*FAKULTAS PERTANIANDEPARTEMEN SOSIAL EKONOMI PERTANIANUNPAD

*Retail RevolutionUrbanisationSumber: Natawidjaja et al., 2007Wide spread of modern retail through out all islands, down to small town in Java IslandFast growth of large food processing and beverages industry, local and multinational companyGrowing of urban live styleDemand of higher product qualityIncrease of health and food safety concernMore women on the work force

Food Processing Industry

Source: UN

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yearNumber of retail outletDomestic cyclesNew cycles1970198319901997Removal of FDI restriction on retail sector in 1998Mainly targeted on upper class and expatriatConcentrated in capital cityOnly few local retail business: Galael, Kem ChickTargeted on the rising middle class Concentrated in Jabotabek and regional capitalSeveral national retailer business: Matahari, HeroQuickly saturated Targeted on all income level Spread through the country: other island, sub-district level Business consolidation Business format development Multinasionalization: Carrefour, Giant Rapid development and market ExpansionSource: Natawidjaja et al, 2007

5 years ago nearly all supermarket market in Jabotabek, around the capital citySupermarkets now spreading to other islands, to secondary and tertiary cities and even large rural towns on JavaSupermarkets started on A consumers now moved to B and C (lower middle and working poor)

While supermarkets have 30% of overall food market, only about 10% of Fresh Fruit and Vegetables retailtypical over countries: processed foods first, later freshshare of fresh food in supermarket sales rising fast: about 30% of food salesshare of produce in supermarket sales from near 0 in mid 1990s to 8% now (recent upturn)

*About 65% of FFV sales of supermarkets are fruit, 35% vegetablesAbout 80% of fruit are importedAbout 20% of vegetables are importedAbout 60% of FFV sales are from importsRoughly TWICE as high import share as in comparable countries !

*TextileAppliancesGroceryBazaarFresh:Fresh Fruits and VegetablesMeat and FishRestaurant and Food retailSangat Menarik

*Source: Planet Retail, 2009

*Source: AC Nielsen, 2008

Store Format200520062007Hypermarket83105121Warehouse Club 242626Supermarket1,1411,3111,379Minimarket6,4657,3568,889Convenience Store115120148Traditional Store1,787,8971,846,7521,900,332

*Source: AC Nielsen, 2007Note: Modern Outlet: hypermarket, supermarket, mini market Traditional market: wet market, independent grocery store

*Source: Planet Retail, 2009

*The Indonesian retail sector is still relatively fragmented and underdeveloped. The top five players hold a combined market share of around 15%. Majority of the leading companies have ambitious expansion plans, which should see them capture an increasing share of the market in the coming years. The leading domestic department store/supermarket operators, Matahari and Ramayana, are still important players, as are local c-store players Indomaret and Alfa Mart.

*Source: Planet Retail, 2009

CompanyNo of StoresSales Area (sq.m)Grocery Banner Sales (USD mn)Market Share (%)Carrefour90459,0901,0982.6Indomaret3,500455,0001,0062.4Matahari3051,010,1005511.3Alfa Mart3,000300,0005161.2Dairy Farm470440,5105121.2Sub Total7,3652,664,7003,6838.7Other39,08491.3Total42,767100

*Source: Planet Retail, 2009

*Source: Planet Retail, 2009

FormatBannerBanner Sales (EUR mn)Market ShareGrocery Banner sales (EUR mn)Market ShareHypermarket & SuperstoreCarrefour9622.57,82.2SupermarketCarrefour Express1310.31210.41,0932.98392.6

*Source: Planet Retail, 2009

*Source: Planet Retail, 2009

FormatBannerBanner Sales (EUR mn)Market ShareGrocery Banner sales (EUR mn)Market ShareDepartment StoreMatahari4661.2870.3HypermarketHypermart4271.12980.9SupermarketFoodmart360.1330.1Other RevenueTime Zone260.10.0Book StoresTimes60.00.0Drug StoreBoston Drug Drug Store40.030.0Total9642.51.3

*Source: Planet Retail, 2009

Supermarkets here are under these pressures in deciding sourcing strategies:extreme competition with other chains (and heating up further!) so cut costs as they move to compete with improved traditional market cost cutting will increasecompeting on quality and varietyneed to stock same products year-round

As recently as early 2000s, leading chains relied on (and smaller chains still do) pasar induk for local sourcing mainly import wholesalers for importsIn past few years, shifting fast to: suppliers for local sourcing of vegetables mainly specialized wholesalers with inter-island linkages for fruit - mainly

*Quality standard for different supermarket chain is different, no common standardSorting and grading are done in consecutive, from farmer, trader, through specialized supplierQuality standard generally based on size and color (Grade Super, A, B, C, D)Handling is done at the supermarket specialized supplier, ready to be put on the selves/displaySo far, for general fresh fruit and vegetebles, no requirement for formal product certification

*Most of modern retailer supplier s for agricultural products, are started as wholesale traders to a traditional market systemTo become modern suppliers, they have to put specific large investment on post harvest handling facilities (cleaning, sorting, gradding, handling, packaging, cold storage, etc.)The supplier need to invest on technology of his own and build contract institution with other farmers to maintain continous supply

*Most of modern retail supplier s made very fast expansion on total gross sales, a long with expantion of the retail chain that they dedicated toModern retail supplier facing far smaller buyers competition compare to the traditional market, since fresh local produce that channel to modern retail is only 10-15% of total productionBargaining position of the supplier determined mainly by subjective valuation of the retailer. If he is consider valueable supplier, the retailer willing to negotiate the trading term.

*Ministry of Trade Decree No. 53/2008: Location for traditional market, shoping centers, and modern retail are mandatory to follow the spatial development plan (RUTR) of local government, including the zoning rule.Many countries have tried to implement zoning restriction on modern retail development, but proofed to be not effective. Especially in Indonesia, any kind zoning rules is always difficult to implementLevel of competition determind by number of market actors, market segmentation, and consumers behaviours.

Usaha Kebijakan Mengendalikan Perkembangan Ritel Modern

*(2) Trading Term Restriction:Ministry of Trade Decree No. 53/2008 poin 7 control very specifically the term of trade: Fixed rebate (1% maximum of 3 month)Conditinal rebate (1% if achieve 100% agreed sales, and 5% if above 100%)Listing fee only for new product per item (hypermarket=150,000 IDR (max 1o mn IDR), supermarket=75,000 IDR (max 1o mn IDR), and minimarket-5,000 IDR (max to of 2o mn IDR)Ministry of Trade Decree No. 53/2008 poin 7 is too limiting and will not effective (no last long)

*Buat Makalah ProCon (Pro dan Contra) tentang perkembangan Ritel Modern di IndonesiaDalam makalah tersebut buat list tentang hal-hal yang dianggap dampak negatip dari perkembangan ritel modernJuga buat list tentang hal-hal yang dianggap positip dari perkembangan ritel modern tersebutDiskusikan Pro dan Contra nya, dan buat pernyataan yang jelas tentang posissi anda dalam kontroversi tersebutMakalah diketik 1 spasi sebanyak 10 halaman. Tidak diperkenankan copy dan paste dari teman, dinilai = 0

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