M

atahari Putra Prima (MPP), a modern multi-format retailer in Indonesia, expects total sales will grow between 15 percent and 20 percent next year, despite the slowing effect of the fuel-price increases on the economy.

With a plan to open more outlets and introduce innovative redesigns, the company is confident that the target is achievable.

MPP '€” part of the Lippo Group conglomerate '€” plans to open 20 '€œGeneration 7'€ Hypermart stores annually over the next five years. These stores will better highlight the ethnic and aesthetic diversity of the respective regions, according to MPP corporate communications director Danny Kojongian.

He added that the company would also open between five and eight new Boston Beauty and Health outlets, as well as 20 new Foodmart stores. About 60 percent of the new stores will be outside Java.

By the end of this year, he said the company planned to operate 239 outlets, 17 more than the 222 it operated last year.

The company also plans to renovate 60 existing outlets over the next five years to enhance the shopping experience and entice more customers.

'€œWe hope that we can book about a 15 percent to 20 percent increase in sales next year,'€ Danny said.

Matahari booked Rp 10.1 trillion, or a 15.5 percent increase in total net sales in the nine-month period that ended Sept. 30, Meanwhile, income for the period more than doubled to Rp 268.3 billion (US$21.72 million) from last year'€™s Rp 128 billion (excluding extraordinary gains).

This year, the company said it projected a 15 to 20 percent increase in sales from the Rp 11.91 trillion booked last year.

Priscilla Tjitra of Credit Suisse said in a published report that the decision to upgrade and re-conceptualize would help keep the company ahead of its competitors.

'€œWe met with the Matahari Putra Prima management recently. The company is preparing to launch a new Hypermart format by the end of the year, called the '€˜Generation 7'€™. The flagship stores will be the existing Lippo Karawaci stand-alone stores, which are now closed for renovation,'€ Priscilla said.

'€œThe fuel hike is expected to temporarily slow down sales in the coming months [up to 1Q15]. Nonetheless, we believe that margins should remain relatively okay from continuous operating efficiency and better purchase prices from suppliers, a benefit of scale from its 246 stores,'€ Priscilla added.

MPP, the research says, is also looking to revamp its '€œFoodmart Gourmet'€ to provide more prepared food and imported food, as well as to establish a wholesale retail business by the end of next year.

Reza Priambada of Woori Korindo Securities said that changes would help the company boost sales. Reza singled out MPP'€™s move to explore branching into the food court business especially, which he said would bring a whole new experience to customers. He also applauded the company'€™s commitment to expanding outside Java.

However, Reza predicted that significant sales increases might not be seen until 2016.

'€œRetailers'€™ move to revamp their store concepts is meant to generate customer loyalty so that they will keep going back to shop and not to shift to other competitors. Their investments might not [show] returns immediately, but we hope to see the MPP book an 18 percent annual increase in sales by the end of 2016,'€ he explained.