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Indonesia Retail

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ASOSIASI PENGELOLA PUSAT BELANJA INDONESIA

(INDONESIAN SHOPPING CENTRES ASSOCIATION)

Retail Trends & Challenges

Retail Trends …..
• The market
– Huge and Changing

• The shoppers
– Socially Shopaholics

• The challenges
– Raising competition and raising cost of doing business

Retail Trends …..
• The market
– Huge and Changing

• The shoppers
– Socially Shopaholics

• The challenges
– Raising competition and cost

Indonesia has it all …..
GDP
Growth l

Accelera>ng real GDP growth ► 4.5% in 2009, 6% in 2010, 6.2% in 2011 4th largest popula>on in the world with 235 m inhabitants Growing urbaniza>on Middle class(1) now represents over 40% of the popula>on vs. 25% 10 years ago Size of middle class has been growing strongly at a 7.5% CAGR over the last 10 years to reach 23 m households GDP per capita to reach USD3,000 by 2012, allowing for greater disposable income and faster modern retail growth

l l l l l

Growing Middle Class Popula>on

l l

Food Retail Industry

l l l

Total food retail industry – USD53B Tradi>onal retail represents 89% of total Modern food retail (hypermarkets, supermarkets and convenience stores) represents only 11% of total One of the lowest modern food retail penetra>on levels in Asia Hypermarket has increased at a 15.1% CAGR over 2004-­‐2009

Source: Euromonitor, IMF, Bloomberg, Sta7s7cs Indonesia, SUSENAS, Asian Development Bank (1) Defined as popula7on with daily spending of USD2-­‐20

Asia Pacific Landscape
In the most developed countries in Asia the modern trade is dominant accounting for 80 to 90% of sales...compared to developing countries 35-55%
Developed Asian Countries Developing Asian Countries

90 75 80

87 73

89 82

61

57 51 38 48 40 45 36 20

33 27

Singapore

Hongkong

Taiwan

Korea

China
1999

5

Malaysia

Thailand

Philipines Source Indonesia : Nielsen

2007

Indonesia retail scene

Before (Till Early 1990's)
- Owner Management - Buy & Sell Relationship based on : - Personal Preferrence & sometimes KKN - Advertising Power - No Clear Positioning & Price was considered as the main driving force in retailing. - Traffic in Modern Trade was about 1,000 - 1,500 trxn/day - Chain with 50+ outlets was only Hero - Clear channel definition - Operating hour : 10 to 10 - Less brand conscious - Professional Management

Now
- Business Building Relationship based on : - Customer's preference supported by research data - Combination of Above & Below The Line activity (Holistic approach) - Implementation of Category Management whereby each category is assigned to a role whether it's Destination, Routine, Occasional or Fill In. - Traffic in Modern Trade varies from < 500 to >10,000 trxn/day - C4, Giant & HPM combined is almost 150 outlets Alfamart & Indomaret combined is almost 8000 outlets - Blurring channel (hypermarket, gourmet + f&b store) - Operating hour varied but mostly are still 10 to 10 - Very brand conscious

Hypermarket (Large Format) • Carrefour • Giant • Hypermart • LoCemart

Supermarket • Borma • Carrefour Express • Diamond • Gelael • Giant Supermarket • Griya • Hari Hari • Hero • Foodmart • Naga • Ramayana • Sinar • Sogo • Superindo • Tip Top • Yogya

Trade Sector Classification & Example of Stores

Minimarket/ CVS Department Store

TradiTonal Store Wet Market • Alfamart • Indomaret • Starmart • Yomart • Circle K • 7-­‐11 DefiniTon :

• • • •

Grocery Cart

Hypermarkets Supermarkets Minimarkets Dept. Stores

: -­‐ Have 20 or more checkout counters

-­‐ Sell more varied products, such as groceries,

electronics, cloths, shoes : -­‐ Have 3 to 20 checkout counters

-­‐ Sell almost all category of groceries : -­‐ Have 1 to 2 checkout counters

-­‐ Sell some category of groceries : -­‐ Have 3 to 20 checkout counters

-­‐ Sell some categories such as fashion apparel,

electronics, household products

Source : Nielsen

Retail Trends …..
• The market
– Huge and Changing

• The shoppers
– Socially Shopaholics

• The challenges
– Raising competition and cost

Shopping is recreaTon Asia-Pacific boats the world’s largest percentage of “Recreational Shoppers” 74% of world’s consumer admit to shopping as entertainment

Source : Nielsen

Consumer mostly shop with family/ relaTves/ friends.

In%

By CiTes

By SES

79

81

72

83

73

71

76

78

82

Shop Together Shop Separately

Average

21

19

28

17

27

29

24

22

18

Total Jadetabek Bandung Surabaya Total

Jabotabek Bandung

Surabaya

Makassar

Medan

SES A

SES B

SES C1

Makasar Medan SES A SES B SES C

Source : Nielsen Base: All Hyper/ Super/ Minimarket; Ref: Q121

Most of the Shopper use motorcycle, and usually with company Shopping Mode

Hypermarkets Mode of Transportation Motorcycle Other public transport Car Walk Accompany by Child Spouse Friend Family (other than spouse and child) Alone 45 34 22 21 14 47 31 14 13

Supermarkets

Minimarkets

Traditional Stores

Wet Markets

65 18 12 11

51 13 1 37

10 2 89

34 17 1 47

54 50 7 21 9

39 32 9 17 26

28 7 1 2 67

21 19 5 7 68

Source : Nielsen Base: All Omnibus Respondents (n=719;N=4,807,000); Ref: Q123

Hypermarkets or Supermarkets packed on Saturday and Sunday, compare to other channel stores Hypermarkets Time 05.00 – 08.59 09.00 – 11.59 12.00 – 14.59 15.00 – 17.59 18.00 – 19.59 20.00 – 22.00 Length (Hour) Day of Shopping 0 12 17 38 30 1 1.5 49% Uncertain, Sat/ Sun 34% 0 15 12 42 26 4 1.4 48% Uncertain, Sat/Sun 45% 3 17 6 24 43 8 0.7 61% Uncertain, Workdays 19% 41 23 4 20 7 4 0.5 63% Uncertain, Workdays 36% 72 13 2 10 3 1 0.9 49% Uncertain, Workdays 44% Supermarkets Minimarkets Traditional Stores Wet Markets

Source : Nielsen Base: All Omnibus Respondents (n=719;N=4,807,000); Ref: Q123

Retail Trends …..
• The market
– Huge and Changing

• The shoppers
– Socially Shopaholics

• The challenges
– Raising competition and cost

The Challenges
• Raising competition (direct & indirect)
– Less margin – Higher advertising & promotion cost – Cannibalization

• More demanding & less loyal customers
– Higher cost of doing business

• Raising operating cost
– Yearly increase of minimum wages à 2-5% of revenue depending on the format

– Raising electricity cost à 1-2% of revenue depending on the format

The Challenges
• Lack of authority control of mall development
– Unhealthy competition – Inadequate supporting facilities like parking & waste management – Deteriorating environment

• Lack of commitment from the tenants on grand opening
– Sometimes resulted from weak planning of the developers

• Lack of loyalty program from the mall

Shopping Centres in Indonesia (by island)

1 1 15 6 30

2 10 9 53 Batam Sumatera 36 Jabar Jabodetabek Jateng JaTm Bali

43

31

Kalimantan NTB 113 NTT Sulawesi Maluku Papua

Shopping Centres in Indonesia (by island)

Shopping Centres in Jakarta

9 5

6

15 10 Jakarta Pusat Jakarta Barat 9

22

jakarta Timur Jakarta Selatan Jakarta Utara Tangerang/Banten

13

24

Depok Bekasi Bogor

MasterCard Worldwide Index of Consumer Purchasing PrioriTes H2 2011

Indonesia MasterCard Survey on Consumer Purchasing PrioriTes-­‐Dining & Entertainment u Indonesians visit either quick serve restaurants (80%) or food courts (70%) for dining, with a very small proporTon patronising fine-­‐dining restaurants and pubs/bars. However, the 2% of Indonesians visiTng pubs/bars do so frequently with an average of 6 trips per month. u Amusement parks are the primary entertainment outlet in Indonesia, with 65% of Indonesians visiTng these. This is followed by 36% of respondents who enjoy going to the movies.

MasterCard Survey on Consumer Purchasing PrioriTes-­‐ Travel u The vast majority of Indonesian respondents have not made an internaTonal trip either for business or leisure in the past 12 months, compared with a majority of respondents having travelled domesTcally. u In terms of domesTc travel, 75% of respondents took a leisure trip within the country and only 18% travelled for business.

MasterCard Survey on Consumer Purchasing PrioriTes-­‐Luxury u The luxury goods market is small, with a heavy skew towards owning jewelry. Women tend to be much bigger spenders than men in this area. u Three-­‐quarters of all luxury purchases by Indonesians are planned in advance. 18% of respondents tend to make impulse buys on the spot, while 74% deliberate purchases for up to 6 months before actually buying items. u Almost all luxury shopping is done locally, with 42% of purchases made at full price and 56% done when items are on sale. Three-­‐ quarters of luxury purchases are not moTvated by any special reason, with only 24% buying to celebrate special occasions.

u Indonesian Consumer Spending on Electronics Up More Than 20% u Sales of electronic goods in the first eight months rose more than 20 percent on the back of strong consumer spending, according to an industry group. u Sales from January to August were up 22 percent to Rp 16.1 trillion ($1.8 billion) from the same period last year, and the full-­‐year figures could be a 28 percent increase to Rp 25 trillion. u LCD/LED and plasma TVs led sales, followed by air-­‐condiToners, refrigerators and washing machines, u On a monthly basis, sales in August were down 8.7 percent to Rp 2.1 trillion from July, as many consumers refrained from spending on durable goods during Ramadan.

.

! Market Statistics – Retail 3Q11
Shopping Malls - Lease
0 25,700 2,185,901 29,626 148,687 88.1 260,130 415,484 67,374 482,858 Up to 2013: 438,664
1 Year-To-Date: additional stock from January to September 2011 2 Estimated achieved (effective) gross rent (including service charge) for typical specialty stores located in a prime area

Trade Centres - Strata Title
Quarterly Completions (sqm) YTD Completions1 (sqm) Total Stock (sqm) Quarterly Net Absorption (sqm) YTD Net Absorption (sqm) Occupancy Rate (%) Direct Vacancy (sqm) Base Rent (IDR/sqm/mo) Service Charge (IDR/sqm/mo) Gross Rent2 (IDR/sqm/mo) Proposed Stock (sqm) 0 96,250 1,481,022 18,345 94,535 66.1 501,927 N/A N/A N/A Up to 2013: 4,908

17 January 2011 Asia Pacific/Indonesia Equity Research Strategy

Indonesia Consumer Survey 2011

17 January 2011 Asia Pacific/Indonesia Equity Research Strategy

Indonesia Consumer Survey 2011
Credit Suisse Research Institute

Mapping the rising consumer spending

Mapping the rising consumer spending
Thought leadership from Credit Credit Suisse Suisse Research and the Research Instituteworld’s foremost experts

Thought leadership from Credit Suisse Research and the world’s foremost experts

Global Equities Research
.

Global Equities Research

(Figure 10). Another finding from our respondents is also with regar given 29% of the total respondents say that they did not have any ex
Figure 5: Indonesia – monthly spending by category (%)
35% 30% 25% 20% 15% 10% 5% 0%

Figur

Savings

Autos

Healthcare

Education

Source: Credit Suisse Emerging Consumer Survey 2011, AC Nielsen

Entertainment

Mobile phone

Housing

Other

Food

HPC

Sourc

Our analysis indicates that § non-­‐Java residents exhibit lower inclinaTon to spend § non-­‐Java respondents exhibit higher ajer-­‐tax income per month per person than Java respondents (Rp2.84 mn per month for non-­‐ Java versus Rp2.46 mn per month for Java) § non-­‐Java respondents exhibit higher saving (Rp0.52 mn for non-­‐ Java and Rp0.24 mn for Java) per month as well as higher saving rate (18% of ajer tax income per month for non-­‐Java versus 10% for Java). § Thus, our analysis indicates that outside Java residents, though they earn more, they also save more.

We believe that non-­‐Java residents exhibit higher purchasing power. However, they are less consumpTve than Java respondents. This indicates that a stronger focus on markeTng and adverTsing in outside Java regions to enTce residents to consume more may lead to significantly higher consumpTon growth of outside Java regions, given the higher purchasing power exhibited by this segment.

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Trade Relation Between Australia and Indonesia

...Trade relation between Australia and Indonesia International trade is the exchange of goods and services between countries. The countries that are in the scope now are Australia and Indonesia. There are many advantages to international trade but countries must choose which goods or services to produce for export and which goods should it import. To be able to answer the question which good should country produce or import the concept of comparative advantage comes in hand. A country is said to have a comparative advantage in production of a good if it can produce better at a lower opportunity cost than another country. In the article above Australia are willing to form relationships and trade with Indonesia, due to the advantage of their economy. There are an estimated 15,000 Indonesian studying in Australia where they provide 500 million to the Australian economy. Furthermore Indonesia is a country with beautiful beaches and favourable climate has a comparative advantage output of tourist service. Indonesia receives about 1million tourist just from Australians. The international economics part of the course was used to analyze this course. The Australians gain low price vacation at a low price than the domestic one “It’s a cheap and easy option. A lot of people my age have gone [to Bali], or talk about going,” he said while the Australian issue 400 full scholarships to the Indonesian postgraduate to complete their masters. The two country benefits from each other. The...

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