The Jakarta Post
Easing mobility restrictions in various regions across Indonesia will not provide an instant boost to the country’s retail sector as wary consumers are expected to still limit their store visits amid a steady rise in COVID-19 cases, analysts have said.
Mirae Asset Sekuritas Indonesia economist Anthony Kevin found that customers did not immediately flock to shopping malls despite the reopening, adding that even those visiting malls still avoided durable goods stores.
“Alive but sort of dead. This is what we thought when visiting several malls in Jakarta and Bekasi [in West Java] as we found that people are still holding back from visiting malls,” he wrote in a research note dated June 19.
“In stark contrast to the minimum-to-no visits to durable goods, besides F&B [food and beverages] stores, people are still rushing to supermarkets to buy basic necessities, while staying vigilant about maintaining their health by purchasing vitamins at drug stores.”
The large-scale social restrictions (PSBB) implemented in several regions, such as virus epicenters and business centers Jakarta, Bandung in West Java and Surabaya in East Java, forced retailers, factories and offices to shut down to contain the coronavirus spread, severely limiting demand as people stayed at home.
Retail sales slumped by 7.5 percent year-on-year (yoy) in April, signaling weaker private consumption. Meanwhile, the trade, services and investment sector on the Indonesia Stock Exchange (IDX) has recorded a 21.87 percent fall so far this year as investors have dumped such stocks. The main gauge, the Jakarta Composite Index (JCI), lost more than 22 percent of its value during the same period.
Mirae equity analyst Christine Natasya in a research note on June 3 expected the retail sector to recover gradually starting the second half of this year following the government’s decision to postpone the Idul Fitri collective holiday to December. The holiday postponement was taken to prevent people from going on mudik (the Idul Fitri exodus) in an effort to curb the spread of COVID-19.
The government’s decision to gradually lift the PSBB has allowed shopping malls to re-open their doors and retailers to go back to business, albeit in a limited way and with strict health protocols.
Health Minister Terawan Agus Putranto signed on June 19 a decree on health guidelines for public facilities, including hotels, restaurants and shopping malls. Such establishments are obliged to provide hand sanitizers in public spaces, clean these areas with disinfectant at least three times a day and maintain proper ventilation.
It is mandatory for both employees and guests to undergo temperature checks and wear face masks in these areas. Meanwhile, the 50 percent cap on venue capacity that has been widely used by businesses is not included in the decree, which instead has a 1-meter social-distancing rule.
Pilarmas Investindo Sekuritas equity analyst Maximilianus Nico Demus also said on Thursday that the malls’ re-opening might not necessarily boost retailers’ performance as the COVID-19 pandemic had shown no sign of subsiding.
“As long as the number of confirmed cases has yet to show signs of slowing down, consumers will prefer to save their money instead of going shopping,” he told The Jakarta Post over the phone.
Indonesia recorded more than 1,200 new confirmed COVID-19 cases on Friday, bringing the total infection number to over 50,100 with at least 2,600 deaths, official data show.
Maximilianus believes the recovery in the retail companies’ performance might not happen before next year.
“The recovery will start to happen if the spread of the virus declines, scientists find a vaccine for the virus or the government provides a huge fiscal and monetary stimulus package,” he said.
Despite the bleak projection, some stocks have an advantage over other publicly listed retailers. “Retailers that have an established online presence can reap more advantages because customers will still have a shopping alternative,” Maximilianus said.
Publicly listed retailer PT MAP Aktif Adiperkasa chief digital officer Amit Keswani seemed to be managing his company’s expectations, along with its parent company publicly listed PT Mitra Adiperkasa (MAP), about business prospects this year.
“[The year] 2020 is about riding through it, continuing investment and connecting with our customers more closely. I don’t think we’ll start seeing 2019 numbers until 2021,” he said during an online discussion organized by the British Chamber of Commerce in Indonesia on Tuesday.
MAP Aktif sales jumped by 19.2 percent yoy to Rp 7.4 trillion (US$517.61 million) in 2019, while its net profits skyrocketed by 96.14 percent yoy to Rp 693.18 billion.
Meanwhile, MAP recorded a 12.47 percent increase in sales to Rp 8.14 trillion last year with net profits of Rp 1.03 trillion, up by 6.8 percent yoy.