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View all search resultsRetailers rethink expansion plans, focus on digitalization
According to a recent internal pulse survey by PwC, 75 percent of enterprises have recognized a need to accelerate digital transformation within their organization as an impact of COVID-19.
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Visitors walk past an outlet selling Indonesian Independence Day-themed fashion products at the FX Sudirman shopping mall in Jakarta on Saturday. (JP/Dhoni Setiawan)
M
ajor retailers across different sectors in Indonesia are reconsidering their expansion plans in the wake of the pandemic, putting their bets on greater digitalization while carefully assessing the need for more physical stores.
Indonesian lifestyle retailer PT Mitra Adiperkasa (MAP), which owns over 2,300 retail outlets in the country with over 150 brands including Zara, Pull&Bear, Starbucks and Kidz Station, has said it is cutting back its investment plans this year.
The publicly listed company would only use 30 percent of its initial 2020 capital expenditure (capex) budget of around Rp 1.3 trillion (US$88.92 million) due to the disruptions the pandemic had caused to its business, the company executive said.
“A number of new shop openings that we have targeted and some of the new brand launches that we have decided on have to be postponed because we have to preserve cash,” MAP vice president director Virendra Prakash Sharma said during a virtual public expose on Thursday.
“This is not only for this year. Even for the next year, we will have very limited capex and the majority of the capex will be going into digitalization.”
Last year, the company opened 225 new physical outlets and five new online outlets. It also acquired eight new brands including Innisfree and Laneige.
The pandemic has hit economic activity and people's purchasing power in the country as household spending, which accounted for more than half of gross domestic product, contracted 5.51 percent in the second quarter. The figure is deeper than the overall GDP contraction of 5.32 percent.
