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Development of modern retail business.

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In 2009, another foreign retail company, the Lotte Group, from South Korea began operation in Indonesia after acquiring Makro from SHV Holding of the Netherlands at a price of US$ 223 million. The name of Makro was changed with Lotte Mart. The Lotte Group, which started retail business in 1979, operates more than 90 outlets in various countries such as China, Russia, Vietnam, and India.

Competition in retail business is getting sharp after 40% of the shares of Carrefour Indonesia, the largest hypermarket in the country were acquired by CT Corporation, a subsidiary of the Para Group at a price of US$ 350 million in 2010. The Para Group, which is owned by Chairul Tanjung, an Indonesian business tycoon, already has big units in various business areas such as television, banking, insurance and financing sectors.

In the past five years , the assets of retail business in the country has increased rapidly to follow the growing number of the outlets to reach 18,152 units in 2011 from 10,365 units in 2007. The Indonesian Association of Retail Companies (Aprindo) said the retail business in the country grew 10%-15% per year. Retail sales in 2006 were valued only at Rp 49 trillion, but in 2010, the value shot up to Rp 100 trillion. In 2011 the value is forecast to rise further by 10%-15% to Rp 110 trillion with the fairly strong purchasing power of the people. Hypermarkets lead in income followed by mini-markets and supermarkets.

Indonesia with a population of 230 million is a potential market for retail business. In the past ten years, business in modern retail in the forms of hypermarket, supermarket and mini-market has been mushrooming, marked with the construction and operation of new shopping malls in large cities. Big retailers such as hypermarkets and department stores have become anchor tenants attracting visitors and shoppers. Modern retailers especially supermarkets and mini-markets have even expanded to smaller cities in district areas. Currently modern retail business has grown in suburban areas with the growing number of residential complexes built in city's outskirts.

With the government policy allowing foreign investment in retail business as regulated under the presidential decree No. 118/2000 foreign retailers began to enter the country. The interest shown by foreign retailers indicates that the business is highly profitable. The operation of foreign retailers, however, has brought a threat to the local retailers. Foreign retails have operated not only in Jakarta, but also in other large cities. Carrefour, for example, has in the pasty five years opened outlets in Yogyakarta, Surabaya, Palembang and Makassar. Now, however, license for mini-markets in Jakarta is no longer easy to come.

The condition has encouraged local retailers, which already established their foothold in the market such as the Matahari Group, which was earlier strong in department store business, to expand heir business by opening their own hypermarket outlets. Hero, which was earlier a leader in supermarket business, has also opened its own hypermarket outlets. It even changed some of its supermarket outlets into hypermarkets.

Currently, modern markets have a 30% share of retail sales in the country with traditional markets accounting for 70%, indicating that modern retail business still have good opportunity for expansion Currently operations of modern retailers have expanded to areas out side Java including Sumatra, Sulawesi, Kalimantan and Maluku. Big retailers like Carrefour and Giant have wider market compared to their competitors as in addition to operating in hypermarket they also compete in supermarket business.

More foreign retailers are expected to venture in Indonesia in the coming years especially with the country's economic stability and improved business climate. Competition, therefore, is expected to be sharper forcing players to find an effective strategy to survive.

Structure of business in modern markets

Retail business has grown attracting global investors in Indonesia. They are superior financially, in management and networks. They have changed the map of retail business in the country in the past five years.

Modern retail business began to enter the country in early the 1980s drawing middle to high class customers. Leading traditional market centers like Pasar Cikini and Pasar Santa in Jakarta began to lose their rich customers.

Supermarkets grew aggressively in early the 1990s at the expense of traditional market centers. Supermarkets quickly mushroomed in the Greater Jakarta area and other larger cities in Java.

In the middle of the 190s, supermarket began to face competition from hypermarket with the operation of Makro (now Lotte Mart). Modern market format of Makro is different from supermarket especially in the size of plot of land occupied, the varieties of goods offered. Hypermarkets could offer goods with cheaper prices as they buy goods from suppliers in lower prices. They are given higher price discount with larger purchases from suppliers.

At the same time small supermarket with the format of mini-market grew coming as new potential competitors for larger supermarkets. The two formats of modern market have wide and strong networks chains. Mini-markets offer competitive prices and conveniences. Mini-markets have the advantage of being closer to customers as they could operate in smaller housing complexes and residential areas.

Among leading mini-market chains are Indomaret and Alfa. They are dominant in this sector. In relatively short time they quickly mushroomed into giant chains in number of outlets.

The most difficult time for supermarket probably came when Carrefour hypermarket from France started operation in the country. Carrefour opened large outlets offering goods in cheaper prices. Carrefour opened outlets in strategic areas and attracted mainly middle to high class customers at the expense of supermarket.

With the sharp competition from hypermarkets and mini-markets, Hero, which was the supermarket leader, began to change its positions. It opened its own hypermarket outlet in joint venture with Giant Retail Sdn Bhd of Malaysia. Aware that Jakarta has been too crowded where Carrefour has dominated the market in strategic areas, Giant chose to establish its foothold first in Surabaya and Tangerang, which had no hypermarket yet. Hero also established its mini-market chain called Starmart.

Not all supermarkets survived the growing competition Supermarket Tops of Aholds from Belgium, which operated mainly in West Java, almost collapsed and was finally acquired by Hero.

Business format

Modern retailers are growing to meet the market demand. The format of modern market may change any time. There has been no standard set for retail business in Indonesia.

The main formats of modern retail business in the country are hypermarket, supermarket, mini-market or convenience store, department store, and specialty store.

Hypermarket, supermarket, and mini-market are generally the off springs of wholesalers and traditional markets. Therefore, hey are called modern markets. The main differences between modern and traditional markets are in the size of plot of land occupied, range of products and convenience in services. .

Modern markets referred to in this reports are limited only to hypermarket, Supermarket and Mini-market.


Hypermarket was the form of big modern market. Hypermarkets are housed in more spacious buildings and offer greater varieties of goods. The hypermarket concept was first introduced in the country by Carrefour from France. Wholesaler Makro is included in the category of hypermarket as Marko has format almost the same as hypermarket. Makro, however, has different market targets as it offers goods to big buyers such as restaurants, hotels and catering. It would not offer goods to individual customers.

A hypermarket has more than cashiers and sells at least 25,000 items of daily necessities like electronic products, and furniture. Carrefour even sells 50,000 types of goods in each of its outlets, Giant 35,000-50,000 types. Makro, however, offers only around 15,000 types. Macro's prices are lower as its offer goods only to large buyers. For example, it offers toothpaste at a cheaper per unit but a buyer is required to buy at least a dozen. Its customers, therefore, are owners of small shops, stores, hotels or restaurants.


Supermarket has started operation in the country before hypermarket was introduced. Supermarkets offer self service for its customers.


Mini-markets also known as convenience stores are an off spring of notions stores and offer convenience and similar services as offered by supermarkets but in smaller scale.

Number of outlets

In the past five years, the number of retailer outlets in Indonesia has increased 17.57% a year on the average. In 2007, the number of retail business in Indonesia was recorded only at 10,365 units, but in 2011, the number has shot up to 18,152 units in various cities in Indonesia.

The outlets of hypermarket grew in number from 99 units in 2007 to 154 units in 2010. By the end of 2011, the number is expected to grow further to 167 units.

On the contrary, the number of supermarket outlets has tended to decline from 1,377 units in 2007 to 1,230 units in 2010. Some of the outlets have been closed because of sharp competition from mini-market. In addition, some of the supermarket outlets have been converted into hypermarket outlets.

The increase in the number of retail outlets is attributable mainly to strong growth recorded in the number of mini-market outlets. In 2007, mini-market outlets totaled 8,889 units--up to 15,538 units in 2010. The number is expected to increase further to 16,720 units in 2011. Indomaret and Alfamart are the largest chains of mini-markets which offer franchise system.

The largest in Jakarta

Most modern markets including local and foreign companies are in Java, which is home to most of Indonesians and the largest business center in the country

In 2010, the number of modern market outlets in Jakarta and satellite cities (Bogor, Tangerang, Bekasi, Depok) make up 38.1% (6,916 outlets) of the total number, West Java 14.08% (outlets), East Java 12.12% (2,556 outlets), Central Java 10.2% (1,852 outlets). Sumatra has the second largest number making up around 8.2% (1,488 outlets) of the total number.

Jakarta overcrowded

Jakarta has the largest number of modern market outlets for all formats in 2010, the country had 152 hypermarket outlets and 44 units of them were in Jakarta. Jakarta had 21% of the number of supermarket outlets and 40% of mini-market outlets.

The number of hypermarket outlets have been considered too many in Jakarta, therefore, in June 2006, the city administrations revised the regional regulation No 2/2002 on private modern markets.

Based on the regional regulation No.2/2002, modern retail outlets with a floor space of 100-200 sq.m. may not be located closer than 0.5 kilometer from the traditional market. The distance is 1.5 kilometers for modern retail outlet with a floor space of 1,000-2,000 sq.m; 2 kilometers for one with a floor space of. 2,000-4,000 sq.m. and 2.5 kilometers for one are having a floor space of more than 4,000 sq.m.

Currently hypermarket outlet is required to be located in a shopping mall as the license for a shopping mall is granted after meeting the regulation on distance form traditional market.

So far some hypermarket owners have not complied with the regulation in the location permit. Some weak authorities still easily bow to the financial power of investors. They allowed themselves to be dictated by the investors. For example, the Plaza Semanggi is allowed to be built on a location less than 2.5 kilometers from the Benhil market. Even a decision of the governor No 44 of 2003 on directive for private modern markets was cancelled by the State Administrative Court after being protested by a hypermarket owner.

This year, the Jakarta provincial administration will issue retain business license only for a modern retailer having a floor space of more than 5,000 sq.m located in a shopping mall. The administration will not renew license for one housed in a stand alone building.

However, the plan that bans big retailer in a stand alone building has been strongly rejected by the owners of big hypermarkets, Carrefour and Giant.

In Jakarta, all outlets of Makro are located in separate buildings. Carrefour has five outlets occupying separate or stand alone buildings. The outlets of Giant and Hypermart and other smaller hypermarkets are housed in shopping malls as anchor tenants.

Foreign retailers stronger

The presence of Carrefour since 1998 has sharpened competition in the retail business in Jakarta. Before Carrefour started operation in Jakarta, other foreign retailers had operated in Indonesia. Such as Walmart, Makro, and Continent. Continent was later acquired by Carrefour.

Other foreign retailers that came later included Dairy Farm International Giant Retail Sdn Bhd from Malaysia. The Malaysian firm teamed up with PT.Hero Supermarket Tbk to establish hypermarket called Giant. Earlier Hero dominated supermarket business in Indonesia, with its Hero supermarket chain.

The success of foreign investors with the format of retail format of hypermarket has encouraged local retailers like Matahari Group to join in the competition in the hypermarket business by opening its own hypermarket chain called Hypermart. Earlier the Matahari Group had succeeded in its department store business with Matahari department store chain. Matahari has the largest number of department store outlets in Indonesia.

In 2009, the Lotte Group from South Korea expanded operation to Indonesia by acquiring Makro from SHV Holding NV of the Netherlands Lotte paid US$ 223 million for the acquisition. The Lotte Group was founded by Shin Kyuk Ho in 1973. Currently, it has 45 subsidiaries operating in hotel, food, distribution, retail, chemical and construction service business. The group started business in the retail sector in 1979. Now it has more than 90 outlets in various countries including China, Russia, Vietnam, and India. The Lotte Group is the fifth largest business group in South Korea with assets totaling 31 billion euro with net income of 23 billion Euro in 2007.

However, the foreign domination began to decline with the take over of Carrefour by the Para Group in 2010. The Para Group also known as CT Corporation owned by Chairul Tanjung, the indigenous business tycoon acquired 40% of PT Carrefour Indonesia. Currently Trans Ritel is the largest single shareholder of Carrefour SA (39%). Other shareholders include Carrefour Nederland BV (9.5 %), and Onesia BV (11.5%). The 40% stake was worth US$350 million, for which CT Corporation used loan from Credit Suisse, Citibank, ING and JP Morgan.


Locations of major players

Players in hypermarket business are located mainly in Jakarta as the country's largest business center. All hypermarket business players have more than one outlets in Jakarta each

Carrefour has 82 outlets in the country located in 27 regencies/cities--Medan, Batam, Bintan, Palembang, Lampung, Jakarta, Serang, Depok, Bekasi, Tangerang, Cikarang, Karawang, Cibinong, Bandung, Cirebon, Yogyakarta, Solo, Pekalongan, Semarang, Madiun, Surabaya, Jember, Malang, Makasar, Denpasar, Singaraja, Pontianak, and Mojokerto.

Hypermarket players

Hypermarket players in Indonesia include Carrefour, Hypermart, Giant, Club Store and Lotte Mart (formerly Makro). Alfa is included in the hypermarket category It has smaller outlets but it is equal to hypermarket in variety of goods offered. There is also what is called Indogrosir better known as wholesalers/warehouses. Carrefour of France, Giant of Malaysia and Lotte Mart of South Korea are foreign hypermarkets having units in various countries.

Lotte Mart

In the beginning Makro was operated by PT. Makro Indonesia with first outlets in Jakarta in 1992, offering various products totaling more than 50,000 items. Each out let has 40,000-50,000 potential members as registered customer. In the beginning its buyers were only required to have membership and each member is to pay membership fee of Rp 25,000 every year. However, since mid 2005, the membership system is no longer required amid competition facing other hypermarkets that do not use such system. Makro, therefore, could attract larger customers.

Lotte Group from South Korea through its subsidiary PT Lotte Shopping Indonesia wholly acquired PT Makro Indonesia from SHV Holdings NV at a price of US$ 294.6 million or around Rp 3.2 trillion in late 2010. Currently the name of Makro has been changed with Lotte Mart with 24 outlets. The largest numbers of outlets are in Jakarta. Other outlets are located in Sidoarjo, Bandung, Semarang, and Yogyakarta, Palembang, Makassar, Banjarmasin, Balikpapan, and Denpasar. Lotte is set to increase the number to 45 outlets in 2013. Currently Lotte Mart has contracts with around 1,800 local suppliers.

In 2011, opened six new outlets including in Jakarta, Banten, Tanggerang, and Makassar. Two of the new outlets are the result of acquisition. They are DBest at Jalan Fatmawati, Jakarta and in Makassar.

Lotte Mart is set to chalk up a 20% increase in income to Rp 5.7 trillion this year. In 2013, its income target is set at Rp 17 trillion as a result of the opening of new outlets.


Carrefour, which came to Indonesia in 1998, took the lead in hypermarket business from Makro, which came to the country earlier. Its first outlet was that of Continent in Kuningan, Jakarta it acquired at a price of US$ 4 million. Later Carrefour was very aggressive in expansion. It opened more outlets in Jakarta and later outside Jakarta.

In late 2010, PT. Trans Ritel a subsidiary of CT Corporation or better known as the Para Group acquired 40% of PT. Carrefour Indonesia at a price of US$ 300 million. Trans Retail became the largest shareholder with other shareholders including Carrefour SA (39%), Carrefour Nederland BV (9.5%), and Onesia BV (11.5%).

Currently Carrefour has 82 outlets in 27 cities in Indonesia Medan, Batam, Bintan, Palembang, Lampung, Jakarta, Serang, Depok, Bekasi, Tangerang, Cikarang, Karawang, Cibinong, Bandung, Cirebon, Yogyakarta, Solo, Pekalongan, Semarang, Madiun, Surabaya, Jember, Malang, Makasar, Denpasar, Singaraja, Pontianak, and Mojokerto. Carrefour has established cooperation with more than 4,000 suppliers in Indonesia. Around 70% of the suppliers are small and medium sized enterprises. Carrefour hopes to increase the number of its outlets to around 100 units by the end of this year.

After the acquisition by CT Corp, Carrefour terminated its cooperation with PT Bank Central Asia Tbk, which was earlier named to issue credit card named BCA-Carrefour. Now in place of BCA, Carrefour has named Bank Mega to issue credit card, Carrefour Mega Card, now having 300,000 holders. Bank Mega is a subsidiary of the Para Group. Bank Mega is the 5th largest credit card issuers in Indonesia. Bank Mega hopes to expand three types of business in cooperation with Carrefour. First is cooperation in co-branding, formerly Carrefour had with BCA. Second is financing business by offering credits for suppliers of goods to Carrefour and third payment of salaries of Carrefour employees by providing ATM of the bank in the outlets of Carrefour.

Meanwhile, in 2008, PT Carrefour Indonesia acquired 75% stake in PT Alfa Retailindo Tbk (supermarket Alfa) at a price of Rp674 billion Carrefour acquired the stake from PT Sigmantara Alfindo and Prime Horizon Ltd respectively as 55% and 40% shareholders of Alfa The acquisition, however, created legal problem with the Commission Controlling Business Competition (KPPU) declaring PT Carrefour Indonesia to have found committing monopoly in the retail market in Indonesia . KPPU punished Carrefour with a fine of Rp 25 billion. KPPU also ordered Carrefour divest all of its shares in Alfa Retailindo. Carrefour protested the decision by filing a complaint with the South Jakarta District Court. Under its decision No 1598/Pdt.G/2009/PN.Jkt.Sel, the court favored Carrefour. KPPU appealed the verdict to the Supreme Court. The acquisition later of the 40% stake in Carrefour by the Para Group, however, solved the problem.

Alfa Retailindo has 29 supermarket outlets using the brand of Alfa all over the country.

In addition to hypermarkets, Carrefour has wholesale center called Carrefour Express with 79 outlets.


PT Hero Supermarket Tbk teams up with foreign partner Dairy Farm International of Malaysia to launch a new hypermarket called Giant in 2000. Hero has long experience in supermarket operations. It has the largest number of supermarket outlets in the country. It dominated modern retail business in the country before foreign hypermarkets were allowed to enter the country.

Giant has continued to expand, opening new outlets in potential areas. In the first half of 2011, Giant planned to secure 10,000 square meters of lands in the Jababeka area for 5,190 sq.m. of hypermarket outlets including in Jonggol and Bogor.

Giant cooperates with Citibank in launching Citi Giant Car, a credit card the holders of which are entitled to 5% discount if shopping in Giant outlets. The card holders also are given access to special promotion, transaction facility in a chain of more than 300 outlets of Giant, Hero, and Guardian.

Currently PT. Hero Supermarket has 40 outlets of Giant hypermarket, 43 outlets of Hero supermarket, 78 outlets of Giant supermarket, 209 Guardian dispensaries, and 129 outlets of Starmart (mini-market).


PT. Matahari Putra Prima (PT. MPP) started the operation of its first hypermarket, called Hypermat, in 2004. Hypermart is wholly owned by local investor, .PT. Matahari Putra Prima, which has the largest department store outlets in the country since 1980.

The first outlet of Hypermart is located in WTC Serpong. Hypermart began operations in Jakarta's outskirts as the city center had been dominated by Carrefour.

In a bid to draw more customers, Hypermart cooperates with state lender PT Bank Negara Indonesia (BNI). Shoppers using BNI credit card are entitled to 35% discount for all products and those using Hypermart credit card. Discounts are also offered for shopper holding Loyalty Program Royal VKB, and other credit cards.

Hypermart is backed up with three distribution centers which have an important role in the distribution of goods to Hypermart and Foodmart. The warehouses of the three distribution centers are located in Surabaya, Balaraja and Cibitung. Its sales networks are located in various areas in Indonesia.

In 2011, three new outlets of Hypermart are to come on line in Surabaya, Lippo Karawaci (Tangerang), and Manado, bringing the total number of its outlets to 53 units by the end of the year. In 2010, it already opened four new outlets in Palembang, Semarang, Bandung, and Padang.

In 2012, Hypermart will continue expansion by planning to open 17 new outlets with a total investment of Rp1 trillion. The 17 new outlets will include 5 units in eastern Indonesia such as in Maluku, Banjarmasin, Kupang and Papua. Each of the outlets will cost around Rp20 billion to Rp25 billion. Two of them will use stand alone buildings and the rest will be in shopping malls. However, the plan to open outlets in Papua is hampered by difficulties in good supplies. It will need higher cost of supplying goods to that region. Supply of goods for the outlets may have to come via Makassar and Surabaya. In the next four years, PT. MPP will open only up to 15 new outlets.

While opening new outlets, Hypermart plans to expand the capacity of its outlets by 12%. With the operation of new outlets, Hypermart is eyeing an income of Rp 9 trillion in 2011 or an increase from Rp 7.6 trillion in 2010. So far Hypermart still dominates the sales contributing 90% to the total sales of PT MPP with Foodmart, Boston, Timezone and other business units contributing the remaining 10%. PT. MPP has 53 outlets of Hypermart, 26 outlets of Foodmart, 55 outlets of Boston Health & Beauty Center, 19 outlets of Times Bookstore, 90 Timezone family entertainment centers . In addition, the company cooperates with CVC Capital in the operation of 98 outlets of Matahari Department Stores.

Club Store

Club Store, which is operated by PT. Mutiara Ritel Inti Wira, began operation with 5 outlets in Jakarta and a number of other large cities. However, since mid 2005 three outlets were closed on failure in market competition facing larger hypermarkets. The three defunct outlets were two in Jakarta (Mal Artha Gading and Mangga Dua) and one in Medan. Mal Artha Gading lost customers to Carrefour and Hypermart, which are not too far from its location. The remaining outlets of Club Store in operation are one in the SCBD building in Jakarta and Discovery Mall in Bali.

Club Store, which uses membership card for its customers, had 60,000 members, but the number has been reduced sharply with the closure of the three outlets. Club Store has own house brand of Club Pack.

Club Store plans to change its business format and reduce shopping space with market targets among the middle to high class people.


Growth slowed In competition from hypermarkets

Supermarkets are facing two fronts in market competition--from hypermarkets and mini-markets. Expansion of hypermarket and mini-markets has reduced the market share of supermarkets. Consumers needing big purchases prefer to go to hypermarkets which offer cheaper prices and those planning small shopping will go to mini-markets which are generally closer to consumers such as in residential areas.

Currently a number of supermarket outlets in Jakarta have few visitors compared to five years earlier. Some supermarkets and hypermarkets are housed in the same building such as Indah Plaza Bandung which houses a supermarket and a hypermarket.

However, despite the decline in number of customers, supermarkets still have room for expansion in the country as indicated by the growing number of outlets from year to year. According to Aprindo, the retailer's association, supermarkets are growing in regional areas and small towns. Supermarkets are still the shopping places for many consumers for daily necessities and fresh food products. In small towns, supermarkets are still a luxury place for shopping. The prospects, therefore, are promising in the regions.

Locations of big supermarket players

The number of supermarket outlets in the country reached 1,377 units in 2007, but the number shrank in the following year's outlets, to reach only 1,229 outlets as a number of supermarkets have been converted into hypermarkets and some have been forced to stop operation on failure in market co petition.

The big players in supermarket business include Hero, Giant, Superindo and Ramayana. Since 2008, Carrefour, the hypermarket took part in the competition in supermarket business when it took over PT. Alfa Retailindo Tbk, the operator of Alfa. Now all Alfa outlets have been renamed Carrefour Ekspress with supermarket format. In addition to regular supermarkets, there are premium supermarkets such as Kem Chicks, Ranch Market, etc, which target expatriates in large cities such as Jakarta and Surabaya.

Super Indo and Ramayana each have 80 outlets this year, and Giant that came later has 46 outlets in a number of cities.

In addition to the three big supermarket chains, there are supermarket with only a number of outlets like Naga (7 outlets) and Tip Top (6 outlets), Yogya supermarket and Griya supermarket with 17 outlets, located mainly outside Jakarta. Yogya supermarket outlets are located mainly in West Java such as Bandung, Cirebon and other smaller cities.

Most big supermarkets are located in Jakarta as the country's largest economic and business centers. In the Greater Jakarta area, Giant has 31 outlets and Superindo 55 outlets. There are small other supermarkets in Jakarta having no outlets in other cities.

Hero has expanded to Papua, where it has 9 outlets targeting the workers and expatriate working for Freeport Indonesia which has larger copper and gold mines in that region.

Main players in supermarket business

The big players in supermarket business include Hero, Matahari and Superindo. Smaller players include Ramayana, Yogya, Tip Top and Naga, and a number of other small players outside Aprindo.

Hero Supermarket

PT. Hero Supermarket Tbk, the operator of Hero supermarkets, started operation in the 1970s, and it is the oldest and biggest player in supermarket business in the country.

PT. Hero Supermarket director Ipung Kurnia said Hero is quite strong and the brand is quite popular especially among the middle to high class members of the community. PT. Hero Supermarket Tbk saw an opportunity instead of a threat to its business the presence of hypermarkets that came later to the country. In 2002, PT. Hero Supermarket Tbk started expansion of operation to hypermarket business using the brand of Giant, while continuing to develop its Hero supermarket.

The outlets of Hero supermarket already reached 95 unit before the number declined after a number of the outlets especially in strategic areas were converted into hypermarket called Giant hypermarket. A number of other outlets in middle class residential areas were renamed Giant supermarket. As a result the numbers of Hero supermarket outlets have been reduced to only 46 units mostly near or in middle high class residential areas such as South Jakarta.

Giant Supermarket

PT. Hero Supermaket Tbk also operates Giant supermarket since 2007 with market targets of middle to lower class consumers. PT. Hero Supermarket Tbk, therefore, is the operator of two supermarkets with Hero targeting middle to high class consumers.

In the past several years, PT. Hero Supermarket focused more on expanding Giant outlets eyeing the much larger market target of middle to lower class consumers. Currently Giant supermarket has 78 outlets in Indonesia.

PT. Hero Supermarket is quite aggressive in expanding Giant supermarket by opening more outlets. In August 2011, it planned to open the first Giant outlet in Balikpapan, East Kalimantan.


PT. Matahari Putra Prima Tbk (PT. MPP) is the operator of Matahari supermarket. PT. MPP has also followed the steps taken by Hero in expanding multi formats of retail business by expanding operation to hypermarket called Hypermart in 2004.

PT. MPP started operation in October 1958 with first store named Mickey Mouse, established by Hari Darmawan. The store occupies two floor building with floor space of 150 square meters in Pasar Baru, Jakarta. It is the first retail company owned by Indonesian in the country.

In 1972, Matahari succeeded as a pioneer in developing department store business in Indonesia. The success encouraged Matahari to expand operation by opening Sinar Matahari department store in Bogor in 1980.

The first expansion of Matahari's business to supermarket was also marked with the operation of the Super Bazaar supermarket on July 14, 1991. In 2000, the name of Super Bazaar was changed with Matahari Supermarket. In 2002, Matahari split its core business by establishing new company Matahari Supermarket.

Later Super Bazaar opened new outlets in Melawai and Pasar Senen in Jakarta, and Bandung and Labuan. Matahari supermarket expanded with outlets mainly in larger cities outside Jakarta. However, since 2007, the name of Matahari supermarket was changed with Foodmart to give a new shopping sensation with a motto of Fresh, Modern, Tasty, and Quality & Trust.

Foodmart targets middle to high class customers by offering One Stop Shopping service in its 26 outlets in 18 cities in Sumatra, Java, Bali, Kalimantan and Sulawesi. Mega M is the pioneer and the first hypermarkets in Indonesia with its first outlet in Pluit to before new outlets were opened in Lippo Karawaci, Kedung Badak Bogor, THR Surabaya and Batam.

PT MPP Tbk is developing 3 new concepts of supermarket according to supermarket's consumer targets. The three concepts include Super Ekonomi with super cheap prices, first introduced in Beringharjo, Yogyakarta , Purwokerto, Tanah Mas in Semarang, and Depok, The first Super Ekonomi outlet is operated by PT Super Ekonomi (a member of the Matahari Group).


PT. Lion Superindo started the operation of Superindo supermarket in August, 1997. Lion Superindo is a joint venture between The Lion Delhaize from Belgium and an Indonesia shareholder. The "Lion" Delhaize which is based in Belgium is an international retailer with branches in 10 other countries in America, Europe and Asia.

Until mid 2011, Superindo opened 10 new outlets in Bandung, Bekasi, Yogyakarta, Malang, Solo, and Surabaya. Currently its has 81 outlets located in various large cities in Java and Sumatra.

Superindo shows its concern for the environment by providing degradable shopping bags that would be decomposed by it self in two years.


PT. Akur Pratama its first supermarket outlet in 1982 in Bandung, West Java. PT. AP operates retail business with the format of supermaket named Yogya and Department Store named Griya. PT. Akur Pratama through its subsidiary PT. Yomart also has stake in mini-market business with outlets named Yomart. The Yogya Group has a warehouse with a floor space of 5,300 square meters serving as Distribution Centre (DC) that distributes goods to all outlets in West Java and Jakarta. The DC has logistics equipment and a fleet of trucks to transport goods.

Currently the Yogya Group operates 52 outlets located mainly in large cities in West Java. Other outlets are located in Central Java and Jakarta.


PT. Ramayana Sentosa Lestari Tbk operates in both department store and supermarket business. Each of the outlets of Ramayana supermarket is housed in the same building with an outlet of Ramayana department store. Currently the Ramayana supermarket has 80 outlets located in large cities such as Jakarta, Bandung, Semarang, Surabaya and Medan.

Ramayana has opened 6 new outlets in a number of cities so far in 2011 with a total investment of Rp 150 billion. In 2011, Ramayana is set sales target at Rp6.85 trillion, or an increase of 14.2% from last year's sales of Rp 6.25 trillion. The increase is predicted with the opening of new outlets especially in the regions. The company plans expansion opening new outlets in Balikpapan, Abepura, Pekanbaru, Denpasar, and Samarinda. In Java it has opened outlets in the Greater Jakarta area, Padalarang, and Cinere. In July, 2011, Ramayana opened an outlet with a floor space of 16,344 square meters in Kediri, East Java and another with a floor space of 13,792 square meters in Garut, West Java . The opening of the two outlets cost around Rp 60 billion.

In 2012, Ramayana sets sales target at Rp 8 trillion with 8 new outlets to be opened in Java, Sumatra and eastern Indonesia in the second half of 2012. Each of the outlets had a floor space of 10,000 square meters. A new outlet needed an investment of Rp 25 billion to Rp 35 billion including the land price.

Carrefour Express

In 2008, PT. Carrefour Indonesia took over 75% of PT. Alfa Retailindo. The outlets of Alfa, therefore, were later renamed by Carrefour Ekspress. The outlets of Alfa when it was acquired by Carrefour totaled 29 units. The floor space of some of the outlets was less than 3,500 square meters, each or not enough to make them a hypermarket. The outlets, therefore, have the format of supermarket.

In 2011, expansion by Carrefour is more for supermarket than hypermarket especially in the regions. Hypermarket outlets area planned only in larger cities.

Carrefour currently has 13 outlets of Carrefour Ekspress. In 2010 Carrefour opened 8 retail outlets including 5 outlets of hypermarket and 3 outlets of supermarket with the brands of Carrefour Ekspress and Carrefour Market.

Carrefour plans to open more supermarket outlets to increase the number to 36 units in 2015. New supermarket outlets of Carrefour have so far been opened only in Java. Carrefour gives priority to outlets in stand alone buildings rather than those using space in shopping malls. Carrefour, therefore, sets higher target for the number of shoppers by cooperating with more suppliers of fresh food products. The number of suppliers of fresh food products is to be increased from 30% of the total suppliers to 50% mostly small and medium enterprises.

Ranch Market

PT. Supra Boga Lestari is the operator of Ranch Market supermarket starting in 1998 with license from a US company. Ranch Market is a premium supermarket targeting high class customers. Ranch Market units; therefore, are located near the complexes of expatriates such as in Jakarta and Surabaya, It sells fresh food products like vegetables, fruits and meat of high quality. Ranch Market is the only supermarket in Indonesia holding the certificate of HACCP and ISO 9001:2000 from Sai Global (Australia) for food security.

Currently Ranch Market has 10 outlets. Premium supermarkets have not grown in number of outlets as fast as other supermarkets, but Ranch Market is set to continue expansion. In 2011 Ranch Market plans to open two new outlets in Jakarta and Balikpapan, East Kalimantan.


Mini-market mushrooming

Mini-market outlets are found in strategic locations in residential areas, housing complexes, office buildings and other public facilities. Business in mini-market has mushroomed especially because of the brisk franchise system offered by major operators of mini-market like Indomaret, Alfamart, Yomart and OMI especially since 1997.

Mini-market franchise system has succeeded in attracting individual investors or corporations as the system needs relatively cheap capital of Rp 300 million--Rp 500 million per outlet including franchise fee and royalty outside the building. The turnover is around Rp 9 million--Rp 10 million per outlet per day. The brisk business in franchise system followed the announcement of the Government Regulation (PP) No.42 in 2007, which gives priority to the owner of the minimarket to handle supply of goods to shops selling sundries and traditional shops by making mini-market networks to function as a distribution center for local businesses.

Seeing that the expansion of mini-market has been out of control the Jakarta city administration through an instruction of the governor No 115/2006 suspended issuance of license for new mini-markets. However, there is still license issued for franchise business in the capital city until 2010. In early 2011, the Jakarta city administration acted firmly by closing more than 2,000 mini-market outlets having illegal licenses.

Mini-market players

Currently mini-market business is dominated by a few big players including PT. Indomarco Prismatama (Indomaret), PT. Sources Alfaria Trijaya (Alfamart), PT. Hero Supermarket Tbk (Starmart), PT. Midi Utama Indonesia (Alfa Midi and Alfa Express), PT. Inti Citra Cakrawala (OMI), and PT. Yomart (Yomart).

After taking domination in hypermarket business through Carrefour, the Para Group expanded operation to mini-market business by planning to establish mini-market chain named Trans Mart. Trans Mart is to come on stream in 2012.


PT. Indomarco Prismatama is the operator of Indomaret outlets that began operation in 1988 in Jakarta. Two subsidiaries of Indomaret under the Intraco Group are PT. Inti Citra Cakrawala and PT. Global Niaga Perkasa, which are respectively the operators of Mitra Indogrosir (OMI) with 101 outlets and Ceriamart with 70 outlets.

Indomaret, known as the pioneer in mini-market business in Indonesia, has around 3,500 items in each of its stores, which has a floor space of 200 square meters each. Its products are dominated by household daily necessities with food products making up 60%, non food products making up 2% and general products 10% and perishable goods accounting for the rest.

Starting 1997, Indomaret offers partnership system in mini-market outlet ownership and franchise management with cooperatives, corporations and individuals as partners.

Throughout 2010, Indomaret opened around 600 new outlets all over Indonesia. Around 300-360 units of the new outlets were in franchise format, and the rest were regular outlets or owned by the investor.

The new outlets are located in outside Java such as in Lampung, Palembang, Medan, Makassar and Bali. It also has opened outlets in Java including in Madura, and West Java such as in Garut and Cirebon.

In 2011, amid sharp competition among mini-markets, Indomaret began innovation after expanding around 40 outlets of standard mini-markets (Indomaret) and Indomaret Point (convenience store) in the Soekarno-Hatta airport and Gambir railway station, ahead of the launch of Indomaret Premium. According to plan, in 2011, Indomaret will open around 100 outlets of Indomaret Premium, with increase in product content. The outlets will be wider (the type of 54 square meters) located in premium areas such as Pondok Indah, Kelapa Gading, etc.

In the Greater Jakarta area (Jabodetabek), there are 150 outlets operating round the clock including 65 outlets in Jakarta proper, and the rest in the satellite cities Bekasi, Bogor, Depok, and Tangerang. Expansion will continue depending on condition in each of the areas.

By the end of 2010, Indomaret had 4,955 outlets all over Indonesia. In 2011, it plans to increase the number to 5,755 outlets. In 2010, outlets in franchise format totaled 1,882 units (38%) and the number is expected to increase to 2,417 outlets (42%) in 2011. Most of Indomaret outlets are located in the Greater Jakarta area (Jabodetabek), West Java, Central Java, East Java, Yogyakarta, Bali, and Lampung.

In the first five months of 2011, Indomaret opened 300 new outlets out of the planned 800 units, with an investment of Rp 400 billion. Indomaret planned to have 50 outlets in Makassar by the end of 2011 currently it already has 31 outlets there, which is considered quiet potential. In Palembang it already has 50 new outlets. After the addition of 800 new outlets this year, 42% of the stores will be in franchise system. The operation of its outlets is backed up by 13 Distribution Centers (DC). This year Indomaret plans to establish 3 more units of DC each in Cirebon, South Sumatra and South Sulawesi. A unit of DC could serve around 200-300 outlets.

Indomaret issues membership card for its customers. Holders of the card are entitled to price discount. By the end of 2010, Indomaret already had 500,000 such members and the number is expected to increase to 1 million in 2011. In 2007, Indomaret cooperates with Western Union Bank, in providing remittance service for Indonesian workers abroad ... The turnover of Indomaret has continued to scale up from year to year--from around Rp 12 trillion in 2009, up to around Rp 14 trillion in 2010. In 2011, the turnover is forecast to reach Rp 18 trillion.


Alfamart was originally named Alfa Minimart operated by PT Alfa Mitramart Utama, which was established in 1989 by PT Alfa Retailindo Tbk (51%) and PT Lancar Distrindo (49%). In 2002, the name of PT Alfa Mitramart Utama was changed with PT. Sources Alfaria Trijaya (PT. SAT) after being taken over by PT HM Sampoerna Tbk (70%) and PT Sigmantaia Alfindo (30%). The name of the Alfa Minimart was also changed with Alfamart.

In 2006, the shares of PT. HM Sampoerna in PT SAT were sold to PT. Sigmantara Alfindo which is owned by Djoko Susanto, making PT. Sigmantara Alfindo the only shareholder of the company. Meanwhile, Djoko Susanto and 5 partners established PT. Kencana Disindo in 2005 operating the mini-market chain of Alfa Express (Alex). The presence of Alfa Express is to back up the Alfamart chain. Alfa Express has around 65 outlets only in the Greater Jakarta area. Unlike Alfamart, franchise system is not yet used for Alfa Express outlets.

PT. SAT launched Initial Public Offering (IPO) in 2009 floating 10% of its share worth Rp 135 billion. The shareholders have changed several times over the past years and now the shareholders are PT Sigmantara Alfindo (64.66%), HSBC HG22 Smallcap World Fund Incorporated (8%), HSBC Fund Service Clients A/C 500 (6.73%) and investing public (18.97%).

While opening new outlets to strengthen its competitiveness, PT SAT has opened kiosks named Alfa Kios around its Alfamart outlets. The kiosks are business units of Alfamart which supply them with products and provide infrastructure needed by he kiosks. In each outlet of Alfamart, there are 50 small shops. Now there are 20,000 such shops.

In 2011, Alfamart built 600 new outlets with a total investment of Rp 360 billion, located in various areas in Java and Lampung.

By mid 2011, the outlets of Alfamart totaled 5,200 units all over Indonesia. Franchised outlets will be increased in portion from 23% to 35% in 2011. Meanwhile, the number of distribution centers totaled around 17 units located in the Greater Jakarta area, Central Java, Bali, and Makassar. Alfamart issues discount card called A Card Flash for its customers starting May, 2010. So far, Alfamart has issued 460,000 units of A Card Flash.

Sales of Alfamart rose 30% from Rp 10.55 trillion in 2009 to Rp 13.71 trillion in 2010. In the first half of 2011 it already recorded sales valued at Rp 8.34 trillion with net profit at Rp 64.45 billion.

PT SAT Tbk will issue new non pre-emptive rights shares up to 10% of its total number of its issued and paid shares, hoping to raise Rp 1.16 trillion . Around 55% or Rp 638 billion of the fund will be used to repay long term debts and 45% or Rp 522 billion to finance business expansion in 2012. Based on its financial report for the first half of 2011, the company has long term debts totaling Rp 523.72 billion in June maturing each year until 2015.


Starmart is a mini-market established by PT. Hero Supermarket Tbk in cooperation with Dairy Farm. Currently Starmart has 130 outlets in the Greater Jakarta area and Bali eyeing the middle to high class customers. Some of its outlets, therefore, are housed in office buildings and apartment buildings. Opening a Starmart outlet will cost around Rp 500 million.

Alfa Midi

PT Midi Utama Indonesia Tbk (PT. MUI) was established in 2007 to operate Alfa Midi and Alfa Express mini-markets. In 2010, PT MUI launched Initial Public Offering floating 15% of its share worth Rp 118.89 billion at the Indonesian Stock Exchange. The shareholders of PT. MUI include PT Amanda Cipta Persada (71.825%), PT Sources Alfaria Trijaya Tbk (12.75%), Rullyanto (0.425%), and investing public (15%).

The IPO fund was used to open more outlets in Jabodetabek, West Java, East Java, Bali, Makasar and other regions. Around 10% of the IPO fund was used to finance expansion of its distribution center (DC) in Serpong, the opening of DC for fresh food in Bekasi, and the opening of a DC in Makasar. A DC will handle the distribution of goods to 80-125 outlets. Alfamidi products include food products making up 60%, non food product 20% and frozen food such as fresh meat and vegetables and fresh fruits making up 20%.

Alfamart and Indomaret sell no fresh vegetables and meat and frozen food such as frozen chicken meat.

By the end of 2010, PT. MUI had 409 outlets including 248 of Alfa Midi outlets and 161 Alfa Expres outlets. In Surabaya there are now 96 Alfa Express outlets. Some of the stores are in own buildings and other in leased buildings. Alfa Midi has 3 Distribution Centers located in Bekasi, Serpong, and Surabaya. Alfa Midi also plans to expand operation to district areas.

In 2010, sales recorded by PT. MUI totaled Rp 1.7 trillion, up 80% from the previous year. In 2011, PT. MUI hopes to chalk up a 40% increase in sales to Rp 2.4 trillion. Alfa Midi has a 3% market share in Indonesia.

In 2011, PT. MUI plans to open up to 100 new outlets and a Distribution Center with a total investment of Rp 285 billion. Opening an outlet of Alfa Midi will cost around Rp 2.3 billion and an outlet of Alfa Express around Rp 600 million. And a DC will cost Rp 55 billion. The opening of new outlets including in Makassar will increase the number of its outlet to 20 units from 15 outlets at present.

PT. MUI cooperates with Lawson Inc to open convenience store chain in Indonesia with 50 outlets in five large cities in 2012. Lawson Inc is the second largest retailer in Japan PT. MUI has secured the right as the master franchise of Lawson in Indonesia, to offer franchise for Lawson stores with an investment of around Rp2 billion per outlet. Lawson targeting young customers will sell consumer goods, snacks, fast food and beverages. The concept has been introduced earlier by 7-Eleven, the pioneer in convenience store business in the country.


Yomart is operated by PT. Mitra Yomart Sejati, which is a member of the Yogya Supermarket group. Yomart which is based in Bandung started operation in 2004 with small sized outlet of 50-75 square meters.

The Yomart chain has outlets only in West Java, such as in Sukabumi, Bogor, Tasikmalaya, and Cirebon. Currently it has 180 outlets.

Pasar Prima

Pasar Prima previously belonged to PT. Alatief Corp which is owned by Abdul Latief, who also owns Pasaraya department store. Later Pasar Prima was acquired by PT. Tason Putra Mandiri of the ACI Group which operates in distribution and retail business. Tason was established in 1997, a company owned by Emil Abeng, the son of Tanri Abeng, former president of PT. Multi Bintang. When it was under Alatif Corp Pasar Prima could not grow as expected, but after it was taken over by Tason it grew well and now it has 48 outlets.

The Tason Group also has other subsidiary including PT. Multimandiri, which has operated for 27 years in the distribution of consumer goods such as Aqua, Nestle, Bir Bintang and Greensand.

OMI (Outlet Mitra Indogrosir)

PT. Inti Citra Cakrawala (PT. ICC) operates a mini-market named OMI. PT. ICC also offer franchise system for investors. Under the franchise system, the investors are free to use any brand--OMI or own brands.

Investment in OMI franchise is relatively small compared to investment in other mini-market franchises--ranging only from Rp 100 million to Rp 300 million, with franchise fee of Rp 10 million--Rp 35 million per 5 years and royalty fee of 1%2% of monthly turnover.

Currently OMI has more than 100 outlets in various areas in Java and Sumatra.

Locations of big players

Most big players like Indomaret and Alfamart are based in Java mainly in Jakarta although they have expanded to the regions such as to Bali and Lampung in Sumatra and Kalimantan.

Government policy

Foreign investors allowed to wholly own modern retail companies

Based on the presidential decree No 96/ 2000 which has been revised and replaced with a presidential decree No 118/ 2000, foreign investment (PMA) has been allowed in big sized modern retail business including Malls, Supermarkets, Department Stores, Shopping Centers, Distribution/Wholesaler, Exports and Import business have been The business areas are no longer included in the Investment Negative List. Foreign investors are allowed to wholly owned big modern retail companies.

The government, however, allows foreign individuals and companies to have only a stake of up to 49% in small modern retail stores.

Modern stores/markets not allowed to be wholly owned by foreign investors are small modern retailers are those with floor space of up to 10,000 square meters, medium modern market with floor space of 10,000-50,000 square meters and small modern stores with floor space of up to 200 square meters and medium modern stores with floor space of 200-6,000 square meters.

Large scale modern retailers which are allowed to be wholly owned by foreign investors are those with a floor space of more than 50,000 square meters and larger modern stores with floor space of more than 6,000 square meters. This regulation is feared to allow foreign domination of the country's retail business. In many other countries retail business is closed to foreign investment.

* The Presidential Regulation 112 of 2007 on traditional markets, shopping centers and modern stores rules that the locations of mini-market and supermarket outlets must at least 2.5 kilometers from a traditional market. However, there is no regulation which requires regional administrations to provide sufficient budget for the development of traditional markets.

* Regulation of the trade minister No 53 of 2008 on development of traditional markets, shopping centers and modern stores.

The regulation says that larger retailers are allowed to take location at main roads unless they are integrated in a mall or real estate. The locations of mini-markets depend on the density of population.

However, there are conflicting regulations between those issued by the center and the regions. Regulations issued by the government are often differently interpreted in different areas. For example, in some area a modern retailer, which already has the business license to operate as a modern store, is still required to have trading business permit (SIUP), principle license, even recommendation from city mayor. On the contrary, in some area a modern store needs only a recommendation from city mayor. One stop service as regulated in the regulation of the trade minister No 53/2008 remains in the pipeline

* Jakarta regional regulation No. 22 of 2002 on private market regulates zoning system allowing only modern markets to take a location of at least 2.5 kilometers away from a traditional market center. However, control is not effective over the expansion of modern markets. Some of them are located just beside traditional market. Based on the regional regulation No. 22/2002, he Jakarta city administration issued a governor instruction N0.115/2006 suspending license for mini-market in Jakarta. With the regulation, in early 2011, the Jakarta city administration closed a number of mini-market outlets illegally operating in Jakarta.


Big retailers such as hypermarkets, supermarkets buy goods directly from producers or suppliers. They buy in large volume and they do no use consignment system.

By buying in large quantity they demand higher discount. Hypermarkets tend to dictate suppliers. Supplier could not do much as they are in weaker position as most of the situation is a buyer market.

The suppliers in Indonesia are grouped in various associations like The Association of Indonesian Food and Beverage Companies (Gapmmi), The Association of Indonesian Suppliers to Modern Markets (AP3MI), The Indonesian Association of Meat Processing (Nampa), The Association of Indonesian Garment & Accessories (APGAI), etc.

In general, the conditions that have to be met by the suppliers for modern markets are almost the same. Carrefour, for example, sets a number of conditions that have to be met by its suppliers. One of he conditions is that the suppliers must be able to guarantee continued supplies of certain goods.

Requirements that have to be met by suppliers:

* In order to be able to fill catalogue, suppliers is charged with a cost of Rp 10 million/product.

* The rent of a space is Rp 1.9 million per 2 weeks per outlets.

* Promotional fee is 3%-5% of annual turnover.

* In certain event such as anniversary celebration, retailers ask the suppliers for contributions

* Terms of payment set by Carrefour is normally per week, per month or per 6 months or the faster the goods sold the earlier the payment will be.

* Controlling the availability of goods, process of orders, determination of stocks and display in each outlet.

Consumer Targets

Each retailer has certain policy to determine it target among the consumers. For example, the targets of department stores and hypermarkets are the entire family. Currently the visit to a hypermarket by a family is not only for shopping but more for recreation and window shopping.

Consumers among the middle to high income people are the main targets of department stores, hypermarkets and supermarkets. The consumers of minimarkets are mainly people of middle to lower income brackets.

The targets of specialty stores are consumers that need certain specific products. For example, building material stores have targets among consumers need building materials

Market segmentation


Carrefour, Giant, Hypermart and Alfa are competing directly in the same market segment to win the market of consumers of all social classes--high, middle and lower class consumers. In Jakarta, they are found in almost all strategic locations in business centers, city center, city's outskirts and residential areas.

In business center at Jl. Jend. Sudirman, there are 2 hypermarket outlets facing each other across the street. They are Carrefour at Ratu Plaza and Giant at Semanggi Plaza. In Kelapa Gading, a high class residential area in North Jakarta, there is Hypermart outlet. In Lebak Bulus middle to high class residential area in South Jakarta, there are Carrefour and Giant, located only 50 meters separated. In Pondok Gede, middle to lower class area in East Jakarta, Giant was the first to have an outlet before Carrefour opened one in 2006. At the same time Carrefour opened one in neighboring area of Kramat Jati.

Lotte Mart is a wholesaler targeting traders, small retailers, catering firms, hotels, and other consumers buying goods in larger volume mainly to be sold again. Lotte Mart, therefore, does not compete directly with other big retailers or hypermarkets.


Hero is the largest operator of supermarket targeting mainly middle to high class consumers. Its prices, therefore, are generally higher. Hero has opened its outlets in strategic areas in Jakarta such as Blok M, Plaza Senayan, Pondok Indah Mal, Mal Taman Anggrek, etc. Hero also chooses to open its outlets near high class residential areas such as Menteng, Kemang, Permata Hijau, etc.

Superindo has similar characteristics as those of Hero opening its outlets in locations near residential areas, but its targets are middle class residential areas such as Jaka Sampurna, Bekasi.

The outlets of Matahari and Ramayana are found mainly in shopping centers visited mainly by middle to lower class consumers such as shopping centers in Bekasi, Tangerang and Depok. The outlets of Yogya, Naga and Tip Top are mainly in city's outskirts.


Starmart has different market target than other retailers. Starmart targets consumers of high class. Therefore, the outlets of Starmart are found only in high class areas such as hotel and luxurious apartment buildings. Among the locations are Menteng apartment, Sahid Palace, Ascott and luxurious office buildings such as Wisma BNI, Plaza Lippo, Wisma Pondok Indah, etc.

Two big players, Indomaret and Alfamart, compete head on as they target the same market segments-ordinary residential areas, housing complexes and office complexes.

Indomaret and Alfamart seek to win the market by offering cheaper prices. Their outlets are found near settlements or residential areas having adequate transport and telecommunication facilities.

Investment aspect

Investment scale

Modern retail business is capital intensive and it needs large capital, especially hypermarket. A hypermarket outlet will need an investment of around Rp50 billion- Rp 100 billion.

Therefore, only global players could afford to enter into this expensive business such as the France-based Carrefour and local players, Hero Group with its Giant hypermarket and Matahari Group with its Hypermart.

The scale of investment for mini market depends on the varieties of their items and sizes of their stores. An outlet with a floor space of 90 square meters, and 3,000 items, will need an investment of Rp 425 million. One with floor space of more than 90 to 150 square meters, and 3,500, will need an investment of around Rp 480 million, one with store of larger than 150 square meters and 4,000 items will need an investment of around Rp 555 million per.

Hypermarket investment

Investment in hypermarket outlets also depends on the size of the outlet and the number of items to be offered. Most hypermarket outlets are located not in own building of the investors. Most of them are housed in a mall buildings or shopping centers

Investments in the outlets of Carrefour range from Rp 50 billion to Rp 100 billion each. An outlet occupies a space of around 8,500.square meters offering around 50,000 items. Carrefour outlets are larger than those of its competitors.

Hypermart investor spends around Rp 40 billion to Rp 50 billion on each outlet and Giant investor Rp 20 billion to Rp 30 billion per outlet.

Makro spends from Rp 30 billion to Rp 50 billion per outlet and the investor uses only separate buildings (stand alone), that the investment is quite large. Makro outlets are like warehouses, that convenience is not the priority. Some outlets outside Java do not even use AC and enough illumination.

Supermarket investment

Investments needed for a supermarket outlet are not he same. The investments for the outlets of Hero range from Rp 4 billion to Rp 5 billion each. The investments by Matahari range from Rp 3 billion to Rp 4 billion for an outlet

Mini-market Investment

The investment for a mini-market outlet also depends the size of the stores, the number of items and shelves. See the following table.

Alfamart adopts a system of progressive royalty that depends on the turnover of an outlet. If the turnover is less than Rp 75 million a month the royalty is zero. The royalty is 2% if the turnover is Rp 75 million to Rp 100 million and 2.5% if the turnover is more than Rp100 million to Rp 150 million and 3% if the turnover is more than Rp 150 million a month.

Franchise triggers expansion of mini-market

Business in mini-market has expanded rapidly either under regular system or through franchise system offered by the retail companies since 2004. The franchise system was first introduced and offered by Indomaret and it was followed later by Alfamart and OMI.

There are some conditions for franchise partners of Alfamart The investor has an initial capital of Rp 300 million--Rp 555 million and provides a space of 40 square meters-120 square meters either owned or rented by the partner. A franchisees of Indomaret, is required to provide an initial capital of Rp 300-Rp 600 million and has a space of 60 square meters-150 square meters.

The franchise fees are not the same. Indomaret sets a higher franchise fee of Rp 75 million for 5 years not including value added tax. The franchise fee set by Alfamart is Rp 45 million and OMI Rp 35 million.

Retail expansion

Big retailers have been quite expansive opening new outlets not only in Jakarta but also in other regions in Sumatra, Sulawesi, Kalimanatan, Maluku and West Nusatenggara (NTB).

Lotte Mart opened six new outlets so far in 2011, including ones in Jakarta, Banten, Tanggerang, and Makassar. Two new outlets it has were through acquisition from other retailers--DBest which is located at Jalan Fatmawati Jakarta and in Makassar.

Alfamart has opened 600 new outlets with a total investment of Rp 360 billion, with each outlet to cost Rp 600 million. The new outlets are located in various areas in Java and Lampung.

Meanwhile, Hypermart owner plans to open 17 new outlets in 2012 with a total investment of Rp 1 trillion. Five of the outlets will be opened in eastern Indonesia such as Maluku, Banjarmasin, Kupang and Papua. Two of the outlets are in stand alone buildings and the rest are housed in shopping malls.

Business sources said another foreign retailer Metro Cash & Carry from Germany will enter the Indonesian market in 2012 in cooperation with a local partner the Sintesa Group. The plan is to open 20 wholesale centers with a total investment of 300 million Euro. Metro Cash & Carry will introduce the business to business (B2B) concept of wholesale and will serve local professional customers such as hotels, restaurants, catering firms, cafes, small food stores and other firms. Currently Metro Cash & Carry has a chain of 80 stores in five Asian countries--China, India, Japan, Vietnam and Pakistan.

Retails sales Rp 100 trillion in 2010

In the past five years retails sales by hypermarket, supermarket and mini-market outlets have grown by an estimated 28.5% year on the average .In 2008, sales grew 23.4% to Rp 55.4 trillion from Rp 44.9 trillion in 2007. In 2009, sales surged 50% to Rp 83.4 trillion and up again 19.9% to Rp 100 trillion in 2010. In 2011, sales are forecast to grow again 20% to Rp 120 trillion. The increase followed the opening of new outlets especially in large cities.

Conclusion and Prospects

With the economy growing 6.6% in 2011 and improved purchasing power of the people the retail business is expected to expand this year and the following years. In 2009, a new foreign retail giant Lotte from South Korea acquired Makro from SPV Holding of the Netherlands. Meanwhile, a number of foreign retail companies are indicating keen interest in entering the domestic market. However, the foreign domination has been reduced with the acquisition of 40% of the country's largest retailers Carrefour by the Para Group. The Para Group through subsidiary PT. Trans Ritel paid US$ 350 million for the 40% stake in PT. Carrefour Indonesia which has 83 outlets.

Hypermarkets and mini-markets have become the largest contributors to the total turnover of modern retailers in the country. The expansion of hypermarkets is fast especially in large cities where shopping convenience is an important factor for growth Mini-markets with smaller number of items to be sold lead especially in smaller locations such as in residential areas close to the consumers.

The hypermarket format still dominates modern retail business, followed by mini-market. Supermarkets are less expansive but relatively stable amid competition from hypermarkets and mini-markets.

Currently the competition is sharp in modern retail business leading to price war with one seeking to undercut each other in price. The competition is almost certain to be won by ones which could offer larger number and greater varieties of goods giving customer one stop shopping service such as Carrefour, the world's second largest retailer.

With a population of more than 230 million, Indonesia is a highly potential market for modern retailers. Seeing the strong interest by other foreign retailers, Carrefour and other big retailers in the country have continued expansion opening new outlets in Jakarta and potential areas in the regions. In 2011, Carrefour plans to open 20 new outlets. Hypermart also plans to have 17 new outlets and Lotte Mart to have 6 new outlets. Among mini-market companies, Indomaret and Alfamart are the leaders, respectively planning to open 800 new outlets and 600 new outlets. Meanwhile, a number of foreign retailers are expected to soon venture in Indonesia such as Metro Cash & Carry from Germany.
Characteristics and formats of modern retails

Description Hypermarket Supermarket

Floor space 4,000-10,000 sq.m. 700-4,000 sq.m.

Building Own building, mall, Own building, mall,
 Plaza, shopping Plaza, shopping
 centers centers

Number of cashiers > 20 persons 3--20 persons
per outlet

Number of items > 15,000 items 5,000--20,000 items

Types of products All categories of Almost all categories
 products in great groceries
 varieties including : Products quite
 groceries, electronics, complete mainly
 clothes and footwear fresh goods

Location In cities, city's Housing and, office
 outskirts, near toll complexes shopping
 road centers

Parking area Spacious Standard

Description Mini-market

Floor space 100-700 sq.m.

Building House-shop,
 Office, Hotel,

Number of cashiers 1-2 persons
per outlet

Number of items < 5,000 items

Types of products A number of
 Only daily

Location Housing and
 shopping areas

Parking area Minimum

Source: Data Consult/ICN

Number of outlets of modern retailers in Indonesia, 2007--2011

Types of retailers 2007 2008 2009 2010 2011 *

Hypermarket 99 130 143 154 203
Supermarket 1,377 1,447 1,272 1,230 1,229
Mini-market 8,889 10,289 11,927 15,538 16,720
Total 10,365 11,866 13,342 16,922 18,152
Growth (%) -- 14.5 12.4 26.8 10

Note *: Estimate

Source : Aprindo/Data Consult/ICN processed

Number of outlets of modern retailers by regions, 2011

 Retailers (outlets)

Regions Hypermarket Supermarket Mini-market

North Sumatra 3 23 700
West Sumatra -- 22 180
South Sumatra 2 52 305
Riau, Batam, Bintan 3 41 177
Greater Jakarta area 83 148 6,851
Banten 1 55 452
West Java 64 145 2,147
Central Java 11 100 1,741
Yogyakarta 4 86 602
East Java 22 153 2025
Bali 4 95 299
West Kalimantan -- 24 43
South Kalimantan 1 22 71
East Kalimantan 1 41 63
South Sulawesi 4 59 98
Central Sulawesi -- 14 39
North Sulawesi -- 12 79
Maluku 1 10 39
Papua -- 18 42
Other regions -- 9 687

Total 203 1,229 16,720

 Retailers (outlets)

Regions Total Share %

North Sumatra 726 4.00
West Sumatra 182 1.00
South Sumatra 359 1.98
Riau, Batam, Bintan 221 1.22
Greater Jakarta area 7,079 38.15
Banten 508 2.80
West Java 2,556 14.08
Central Java 1,852 10.20
Yogyakarta 692 3.81
East Java 2,200 12.12
Bali 398 2.19
West Kalimantan 67 0.37
South Kalimantan 94 0.52
East Kalimantan 105 0.58
South Sulawesi 163 0.90
Central Sulawesi 53 0.29
North Sulawesi 91 0.50
Maluku 50 0.28
Papua 60 0.33
Other regions 796 4.4

Total 18,152 100

Source : Data Consult/ICN processed

Part of modern retailers having floor space of more than 5,000 sq.m.
in Jakarta

Retailers Number of outlets Outlets stand alone in Jakarta

Carrefour 24 5 (Cempaka Putih, Lebak Bulus, Puri
 Indah, MT. Haryono, Bintaro)

Hypermart 10

Giant 5 3 (Pondok Gede, Ciledug, Bintaro)

Lotte Mart 5 3 (Kelapa Gading, Pasar Rebo,

Source: Data Consult/ICN processed

Main players in retail business and shares

 Types of retail
Name of company Group outlet

PT. Carrefour Indonesia a. Carrefour group Hypermarket
 from France Supermarket
 b. Para group of

PT. Hero Supermarket Tbk a. Hero Group of Hypermarket
 Indonesia Supermarket
 b. Dairy Farm from Mini-market
 Malaysia Healthcare store

PT. Lotte Shopping Lotte from South Hypermarket
Indonesia Korea

PT. Matahari Putra Prima Lippo Group Hypermarket
Tbk Supermarket
 Department store

PT. Mutiara Ritelinti Wira -- Hypermarket

PT. Lion Super Indo The Lion Delhaize of Supermarket

PT. Ramayana Lestari -- Supermarket
Sentosa Department store

PT. Akur Pratama Yogya Group Supermaket
 Department store

PT. Tip Top -- Supermarket

PT. Gelalel Pasar Swalayan Gelael Group Supermarket

CV. Naga Swalayan -- Supermarket

PT. Rifi Sempana -- Supermarket

PT. Indomarco Prismatama Indomarco Mini-market

PT. Sources Alfaria -- Mini-market

PT. Inti Citra Cakrawala OMI Mini-market

PT. First Inti Retailindo -- Mini-market

Name of company Brands

PT. Carrefour Indonesia Carrefour
 Carrefour Express

PT. Hero Supermarket Tbk Giant
 Guardian and Boston

PT. Lotte Shopping Lotte Mart

PT. Matahari Putra Prima Hypermart
Tbk Foodmart

PT. Mutiara Ritelinti Wira Club Store

PT. Lion Super Indo SuperIndo

PT. Ramayana Lestari Ramayana
Sentosa Ramayana

PT. Akur Pratama Yogya and
 Yomart Griya

PT. Tip Top Tip Top

PT. Gelalel Pasar Swalayan Gelael

CV. Naga Swalayan Naga

PT. Rifi Sempana Omura

PT. Indomarco Prismatama Indomaret

PT. Sources Alfaria Alfamart

PT. Inti Citra Cakrawala OMI

PT. First Inti Retailindo First Mini-market

Sources: Aprindo/Data Consult/ICN

Locations of players, 2011

Hypermarket (outlets)

 Lotte Club
Kota Carrefour Giant Hypermart Mart Store

Jakarta, Bogor, 43 24 10 4 2
Depok, Tangerang,
Bekasi (Greater

Purwakarta, West Java -- 1 -- -- --

Serang, Banten 1 --

Bandung, West Java 4 2 1 1 --

Cirebon, West Java 1 1

Yogyakarta 2 -- -- 1 --

Semarang, Central 2 1 -- 1 --

Pekalongan, Central 1 --

Solo, Central Java 2 -- -- 1 --

Surabaya, East Java 7 7 5 2 --

Kediri, East Java -- -- 1 -- 1

Malang, East Java -- 1 1 -- --

Madiun, East Java 1 1 -- --

Bojonegaro, East Java -- 1 -- --

Gresik, East Java -- 1 -- --

Mojokerto, East Java 1 -- --

Jember, East Java 1 -- -- -- --

Pasuruan, East Java 1 -- -- --

Probolinggo, East -- 1 -- --

Banyuwangi, East Java -- 1 -- --

Denpasar,Bali 3 -- -- 1 --

Medan, North Sumatra 2 -- 1 1 --

Palembang, South 1 -- -- 1 --

Lampung 1 -- -- -- --

Pekan Baru, Riau -- 1 1 1 --

Batam 2 -- 1 -- --

Bintan 1 -- -- -- --

Makassar, South 4 -- 1 2 --

Banjarmasin, South -- 1 -- 1 2

Pontianak, West 1 -- -- -- 1

Balikpapan, East -- -- -- 1 1

Ambon, Maluku -- 1 -- -- 1

Total 82 42 53 24 2

Sources : Data Consult/ICN processed

Hypermarket business players in Indonesia, 2011

 Name of Number of
Names of company Group outlets outlets

PT. Carrefour Carrefour Group Carrefour
Indonesia from France and 82
 Para Group

PT Matahari Putra Lippo Group Hypermart 53
Prima Tbk

PT. Hero Hero Group Giant 42
Supermarket Tbk

PT. Lotte Lotte Group of Lotte Mart 24
Shopping South Korea

PT Mutiara Wicaksana Club Store 2
Ritelinti Wira Overseas Group

Sources : Data Consult/ICN processed

Location of big players in supermarket business, 2011

 Supermarket (outlets)

Areas Giant Foodmart Super Indo

North Sumatra -- 1 --
South Sumatra -- 2 1
West Sumatra -- 1 --
Jambi -- 1 --
Lampung 1 1 --
Bengkulu 1 -- --
Riau -- 1 --
Batam -- 1 --
The Greater Jakarta area 31 6 55
Banten 2 -- 1
West Java 10 3 13
Central Java 7 2 10
Yogyakarta 2 1 --
East Java 18 2 4
Bali -- 2 --
West Nusa Tenggara -- -- --
Makassar, South Sulawesi -- -- --
Balikpapan, E. Kalimantan -- 1 --
Banjarmasin, S. Kalimantan -- -- --
W. Kalimantan -- -- --
Maluku -- 1 --
Papua -- -- --

Total 78 26 81

 Supermarket (outlets)

Areas Ramayana Yogya Hero

North Sumatra 3 -- --
South Sumatra 2 -- --
West Sumatra 2 -- --
Jambi -- -- --
Lampung -- -- --
Bengkulu -- -- --
Riau 2 -- --
Batam 1 -- --
The Greater Jakarta area 35 2 15
Banten 1 -- 5
West Java 9 49 5
Central Java 6 1 --
Yogyakarta -- -- --
East Java 10 -- 8
Bali 2 -- --
West Nusa Tenggara 1 -- --
Makassar, South Sulawesi 1 -- --
Balikpapan, E. Kalimantan 2 -- 3
Banjarmasin, S. Kalimantan 2 -- 1
W. Kalimantan 2 -- --
Maluku -- -- --
Papua 1 -- 9

Total 80 52 46

Sources: ICN processed

A number of big players of supermarkets in Indonesia, 2011

Companies Groups

PT. Lion Superindo Delhaize from Belgium
PT. Ramaya Lestari Sentosa Tbk Ramayana
PT. Hero Supermarket Tbk Hero
PT. Hero Supermarket Tbk Hero
PT Matahari Putra Prima Tbk Lippo
PT. Akur Pratama --
PT. Carrefour Indonesia Para
PT. Supra Boga Lestari --
CV. Naga Swalayan --
PT. Tip Top --

 Number of
Companies Names of outlets outlets

PT. Lion Superindo Superindo 80
PT. Ramaya Lestari Sentosa Tbk Ramayana 80
PT. Hero Supermarket Tbk Giant 78
PT. Hero Supermarket Tbk Hero 46
PT Matahari Putra Prima Tbk Foodmart 26
PT. Akur Pratama Yogya and Griya 52
PT. Carrefour Indonesia Carrefour Ekspress 14
PT. Supra Boga Lestari Ranch Market 10
CV. Naga Swalayan Naga 7
PT. Tip Top Tip Top 6

Sources: Aprindo/ICN processed

Several big players in mini-market business in Indonesia, 2011

 Number of
 Names of outlets
Name of company Group outlet (units)

PT. Indomarco Prismatama Intraco Indomaret 5,755

PT. Sources Alfaria Trijaya Alfa Alfamart 5.200

PT. Hero Supermarket Tbk Hero Starmart 130

PT. Midi Utama Indonesia Alfa Midi Alfa Midi 248
 Alfa Express 161

PT. Mitra Yomart Sejati Yogya Yomart 180

PT. Inti Citra Cakrawala Intraco OMI 100

PT. Tason Putra Mandiri ACI Pasar Prima 48

Sources: Aprindo/ICN processed

Locations of big players in mini-market business, 2011

 Number of outlets (unit)

 Alfa Alfa
Areas Indomaret Alfamart Midi Express Starmart

Sumatra 200 150 -- -- --

Jabodetabek 2.877 2,392 50 51
(Jakarta, Bogor,
Depok, Tangerang,

West Java 976 950 15 --

Yogyakarta and 460 613 -- --
Central Java

East Java 1,151 1,040 96 --

Bali 50 30 15 5 --

Kalimantan 10 5 -- -- --

Sulawesi 31 20 10 10 --

Total 5,755 5,200 248 161 51

Sources : ICN data processed

Foreign ownership allowed

 Foreign shares
Types of business allowed

Small modern market/store: 49%
--small modern market (up to 10,000 square
--medium modern markets (10,000-50,000
square meters)
--small modern stores (up to 200 square meters)
--medium modern stores
(200--6,000 square meters)

Larger modern market/stores 100%
--larger modern market (> 50,000 square meters)
--large modern stores (> 6,000 square meters)

Sources: Aprindo

Consumer targets of different formats of retailer

Hypermarkets Supermarkets Mini-markets

Families Housewives Middle to lower income people

Middle to high Middle to high
class people class people

Sources : Data Consult/ICN processed

Estimates of investment scale, 2011
 Estimated investment
Types of retail business (per outlet)

Hypermarket (Rp billion) 30-100

Supermarket Rp billion) 5-20

Mini-market (Rp million)
a. Store with 35 shelves Store with 36 300-425
 shelves, 3,000 items, floor space of 90
 square meters
b. Store with 45 shelves, 3,500 items, 480
 floor space of 90--150 square meters
c. Store with 54 shelves, 4,000 items, floor 555
 space of > 150 square meters

Sources : Data Consult/ICN processed

Estimates of investment in each hypermarket outlet

 Investment per outlet
Names of hypermarket (Rp billion)

Carrefour 50-100
Hypermart 40-50
Giant 20-30
Lotte Mart 30-50

Sources : Data Consult/ICN processed

Estimates of investments by several big supermarkets

 Investment per outlet
Name of Supermarket (Rp billion)

Hero 4-5
Foodmart 3-4
Superindo 1-2

Sources: Data Consult/ICN processed

Estimates of investment in a mini-market outlet

Breakdown Costs

1. Franchise fee for 5 years Rp 45,000,000,-
2. Mechanical & electrical) Rp 120,000,000,-
3. License Rp 15,000,000,-
4. Store equipment & Air Conditioner Rp 70,000,000,-
5. Computerization Rp 20,000,000,-
6. Promotion & store opening Rp 20,000,000,-
7. Shop sign & Single pole Rp 10,000,000,-

Total : Rp 300,000,000,-

Sources: Alfamart

Royalty fee charged by Alfamart.

Net sales per month Royalty

Less than Rp75 million 0%
Rp 75 million to Rp100 million 2%

Rp101million to Rp150 million 2.50%

More than Rp150 million. 3%

Sources : Alfamart

Investment in mini-market franchise, 2011

Brand Investment value (Rp million)

Indomaret 300-600
Alfmart 300-555
Alfamidi 2.300
Alfa Express 500-600
OMI 100-300

Sources : ICN processed

Expansion plans of retailers, 2011-2012

Name of Type of retail New outlets
companies business (unit)

PT. Carrefour Hypermarket 20
Indonesia (Carrefour)

 (Carrefour Express)

PT. Matahari Hypermarket 17
Putra (Hypermart)
Prima Tbk

PT. Hero Hypermarket 3
Supermarket (Giant)

 Supermarket (Giant) 15

PT. Lotte Shopping Hypermarket 6
Indonesia (Lotte Mart)

Metro Cash & Hypermarket 20

PT. Lion Super Supermarket (Super 20
Indo Tbk Indo)

PT. Indomarco Mini-market 800
Prismatama (Indomaret)

PT. Sources Alfaria Mini-market (Alfamart) 600
Trijaya Tbk

PT. Midi Utama Mini-market (OMI) 100

Name of Locations Investment Start-up
companies (Rp billion) schedule

PT. Carrefour Java, Sumatra, N.a 2012
Indonesia Sulawesi

PT. Matahari Jabodetabek, 1.000 2012
Putra Ambon,
Prima Tbk Banjarmasin,

PT. Hero Jabodetabek, N.a 2011
Supermarket Java, Sumatra
 and Kalimantan

PT. Lotte Shopping Jakarta, N.a 2011
Indonesia Tangerang,

Metro Cash & Jabodetabek 300 million 2012
Carry Euro

PT. Lion Super Java, Bali 80 2011
Indo Tbk

PT. Indomarco Java, Sumatra, 480 2011
Prismatama Sulawesi

PT. Sources Alfaria Java, Bali, 360 2011
Trijaya Tbk Lampung, South

PT. Midi Utama Java 285 2011

Sources: ICN processed

Total retail sales, 2007-2011 *

Year Sales (Rp trillion) Growth (%)

2007 44.9 --
2008 55.4 23.4
2009 83.4 50.5
2010 100.0 19.9
2011 * 120.0 20.0
Average growth 28.5

Sources : Aprindo, ICN processed

Note: * estimate
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Publication:Indonesian Commercial Newsletter
Geographic Code:9SOUT
Date:Jun 1, 2011
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