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RI modern retail industry looks to mini-marts as backbone of recovery
Mini-marts are leading recovery in the country's modern retail industry as supermarkets gradually adapt to changes in consumer behavior and hypermarkets remain stuck on pre-pandemic business models.
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A motorcyclist parks near an Alfamart convenience store in South Tangerang, Banten, in this undated photograph. (JP/Evi Mariani)
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n the wake of weakening consumer buying power and confidence, the modern retail industry’s road to recovery is still heavily reliant on the mini-mart (minimarket) segment, as the supermarket and hypermarket segments continue to struggle, even after mobility restrictions were eased.
Olly Prayudi, corporate director at Fitch Ratings Indonesia, said that although inflation had taken a toll on consumer buying power, which could worsen if subsidized fuel prices were raised, brick-and-mortar retail businesses would still introduce a gradual cost pass-through to avoid hurting domestic consumption more.
Though inflation had exceeded Bank Indonesia’s expectations three times, Olly still expected market shares of small-format stores to grow, especially as because supermarkets and hypermarkets were still struggling to recover.
“We expect the combined [number] of Alfamart and Indomaret stores to exceed 40,000 by the end of this year,” Olly told The Jakarta Post on Monday.
He also noted that several grocery store chains had booked poor performances in the first quarter, including PT Hero Supermarket (HERO).
HERO’s first-quarter revenue dropped 43 percent year-on-year (yoy) to around Rp 1 trillion (US$67 million), while its net loss rose to Rp 67 billion from Rp 1.64 billion in the same period last year.
“Supermarkets and hypermarkets will still face hardships in 2022 due to strong challenges from minimarkets and traditional markets,” Olly added.
