MODERN RETAIL AND HOW TO OWNING

BUSINESS RETAIL IN INDONESIA:

INSIGHTS FROM RETAIL MANAGEMENT

WHAT WOULD WE LEARN AND GOT TODAY

THE WORLD OF RETAILING

WHAT IS RETAIL

THE STORY OF RITEL MODERN IN INDONESI

STRATEGIC PLANNING IN RETAILING: OWNING OR

MANAGING A BUSINESS

THE CONTEMPORARY CHALLENGES FACING RETAILRES

INDONESIA CONSUMERS

1. DR. ZULKARNAEN, MM, MBA

2. ALREADY 20 YS AS PROFESIONAL IN

RETAIL SECTORS

3. VICE PRESIDENT IN RETAIL COMPANY

4. DIRECTORE AND OWNER OF FUTSAL

AND FOOD CENTER

5. RESEARCHER IN RETAIL BUSINESS

WHO AM I

THE WORLD OF RETAILING

ENVOLVING IN

TO A GLOBAL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

RETAIL

HIGH TECHNOLOGY

Retailing is such a part of our everyday lives that it’s often taken for granted.

STORY OF INDONESIA RETAILERS

Ritel adalah industry kedua terbesar

tempat rakyat Indonesia menggantungakn

hidupnya setelah pertanian

Sumber: Presentasi KPPU kepada anggota AP3MI 2009

THE STORY OF INDONESIA FOOD BUSINESS RETAIL

1970 : DICK GELAEL open GELAEL supermarket 1st

store on Jln. Falatehan, Kebayoran

1970 : BOB SADINO open KEMCHIK 1st store in Kemang

1971 : MS KURNIA open HERO 1st store on Jln. Falatehan in Kebayoran

FROM ZERO TO HERO IN INDONESIA FOOD RETAIL

Driverconstruction

laborersEggs Seller Vegetables Kemfood KemChik

Tokokelontong

kecil di dekatGlodok

Pedagangbarang untuk

ekpatriat

Hero Supermarket

Suba Indah

Toko MainanGiant

Penjual pakaiananak-anak di

Pasar BaruMickey Mouse Matahari

Matahari

Hypermart

Foodmart

Boston

Rumah Matahari, Bakery, Rekreasi,

Bodyshop

THE EARLY MODERN RETAIL BUSINESS IS TRADITIONAL MARKET

RETAIL MODERN (MINI, SUPER &

HYPER)

GENERAL TRADE + MODERN TRADE

GENERAL TRADE ? WET

MARKET/Traditional market

INTRODUCTION OF RETAILING

INTRODUCTION OF RETAILING

WHY RETAIL MODERN GROWING VERY FAST

PP NO.118 TAHUN 2000 PASAL 1, AYAT 1

PERUBAHAN PRILAKU BELANJA

PERTUMBUHAN JUMLAH PENDUDUK

PERTUMBUHAN MIDDLE CLASS INCOME

BOOMING PROPERTY

TINGKAT KEPERCAYAAN KONSUMEN NO.1

Sumber: A.C Nielson, 2015

SALES GROWTH RETAIL MODERN 2008 - 2015TOTAL SALE

2015

189.82 T

6.28%

THE GROWTH OF TOTAL STORES

THE TOP INDONESIA RETAILERS

•CARREFOUR

•GIANT

•HYPERMART

•SUPER INDO

•HERO

•FOOD HALL

•SINAR SUPERMARKET

•KEM CHICKS

•YOGYA SWALAYAN

•BORMA

•RANCH MARKET

•LOTTE MART

•PUNCAK SUPERMARKET

•TIP TOP SUPERMARKET

•FOOD MART

•SRI RATU

•TOSERBA YOGYA

•MACAN YAHOAN

RETAILING MANAGEMENT

BUSINESS ACTIVITIES INVOLVED IN THE SALES

OF GOODS AND SERVICES TO

CONSUMERS FOR THEIR PERSONAL, FAMILY, OR

RETAIL MANAGEMENT

THE WORLD OF RETILING AND

INDONESIA OF RETAILING

RETAILING STARTEGY

1. Retail market strategy

2. Financial Strategy

3. Retail Locations

4. Site Location

5. Organizational Structure and HR Mgt

6. IT and SCM

MERCHANDISE MANAGEMENT STORE MANAGEMENT

ITS IMPACT ON THE

ECONOMY

BENEFIT OF RETAIL

BROAD RANGE OF CAREER

OPPORTUNITIES

ITS RELATIONSHIP VENDOR AND

RETAILRES

ITS FUNCTION IN DISTRIBUTION

ITS IMPACT ON THE

ECONOMY

Annual U.S retail stores sales : $3.5 Trillion = Rp.39.500.000.000.000.000 (in USA)

Telephone, mail order sales, non store = $200 billion= Rp. 26.600.000.000.000 (in USA)

Annual Indonesia retail sales 2015: Rp.200 trillion.

Hypermart forecast sales 2016: Rp. 20 trillion with EBITDA Rp.1.2 trillion.

WHY IS RETAIL ?

SALES RETAIL IN INDONESIA 2016 : RP. 200 TRILLION

ITS FUNCTION IN

DISTRIBUTION

Manufacturer Wholesaler RetailerFinal

consumers

A Typical channel of distribution

ITS RELATIONSHIP VENDOR AND

RETAILRES

Exclusive Distribution

Intensive Distribution

Selective Distribution

Number of retailers

Potential Conflict

Support from suppliers

Supplier sales

Retailer assortment

Product range

Competition among retailer

Medium/low

Highest

Comparing exclusive, intensive and selective distribution

BROAD RANGE OF

CAREER OPPORTUNITI

ES

Organization of a Big retailers

CEO

FINANCE & ACCOUNTING

DIRECTORE

OPERATION DIRECTORE

HRD DIRECTORESTORE

DEVELOPMENT DIRECTORE

DC DIRECTORE IT DIRECTOREMERCHANDISING

& PROMOTION DIRECTORE

Vice President

General Manager

Category Manager

Buyer

ASSISTANT CEO SECRETARY

Billion of employees are

working on retailers

Salary range from UMR to 1.1

Billion/monthOr 13.3 Trillion

one year

Type of Food Retailers

SUMBER : PERATURAN PRESIDEN NO. 112 TAHUN 2007

URAIAN MINIMARKET SUPERMARKET HYPERMARKET

Barang yang

diperdagangkan

Berbagai macam

kebutuhan rumah

tangga termasuk

kebutuhan sehari-hari

Berbagai macam

kebutuhan rumah

tangga termasuk

kebutuhan sehari-hari

Berbagai

macam

kebutuhan

rumah tangga

termasuk

kebutuhan sehari-hari

Jumalah item <5.000 5.000 – 25.000 >25.000

Jenis produk Makanan kemasan

dan barang-barang pokok

Makanan dan

barang-barangrumah tangga

Makanan,

barang rumah

tangga,

elektronik,

pakaian dan alat olahraga

Model penjualan

Secara eceran,

dilakukan langsung

pada konsumen

akhir dengan cara swalayan.

Secara eceran,

dilakukan

langsung pada

konsumen akhir

dengan cara swalayan.

Secara eceran,

dilakukan

langsung pada

konsumen akhir

dengan cara swalayan.

Luas lantai usaha

Maksimal 400M2 400M2 – 5000M2 >5000M2

Luas lahan parkir

Minim Sedang Sangat luas

Modal s/d Rp.200 juta 200. ta – 10 Milyar >10 Milyar

Sumber : Peraturan Presiden No. 112 tahun 2007

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

Donley’s Old West Steakhouse and Buffet in Illinois,is run by brothers Randy and Mike Donley. The Restaurant abuts Donley’s Wild West Town, a museum and theme village founded by Randy andMike’s father. The huge 270-seat restaurant, reminiscent of a saloon, was an immediate hit with both tourists and local residents when itopened in 1994

Yet, even though restaurant revenues were close to $2 million in 1995 and it was usually crowded, the Donleyslost money. According to Randy, “The busier we were, the more we lost.” The losses, amounting to

$250,000 in 1995, occurred despite the two brothers each working 18-hour days.

Only after hiring a restaurant consulting firm, did the Donleys begin to better grasp the reasons for their losses and revamp their strategy.

By enacting several tactics recommended by the consultant, they reduced annual food costs by $280,000. The tactics

included offering cheaper cuts of meat on the buffet (saving $2,500 per week), homemade desserts instead of ready-

made (saving $500 per week), and decorating the buffet with unused kale, a type of cabbage, instead of throwing it out (saving $2000

per year). The consulting firm also recommended that employees purchase their meals at cost (rather than be given free meals

as a fringe benefit), that supply cabinets and freezers be locked to control employee theft, and that the food purchasing contractbe renegotiated.

In addition to cost controls, the Donleys learned to refine their overall business skills. They now screen job applicants better (e.g.,

they will no longer hire temperamental chefs). Also they are more aware of the value of human relations skills in managing

employees.

As a result of these changes, the restaurant turned its first monthly profit ($12,000) in March 1996. This compared

quite favorably with losses of $25,000 in March 1995. It was really nice that the profit was earned without the restaurant having to substantiallyraise prices (only the price of a Sunday buffet was increased---from $10.95 to $11.95).

Now that cost controls and a more professional management style have been implemented, the brothers plan to boost revenues byattracting additional customers from the Chicago suburbs with such features as a casino night or cigar night. They are

also considering opening to new units.

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

I. Situation analysis

II. Objectives

III. Identification of consumers

IV. Overall strategy

V. Specific activities

VI. Control

Mass marketing Concentrated marketing Differentiated marketing

Organizational mission, Ownership and management

alternatives Goods/services category

Sales Profit Satisfaction of public image

Controllable variable Uncontrollable variable

Evaluation Adjusment

Daily short-term operation Responses to environment

Element of a

Retail Strategy

Ownership and management alternative

SOLE PROPRIETORSHIP

PARTNESHIP

A CORPORATIO

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

Durable

goods stores

Nondurable

goods stores

Personal

Service

Amusement

Service

Repair

Service

Hotel Service

• Automotive group

• Furniture and appliance group

• Lumber, building and hardware group

• Jewelry stores

• Laundries and dry cleaning

• Beauty/Barber shops

• Video shooting

• Funeral services

• Health-care services

• Automobile repairs

• Car washes

• Consumers electronic repairs

• Appliance repairs

• Watch and jewelry repairs

• Apparel group

• Food group

• Eating and drinking place

• Gasoline services stations

• Drug and proprietary store

• Coffee shop

• Movie theatres

• Bowling alleys

• Futsal Center

• Skating rinks

• Dance halls

• Amusement parks

• Karaoke Cennter

• Hotels

• Motels

• Trailers parks

• Camps

Selected kinds of retail gods and services establishments

THE CATEGORY PRODUCT LIFE CYCLE

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

SOME OF THE TYPICAL FINANCIAL INVESTMENTS FOR A NEW RETAIL VENTURE

Use of Fund Source of Funds

Land and building (lease or purchase Personal saving, bank loan, commercial finance company

Inventory Personal saving, bank loan, commercial finance company sales revenue

Fixtures (display cases, freezer, storage etc. Personal saving, manufacturer credit, bank loan, commercial finance company

Equipment (cash register, office equipment etc. Personal saving, manufacturers credit, bank loan, commercial finance company

Personnel Personal saving, bank loan, sales revenue

Promotion Personal saving, sales revenue

Personnel drawing account Personal saving, life insurance loan

Miscellaneous: Personal saving, manufacturer, wholesaler credit, bank • Equipment repair credit, bank loan, commercial finance company• Credit sales (bad debts)• Professional services• Repayment of loan

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

OBJECTIVES

1. SALES : GROWTH, STABILITY, MARKET SHARE

2. PROFIT : TIME PERIOD, A YEARLY, CONSIDESERING LAND, BUILDING, EQUIPMENT AND GOODS, ROI

3. SATISFACTION OF PUBLICS: STOCKHOLDERS, CONSUMERS, SUPPLIERS, EMPLOYEE, AND GOVERNMENT

4. IMAGE : POSITIONING (MASS MERCHANDISING & NICHE RETAILING)

STRATEGIC PLANNING IN RETAILING: OWNING OR MANAGING A BUSINESS

How Chicago Retailer Are positioned in the women’s fashione market

Wo

me

n’s

W

ear

fas

hio

nab

ility

Women’s wear Value for the money

*Norman Marcus

*Saks

*Express

*Nordstroms

*Lerner

*Marshal Fields

*Ann Taylor

*Mont.Ward

*Venture

*Kmart

Walmart

*Lord & Taylor

*Lane Bryant

T.J.Maxx

J.C Penney

Target

*Talbots

Worst value (left) Best value (right)

Co

nse

rvat

ives

vs

Cu

rren

t vs

Ver

y la

tes

IDENTIFICATION CUSTOMERS & MARKETING TECHNIQUES

TARGET MARKETING TECHNIQUES AND THEIR STRATEGIC IMPICATIONS

TARGET MARKET TECHNIQUES

StrategicImplications

Mass Marketing Concentrated Marketing

DifferentiatedMarketing

Location Near a large population base

Near a small or medium population

base

Near a large population base

Good and ServiceMix

Wide assortment of medium-quality

items

Deep assortment of high quality or low-

quality items

Distinct goods/services aimed at each

market segment

Promotion Efforts Mass advertising Direct mail, subscription

Different media and messages for each

segment

Price Orientation Popular price High or low High, Medium, and low – depending on

market segment

Strategy One general strategy directed atlarge homogeneous

(similar) group of consumers

One specific strategy directed at

a specific, limited customers

Several specificstrategies, each

directed at different (heterogeneous)

consumers

RETAIL PROMOTION MIX

Objectives

*Inform

*Persuade

*Remind

Sales People

Store atmosphere and Visual

Merchandising

Advertising

Public Relation

Sales Person

RETAIL PROMOTION MIX

WEEK END

AND

WEEKDAYS

NEWS PAPERS

RETAIL PROMOTION MIX

BE WEEKLY KATALOG

RETAIL PROMOTION MIX

INSTORE PROMOSI

1. PRICE DISCOUNT

2. GIFT PACK

3. BUY ONE GET ONE

4. BUY 2 GET 1

5. BUY MORE SAVE MORE

6. 2ND PURCHASE DISCOUNT

7. ETC

1. AND INSTORE ACTIVITIES

2. FREE TESTING PRODUCT

3. DEMO COOKING

4. COLOURING & DRAWING

COMPETITION

5. WHEEL OF FORTUNE

6. KIDS STORE TOUR

7. ETC

OVERALL STRATEGY

Retail Strategy

Controllable variables

*Location

*Managing business

*Merchandising management

*Pricing

*Communicating with consumers

Uncontrollable variables

*Consumers

*Competitions

*Technology

*Economic condition

*Seasonality

*Legal restrictions

The Contemporary Challenges Facing Indonesia retailers

3. Lokasi, Lokasi, Lokasi

Market Percentage

Hong Kong 93%

Indonesia 93%

Singapore 90%

South Korea 89%

Philipines 88%

Malaysia 88%

Thailand 84%

UAE 84%

China 83%

Sumber: Nielsen

OVERALL STRATEGYControllable variables

*Location

*Managing business

*Merchandising management

*Pricing

*Communicating with consumers

MANAGING BUSINESS

RETAIL ORGANIZATION &

HUMAN RESOURCES MGT

TASK, POLICIES, RESOURCES, AUTHORITY, RESPONSIBILITY,

REWADS & PUNISHMENT

HIRING, TRAINING, COMPENSATION, SUPERVISION

OPERATION MANAGEMENT

ASSET MANAGEMENT, BUDGETING, RESOURCE

ALLOCATION

STORE FORMAT, SIZE, SPACE ALLOCATION, PERSONNEL USE,

STORE MAINTENANCE, INVENTORY MANAGEMENT, STORE SCURITY, INSURANCE,

CREDIT MGT, COMPUTERIZATION AND CRISIS

MANAGMENT

OVERALL STRATEGYControllable variables

*Location

*Managing business

*Merchandising management

*Pricing

*Communicating with consumers

MD MANAGEMENT & PRICING

MD MANAGEMENT

QUALITY GOOD AND SERVICE

WIDHT & DEPTH OF ASSORTMENT

PRICING

LEADING/FOLLOWING, COST-PLUS/DIMENT-

ORIENTED,

EVEYDAY LOW PRICE OR HIGH LOW PRICE

OVERALL STRATEGY

Controllable variables

*Location

*Managing business

*Merchandising management

*Pricing

*Communicating with consumers

Building & maintaining a

distinctive image

Physical attributes

•Atmosphere

•Store front

•Store inside

•Layout & display

•Wall & floor colors

•Lighting

•Music

Promotion Techniques

•advertising

•Personel selling

•Sales promotion

•Li

Customer service

•Parking

•Gift wrapping

•Return policy

•Extended hours in busy season

•credit, phone and mail sales

•Donations to charity

Communication with consumers

OVERALL STRATEGY

Retail Strategy

Uncontrollable variables

*Consumers

*Competitions

*Technology

*Economic condition

*Seasonality

*Legal restrictions

Inflation, consumer

unemployment,

interest rate, tax

amnesty, tax levels,

GDP,

New entry, existing

retailer create

competition

OVERALL STRATEGY

Retail Strategy

Uncontrollable variables

*Consumers

*Competitions

*Technology

*Economic condition

*Seasonality

*Legal restrictions

Control Uncontrol

Location Zoning law, Environment law,

Local ordinance, Leases ets

Managing Business Personel law, Antitrust law,

Franchise agreement, Business

tax, Delivery laws

MD & Pricing Trademark, Licensing

agreement, Merchandising

restrictions, Warranties & Sales

tax, Collusion

Communication

with the Customer

Truth in advertising,

Telemarketing laws, Inventory

laws, Labelling laws,

The Contemporary Challenges Facing Indonesia retailers

1. Regulasi, Permit dan Strategi

2. Infrastruktur Sebuah Pilar

3. Dampak Lingkungan

4. Dampak Ekonomi

5. Dampak Sosial

Consumers of Indonesia

1. Pasar Muda dan Ekspansif

Italia Congo Indonesia

Populasi 2008 59.9 million 66.5 million 239 million

Populasi 2025 62.0 million 109.7

million

292 million

% Growth 3.5 65 22

% populasi <15 14 47.1 29

% populasi 65+ 19.9 2.6 6

Annual births 568.120 2.900.000 5.077.000

Annual deaths 575.300 800.000 1.521.000

Natural population

increase

-7.180 2.100.000 3.556.000

Life expectancy at birth 81 53 70

Pembagian Demografi

Consumers of Indonesia

4. Pasar Tradisional: Belanja segarsetiap hari

Consumer Confidence Index

Sumber: Nielsen Global online consumer confident survey 2015

Showing general pattern of increased

optimism

The Future of Retailers

4. Muncul Konsumen Tidak sabar

Top

Mgt

Middle Management

Front-line people

CUSTOMER

CUSTOMER

Front-line people

Middle Management

Top

Mgt

Traditional Org.chart Modern customer oriented org.chart