Retail boost in Indonesia?


An international manufacturing haven for many years, it’s Indonesia’s retail industry that’s currently in the limelight. Tesco, Wal-Mart, Central Department Store from Thailand and two retail chains (Takashimaya and Isetan) from Japan are all rumoured to be set to make an entry into the country that was severely affected by the Asian financial crisis in 1997 and is still recovering from the Asian tsunami last December.

Bisnis Indonesia Daily News reported last week that Tesco and Central Department Store are likely to start operations next year. Central, which didn’t respond to OPI+ calls before going to press with this issue, is apparently the anchor tenant at the Grand Indonesia complex, a 7-hectare hotel-apartment-shopping mall-office complex in Jakarta’s city centre that is due to open in September of next year.


Indeed, it is this type of environment that shoppers increasingly flock to in the country. Office 1’s CEO Mark Baccash likens Indonesia to the Indian market. He told OPI+: "It’s a market that’s changing very fast in the sense that people are going to be shopping for [office products] in shopping malls."


But while the out of town chain stores are not as common, they do exist although, according to Baccash, their quality is not very impressive. He welcomes a boost to the retail sector which, internationally speaking, is currently restricted to Carrefour and Giant (Malaysia) in the country.


Baccash has ulterior motives, of course. Office 1 entered Indonesia with its franchising concept in 1997, partnering with local retail giant Gramedia. But things didn’t work out and Office 1 pulled out last year. Baccash is keen to go back and is currently looking for a new partner. "It would be very good news for us and terrific for the region, because [with the likes of Tesco coming] it would educate the market and probably rattle the local people in the community a bit."


For the time being, Tesco – which allegedly has already selected locations on the outskirts of the capital Jakarta and its satellite cities – is having none of it. International PR manager Greg Sage had a concise, if a little ambiguous message for OPI+. "We do not have any plans to enter Indonesia, but we never say never."


Wal-Mart is similarly cagey, saying that it "has no plans for that market at this time". And, like Office 1, it too might be licking its wounds, having been and gone in Indonesia within the space of two years (1996-1998) during which it had a licensing agreement with a local partner.


Ardiansyah Parman, director general of domestic trade at the Indonesia Department of Trade, wasn’t able to confirm the rumoured entrance of the foreign players, but said that they could create jobs and increase the marketing capacities of distributors.