Retailers expect recovery next year

The Jakarta Post, Jakarta | Tue, 11/10/2009 9:47 AM

Already resigned to the possibility of zero-growth in sales this year, modern retailers expect a quick recovery next year to return to double-digit growth as an improving economy bolsters people’s purchasing power, says an association.

The Association of Indonesian Retailers (Aprindo) said Monday next year would be much better for the industry than this year as the economy will probably not be affected by negative impacts of the global economic downturn, which hit industry sales this year.

“The retail sector has been affected the longest among other sectors. The global crisis is like a chain where we stand at the end of the line,” Aprindo executive director Tutum Rahanta said in a phone interview.

Aprindo groups together more than 100 modern retail companies, including the country’s biggest retail chains such as European giant Carrefour, Hero and Matahari.

It is estimated that Indonesia’s economy will expand by 4.3 percent this year, slower than the 6.1 percent last year, due to delayed negative impacts of the global economic downturn. But the economy is predicted to grow at full-swing next year on the back of partial recovery in the world’s major economies.

“We predict full sales to reach Rp 80 trillion [US$8.5 billion], nearly the same as last year’s overall sales. Sales could be better than this prediction but not more than 5 percent, [above the estimate]” Tutum said.

“In addition to the crisis, we also had a number of major factors and events this year that affected the retail market, including the presidential and legislative elections and natural disasters. Next year, there will be no more elections and the impact of the economic crisis will have completely faded,” Tutum said confidently.

JP/Irma

France-based Carrefour, currently with the largest modern retail market share in Indonesia, suffered a 4.06 percent drop in sales during 2009’s first nine months, falling to 662 million euro ($993.16 million) from 690 million euro in 2008.

Unlike Carrefour however, PT Hero Supermarket managed to post growth as Hero’s September sales hit Rp 4.97 trillion, which represented a 13.4 percent increase from a year earlier.

Hero is now operating 459 modern retail outlets, consisting of 34 Giant hypermarkets, 60 Giant supermarkets, 50 Hero supermarkets, 124 Startmart minimarkets and 191 Guardian health and beauty stores.

Similarly positive performance was achieved by PT Matahari Putra Prima, the operator of Hypermart supermarkets. The company’s sales during the first nine months of 2009 achieved 14.68 percent growth, with sales increasing from Rp 9.09 trillion in 2008 to Rp 10.43 trillion in 2009.

Despite the estimated overall zero-growth for the industry, Tutum said the retail sector was quite fortunate compared to other sectors like the automotive and manufacturing sectors, which had been hit very hard by the economic downturn.

The Indonesian Automotive Industry Association (Gaikindo), for example, said that car sales were expected to decline by 24.32 percent by the end of 2009, from last year.

“Everybody is still buying basic needs despite lower income, but more selectively,” Tutum said.

With recovery on the horizon, the association expects that expansion, in the form of new outlets, could start taking place early next year, although Tutum did not provide any figures on this.

Aprindo members now run about 8,500 outlets nationwide, about one thousand more than last year.

According to the Manpower Ministry, the modern retail sector employs about 350,000 workers. (bbs)