion. Nielsen conducts research on public spending trends by way of face to face interviews in Greater Jakarta, Bandung, Surabaya, Makassar, and Medan. Respondents were men and women aged 15-65 years. A total of 1,781 interviewees have more spending power than Rp 1.250 million per month. (Gen/c6/kim)  Retailers repacking should be more creative place to sell, then promote it more interesting. Based on the results of a survey conducted by Nielsen, 19.8 percent of consumers revealed that nonfood factors (comfort, packaging, promotion, etc) is a reason for them to come to a spot of shopping.  HR management has a significant role in a retail business. Coordinate and motivate employees in achieving the target. Until eventually forming a work commitment, which could unite among employees, resulting in a competitive advantage. Aspects of site selection in the retail business was also very influential. The selection of retail locations that allow businesses to grow, evaluate the strength of any trade area selected. While the financial system, a method of reflection does retail strategy concerning resource management (capital, equipment, human resources, and etc.) in order to achieve optimal performance.  Similarly, the food retail business is very promising. Judging from the rapid growth annually. Plus, the market share of Indonesia itself has been very promising, the state with the fourth largest population in the world with an increasing segment of the middle class, the economy is supported by a strong consumer base. But nevertheless, the success or failure of a business depends heavily on management strategies and management. Everything is back to the business people themselves.

Indonesia Still Disadvantaged Retail Company with Singapore

Jakarta-Indonesia has a range of retail and corporate franchise or franchising. Unfortunately the growth and development of retail and franchise in Indonesia is still struggling in the domestic market.

U.S. Country Manager of Indonesia Louken Anthony said Danny paradigm patterns and franchise retail business in Indonesia must change not only excel at the local level, but can speak at a global level.

"Indonesia has the potential for tremendous retail growth. Therefore the business is expected to not only excel in the local market but excel in the global marketplace," he said during a discussion with the theme Retail Trends 2013 in the WTC Building Jakarta, Monday (25/03/2013).

We have argued Indonesia has a flagship retail products ranging from food, clothing, education and other leading products are selling well in the domestic market. Unfortunately very few local brands that succeed when taken abroad. Therefore, it will bring the brand and retail business to go international in the near future.  "What did the U.S. Louken is committed to supporting retailers in Indonesia," he said.  

Meanwhile in the same place, the CEO of the U.S. Louken Singapore Luke Kim explained that retail from Indonesia regarded inferior to Singapore retail developments in the global arena. For example, the current retail product from Singapore BreadTalk is worldwide through its products.

"Compare this to Singapore, the country of origin of various retail success and exist in the global market. Call it BreadTalk to Charles & Keith. Though it was originally a retail small and medium enterprises in Singapore but they successfully send orders via brand and products to consumers in foreign countries, "he said.