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Jakarta Post

Indomaret to open 1,600 outlets next year

  • The Jakarta Post

    The Jakarta Post

Jakarta   /   Mon, December 21, 2015   /  05:48 pm

Convenience store chain Indomaret is planning to open 1,600 more outlets across the archipelago next year to strengthen its grip on the market amid its confidence over the economic outlook.

Indomaret marketing director Wiwiek Yusuf said the company is optimistic the domestic economy will recover next year and will help the retail business grow faster.

'€œNext year the business will grow slightly higher than this year along with the economic recovery,'€ he told The Jakarta Post on Friday.

With the 1,600 new stores target for next year, the company is seeing a stable rate of growth, as in 2015 it opened an additional 1,560 outlets. The retail company expects to see sales increase in each outlet.

As of November 2015, the network had 12,150 stores under 26 main branches in big provinces. Out of that total, 32 percent are owned by individuals or groups that bought franchises from the company.

The capital expenditure necessary for a new outlet is Rp 450 million (US$32,142). That covers renovations and the provision of machines, banners and other things, but does not cover the purchase of space or buildings, according to Wiwiek.

An outlet sells up to 5,000 different products of various brands, provides at least 150 transaction payments and employs eight to 10 people. Next year the network hopes to partner with 200 companies '€” including universities for the payment of student fees '€” which will be up from the current 150.

The expansion and the product and service development are parts of its marketing strategy to compete with Alfamart, which now runs about 10,000 stores.

'€œOur development follows people'€™s changing needs, lifestyles and the country'€™s infrastructure as a whole,'€ Wiwiek said.

'€œAs traffic is massive here and new residences are many, we keep opening stores to cater to people'€™s needs near where they live or work. As people want to get more convenient meals, we also now sell ready-to-serve meals, and as they buy more products and services online, we provide payment services for those who don'€™t own credit cards,'€ he said.

The minimarket company, which was established in 1988, has spread its wings over almost in every province to the smallest administration units or villages, except in some regions in the east, including Papua, West Papua, Maluku and East Nusa Tenggara.

Indomaret competes head to head with the Alfamart minimarket network, which is only a year younger. Alfamart has about 10,000 outlets as of this year and it has announced plans to open stores in the Philippines as well. Locally, as competition is tight, the distance between their stores can be as near as 100 meters, or even next to each other.

Both have incited protest from neighbors who regard them as threats to their small-shop businesses and the government and regional administrations have consequently come up with certain rules to protect locals.

Every area has different bylaws, regulating the minimum distance between a minimarket and a traditional market, minimum prices and a quota of outlets for an area.

'€œThe regulations don'€™t pose a threat to us because as a company that'€™s doing business here, we need to abide by them,'€ Wiwiek said.

The firm saw total revenues and outlet growth drop by 3 percent from 28 percent last year to 25 percent this year. '€œIn the past, when the economy was better, it could reach up to 30 percent, but now as the situation indicates the start of a recovery, we expect growth will slowly rise again.'€

The first quarter of this year was the most difficult time for it as the global economy slowed at the same time the government changed, leading to a late disbursement of Indonesia health cards (KIS) to the poor. That affected its sales. (rbk)

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