CLSA ON THE ROAD, Modern stores war continues

As Indonesia’s middle class expands rapidly, they are willing
spend more to avoid muddy floor or other inconveniences when
shopping. Thousands of wet markets are disappearing as a
result from the transition. Take Benhil for example, the street
is only 1.4 km long road but packed with a traditional market,
at least four mini markets and three convenience stores. During
our visit, we saw heavy traffic at Seven Eleven and Indomaret
behind CLSA office.

Modern markets popping up in Benhil
 Population in Benhil area may double during working hours from
20k people to 40k given the fact that there are at least three office
towers in the area, schools and a hospital.
 Retailers quickly set up business using different strategies to tap
the growing market. There are two Indomaret outlets, Alfaria
(AMRT IJ - Rp4,000 - N-R) and three convenience stores (Seven
Eleven under Modern Intl (MDRN IJ - Rp3,175 - N-R), Lawson and
Circle K) operating less than 500 meters away from each other.
 Last month the Jakarta governor has revoked the moratorium on
mini market issued in 2006, however, we expect competition will
heat up more in other parts of Indonesia.
Four Ps to measure modern market
 We went to all the shops in Benhil and compared prices of some
items between them. For Indofood fried noodle, Alfamart offers the
cheapest at Rp1,450/pack (others up to 38% higher).
 Product-wise, Seven Eleven offers much more varieties for
customers ranging from fresh foods and beverages to imported
snacks and ice cream but with higher prices.
 All the modern markets in Benhil but Indomaret open 24x7. Seven
Eleven and Lawson are more spacious and have better lighting.
 Among convenience stores, Circle K offers promotion on basic items
the most while Seven Eleven offers discount on fresh foods.
Alfamart and Indomaret have their own promotion cycles.
Different profile of customers and store visit duration
 We see different groups of customers coming to minimarkets and
convenient stores and the duration spent in convenience store are
relatively longer.
 Advertisement on TV helped by higher disposable income, fuels
Indonesia’s middle class to spend on premium products such as
cheese, and frozen foods.
Beneficiaries?
 The more shops, the better for customers because they will have
the luxury to choose where to buy. We don’t understand the
rationale behind setting up outlets from the same franchise so close
to each other. It is equal to cannibalism.
 The beneficiaries for burgeoning mini markets are AMRT, MDRN
and the suppliers such as ROTI IJ, Unilever Indo (UNVR IJ -
Rp19,950 - SELL) and Indofood (INDF IJ – Rp5,150 - U-PF).

Download file : Komodo shop final