New Market Research Report: Mixed Retailers in Indonesia

For the first time since 2008 mixed retailers reported a declining number of total outlets in 2014 due to facing various challenges in store-based retailing which were carried forward to 2015. A high surge of retailing costs eroding their profit margins caused some retailers to shrink their selling space, and some others to close down their less productive or non-productive outlets. Several companies reported a financial loss due to continuous increase of costs whilst weakening purchasing power amongst consumers slowed sales significantly during 2015. Mixed retailers are also increasingly facing competition from internet retailing due to a rapidly growing channel strategy implemented by leading retailers in Indonesia during the year. Amongst the major launches were MatahariMall (owned by the same group as Matahari Department Store Tbk PT) and MAPeMall (owned by the brand owner of Sogo, Seibu, Lotus and Debenhams, Mitra Adi Perkasa Tbk PT).

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Competitive Landscape

With increasing retail value share, Matahari Department Store Tbk PT stretched further distance between it and other leading department stores in 2015. It held 42% retail value share in 2015 through growing value sales and outlet expansion during the year. With the launch of MatahariMall by its parent group in 2015, the company offered an offline service to pick up items purchased at the internet retailing site, a collaboration which is expected to mutually benefit both online and offline operations. Matahari Department Store was amongst the few retailers that managed to thrive in the midst of the challenging retailing environment in 2014-2015. The company’s major offerings to the middle-income consumers dominated by products sourced from local manufacturers have successfully minimised the impact of the high growth of the US dollar, which has badly hit retailers relying more on imported products.

Industry Prospects

Mixed retailers will remain an important retailing channel in Indonesia over the forecast period amidst growing challenges from other channels, primarily internet retailing. The improved economy at an accelerating rate over the forecast period is expected to also increase growth rates of mixed retailers in terms of value sales. Department stores will also continue to be the dominant type of mixed retailers in the forecast period, especially for offering a one-stop shopping solution in a convenient modern retailing format, primarily located within modern shopping malls in Indonesia. In fact expansion of mixed retailers will be dependent on the expansion of modern shopping malls rather than as independent or stand-alone outlets, especially for those catering to the middle- to upper-income demographics.

Report Overview

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