Business

Carrefour Indonesia to
strengthen private label

Giant retailer Carrefour Indonesia will expand its private label products as it has seen a 5 to 10 percent growth in their demand every year.

Carrefour, fully owned by tycoon Chairul Tanjung, currently has around 2,988 stock keeping units (SKUs) of private label products in its portfolio, according to Carrefour Indonesia spokesman Satria Hamid.

“The figure is still very small compared to the total SKU number in Carrefour, but the demand continues to grow every year. So, we are trying to launch new products every three months,” he said in Jakarta on Friday.

At the moment, the private label makes up for 7.5 percent of the company’s product portfolio, which has reached around 40,000 SKUs from 4,000 suppliers across Indonesia. More than 60 percent of its private label products are non-food, such as clothes and wooden containers, while the rest are food.

Carrefour quality and hygiene general manager Andi Nur’aida said that everyday food items in its private label’s edibles had been the most favored by customers. “There are 12 food items that are on our best-selling list including rice, soy sauce, cooking oil, sugar and meat floss,” she said, adding that Carrefour would expand the list to include other everyday items.

The company began offering its private label products in 2003. It currently partners with about 300 small- and medium-scale enterprises (SMEs) to supply all the private label products. It had planned on increasing the number of its SME partners, but Andi said that the company had often faced problems regarding quality standards.

“We have to make sure that our partners can meet our standards in the long-run. For food, the products must not be genetically enhanced and must not be processed using chemicals after being harvested. Unfortunately, there are still many SMEs that have not applied this strict process,” she said.

According to Satria, the addition of new SME partners will be in line with Carrefour’s policy to develop the country’s small and medium businesses, especially because it is now a 100 percent Indonesian firm.

Carrefour was fully acquired by businessman Chairul Tanjung last November when his retail business operator, PT Trans Retail, acquired a 60 percent stake, worth US$750 million, from French Carrefour SA. Trans Retail had previously bought 40 percent of the company’s shares in April 2010.

Chairul obtained the funds to finance the November acquisition from a syndicated loan, involving 10 foreign banks — Credit Suisse, BNP Paribas, JP Morgan Securities, ING Bank, ANZ, Goldman Sachs, Deutsche Bank, Royal Bank of Scotland, Standard Chartered Bank and Bank of Tokyo Mitsubishi UFJ. The loan must be fully repaid in three years.

Following the takeover, the business will be rebranded as Trans Carrefour. In a press conference, Chairul said that Trans Retail had the right to use the Carrefour brand for five years. “We have decided to use Trans Carrefour. In time, the word ‘Trans’ will be bigger and ‘Carrefour’ will diminish,” he said.

Carrefour Indonesia is expected to post 30 percent annual business growth starting from 2013, which would be an increase from a previous rate of around 10 percent.

Meanwhile, Tutum Rahanta of the Indonesian Retailers Association (Aprindo) said that using private labels had been a common practice among giant retailers since it was introduced in Indonesia about 10 years ago.

“The profit margin offered by private label products does not differ much from those of other brands. It is more a company’s marketing strategy to make their own label popular among the public,” he said.

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