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I. INTRODUCTION
1.1. Statement of the Problem
Retail business is direct sale of goods in any type of outlet such as
kiosk/stall, traditional/modern market, department store, boutique, etc.,
including delivery service, which generally supplies for purchasers
personal consumption. Early 1970an was the beginning of massive
changes in the retail business in western countries, this change had an
impact on social and economic conditions of society.
Retail change has occurred in the context of wide-ranging
socioeconomic trends (Bromley & Thomas, 2003, p. 3). First, increasing
affluence has been associated with a rise in car ownership and much
greater mobility. Given the improvement in roads, people are now able and
willing to travel far greater distances for their shopping and the car is
increasingly being regarded by retailers as a “shopping basket on wheels”.
However, those who do not own cars have become polarized as a
disadvantaged group whose poor mobility constrains their access to urban
facilities. The growth in car ownership and the consequent volume of traffic
has also had detrimental effects on movement within the city, and growing
central congestion has contributed to decentralization. Second, changes in
the spatial redistribution and composition of population. Champion (1989,
1992) on Bromley and Thomas (2003) state that Counter-urbanization,
involving the shift towards a less-concentrated pattern of population
distribution, in which rural areas and small towns grow faster than large
cities, was a dominant feature of the 1970s and 1980s. Furthermore,
Champion & Townsend (1990) stated consumer services such as retailing
have followed the population in decentralizing from city centres. Warnes
(1989) stated Trends in composition have been equally significant. The
population is ageing and the proportion of elderly people has increased
markedly. There are now more households to participate in shopping and
more of them are experiencing the restricted mobility associated with the
Draft of Thesis Proposal 2
disabilities of age. Third, A set of socioeconomic trends result from the
changing character of the working population. Part-time employment for
both sexes grew considerably in the 1970s and 1980s, and retailing has
been prominent in this trend (Townsend 1986 and Watson 1992). The
proportion of women in the workforce has also increased, and retailing
itself shows continued feminization of the workforce, with women
comprising about62 per cent of workers (Sparks 1992). Those in work
experience time constraints on their shopping patterns, a factor of
particular relevance to women, whose traditional gender role has included
being the principal shopper (Davies & Bell 1991). However, alongside
these trends the growth of unemployment since the 1980s associated with
deindustrialization should be noted, and the suggested emergence of an
underclass (Eversley 1990). The shopping constraints of disadvantage are
a hallmark of the unemployed.
In Southeast Asia, the market share of traditional retail experience
diminishing trend, along with the increasing number and capitalization of
the modern retail business. In Indonesia, the performance of the modern
market has increased, while traditional markets decline. AC. Nielsen noted
the fact, that in 2004, the contribution of the traditional market of about
69.9%, this value decreased from 73.7% the previous year (2003), 74.8%
(2002), 75.2% (2001), and 78.1% (2000). On the other hand, the opposite
condition occurs in supermarkets and hypermarkets. The contribution of
each type of the modern market was increasingly large. Suryadarma et.al.
(2007) Researchers from independent research institutions in Indonesia,
SMERU Research Institute in his report concluded, that the existence of
modern markets (supermarkets) give effect to the reduction in the
contribution and performance of traditional markets. Quantitatively, the
existence of traditional markets (supermarkets) do not prove any
significant effect. Decline in more traditional market performance caused
by internal factors that lead to lack of competitiveness compared to the
modern market. Furthermore Suryadarma reported also, that the
Draft of Thesis Proposal 3
traditional markets that are close to the supermarket which is worse
affected than the who are far away from the supermarket.
AC Nielson (2010) mention that Indonesia is the second fastest
developing market in South- East Asia with an annual share change of
1.6%. This is likely to continue to grow at a fast rate with modern trade still
accounting for less than 40% of sales. The fastest growing channel in
Indonesia has been the mini-market, led by local giants Indomaret and
Alfamart. Over the decade, store numbers increased from just over 2000
to more than 11,500. It is now difficult in many cities to stand on a corner
and not see at least 2 of these stores!! The impact of mini-markets on
where people shop has been significant as their share of trade has
increased nearly six-fold to over 17%.
Chamber of Commerce (2010) or KADIN mentions that the retail
industry is one of Indonesia's strategic industries. This industry is the
second largest sector in terms of employment, which absorbs
approximately 18.9 million people, second only to the agricultural sector
that could absorb around 41.8 million people. Retail industry is divided into
two types: (1) Traditional Retail; and (2) Modern Retail. Traditional retail is
represented by traditional markets and small shops on the roadside, while
the modern retail is represented by Carrefour, the Ramayana, Indomart,
Alfamart, and so forth.
Furthermore, KADIN explained that traditional retailing in Indonesia
has a strategic value. Traditional retail markets in Indonesia are among the
most frequently visited, as many as 25 times per month, compared to India
and Sri Lanka are only 11 times per month and the Philippines are only 14
times per month. There are several advantages of traditional retail
markets, among others, is the ease of access for small suppliers, including
farmers. Besides, in the traditional retail market can occur bargain, fresh
goods, and close to home, but the traditional retail market has no place as
comfortable as modern retail market.on the other hand, modern retail
market in addition to having a comfortable place, the goods also have a
Draft of Thesis Proposal 4
high standard and quality as usual modern retail company will maintain the
company image. In addition, the service was excellent and also full of
goods available, from electronic goods to everyday needs. However, the
modern retail market cannot be negotiated.
Initially, Indonesian modern retail market dominated by a few leading
players who had long been in this business such as: Hero, Indomaret,
Ramayana, the Sun, Alpha. Invasion of foreign hypermarkets are so
intense in the 2000s made the competitive landscape of retail business
becomes increasingly fierce. The development of modern retail business
nationwide for the last five years is staggering. According to AC Nielsen
survey (2006), the number of trade centers, both hypermarkets, wholesale
centers, supermarkets, mini market, convenience stores, as well as
traditional stores rose nearly 7.4% during the period 2003-2005. Of the
1,752,437 total outlets in 2003 to 1,881,492 in 2005 outlets. The
development of a very high this indicates that the Indonesian market has a
very promising potential for retail business.
There are fears what will happen to domestic retailers, and even
more are feared to shift the traditional market. AC Nielsen noted, from year
to year starting in 2000, the market share of traditional retail market
continues to decline. In early 2000 the market share of 78.3% traditional
and increasingly reduced to 70.5% in 2005. The more proliferation of
foreign retailers should be wary of going to disrupt the "underprivileged"
who work on traditional markets. In line with the existence of socio-
economic shift, from the "A Consumers' (upper class consumers),
penetrated into the" B and C Consumers "(Consumers middle and
bottom), the traditional market infrastructure is absolutely necessary
repaired immediately.
The high rate of minimarkets development raises big questions, that
is. (1) What is the impact of the presence of minimarket to the traditional
retailer? (2) How much the percentage change in revenue/ received by
traditional retailers after the presence of minimarket?
Draft of Thesis Proposal 5
1.2. Objectives
The objectives of this research are:
1. To describe the traditional retailer and minimarket development in
Malang City
2. To identify the factors that influence consumer shopping in minimarket
and traditional retailer
3. To assess the impact of minimarket on traditional retailer.
Draft of Thesis Proposal 6
Chapter II
LITERATURE REVIEW
2.1. Retail Market : An Overview in Asia Pacific
The growth volume of the grocery sales was degenerated in 2009.
Nielsen (2010) notified, throughout the Asia Pacific region, countries
experiencing lower growth rates of grocery sales in 2009 compared with a
very strong performance in 2008. AC Nielsen noted that the countries with
the strongest market growth rates in 2009 are India and Vietnam, with total
sales increased by close to 15% when compared to the year 2008.
Furthermore, Nielsen reported that In China and Indonesia, a market that
has consistently enjoyed double digit growth during the last 5 years, the
growth rate slowed down to +3% and +5% respectively. China has seen a
strong recovery, although since Q4 2009 and now back to a growth of
11% in Q1 driven by strong demand for food categories.
The 2000’s noted by Nielsen as a decade of change for grocery
retailing in Asia. More than ten years, throughout Asia, the rapid changes
in the retail grocery business were recorded, driven by the retailer’s
investment in the establishment of new stores. Across the region, the
modern trade now accounts for 53% of the packaged grocery sales
tracked by Nielsen, from the 35% share in 2000. This shift of consumer
spending of nearly 2% per annum has been strongest in North Asia – led
by China where the importance of modern trade increased on average by
3%. The biggest number of expansion was seen in the China market,
China accounted for over 100,000 new stores or more than 60% of the
total new store investment and equivalent to a 1000% increase in a 10
year period. Furthermore, modern market share increased from 34% to
64% during the decade with all formats that encourage growth.
In china, hypermarkets are the strongest modern trade channel
accounting for 28% of packaged grocery sales. The importance of
Hypermarkets differ significantly by city; in Shanghai, 77% of shoppers
Draft of Thesis Proposal 7
claim to use them as their main store compared to just 45% in Beijing. The
biggest growth opportunity for this channel is now coming from the lower
tier cities with the key cities generally reaching relatively mature level of
development (Nielsen, 2010).
Beside China, Korea was another market where the speed of
change has been rapid. Korea is a market where Hypermarkets occupy a
very strong share of trade (31%) (Nielsen, 2010). Beside Hypermarket,
there is another channel have also expanded rapidly in this country – the
Convenience stores-, it achieve a 12.5% share and the number of store
growing from 3,000 to nearly 17,000 stores in the last 10 years. Traditional
grocery stores have suffered most in Korea, with a closure rate of 5% per
year or more than 50,000 stores during the decade (Nielsen, 2010).
2.2. Retail Market Development In Indonesia
Indonesia is the second fastest developing market in South-East
Asia (AC. Nielsen, 2010). Rangkuti (2010), state that the Indonesian retail
sector began its rapid expansion in 1999, when a Presidential Decree
allowed Carrefour, a French retailer, to increase its outlet numbers in
Jakarta. As other foreign and local retailers followed, the Indonesian retail
sector grew and consumers benefited from stronger competition between
retailers. Furthermore, he state that the modern retail businesses such as
hypermarkets, supermarkets, and mini-markets are replacing more
traditional retail outlets, including wet markets and independent small
grocers.
The retail industry is one of Indonesia's strategic industries (Kadin,
2009). Kadin state that this industry is the second largest sector in terms of
employment; this absorbs approximately 18.9 million people. It is behind
agricultural sector that could absorb around 41.8 million people. Especially
in traditional retailing, the traditional retailing in Indonesia still has strategic
value. Furthermore, Kadin mentions that the traditional retail market in
Indonesia is the market's most frequently visited, as many as 25 times per
Draft of Thesis Proposal 8
month, compared to India and Sri Lanka are only 11 times per month and
the Philippines are only 14 times per month. There are several advantages
of traditional retail markets, among others, is the ease of access for small
suppliers, including farmers. Also in traditional retail markets, buyers can
haggle, the place is close to home, and goods is fresh, but in the
traditional retail market has no place as comfortable as modern retail
market.
Kadin (2009) categorize the retail industry in Indonesia into two
categories; (1) Traditional Retail; and (2) Modern Retail. Traditional retail is
represented by traditional markets and small shops on the roadside, while
the modern retail is represented by Carrefour, the Ramayana, Indomart,
Alfamart, and so forth. Unlike traditional retail markets, modern retail
market not only has a comfortable place, but also have quality goods
because it typically modern retail company will maintain the company
image. In addition, the service was excellent and also full of goods
available, from electronic goods to everyday needs. However, the modern
retail market price is not negotiable
The development of modern retail market in Indonesia is
experiencing expeditious progress. Ten years ago almost all supermarkets
located in Greater Jakarta, but now only 50% of them. Supermarket
development has expanded into other islands, even large villages in Java.
Initially the supermarket is just to ‘A’ consumers (Upper class consumer).
However, it has now expanded to ‘B’ and ‘C’ consumers (middle class and
low class consumer respectively). This phenomenon occurs because of
incessant supermarket expansion into smaller cities in Indonesia.
There are many advantages to be gained from the development of
modern retailing in Indonesia, among others: consumer feel pampered
with convenient shopping, security, a diverse variety of products, and also
the prices of competing products. On the other hand the presence of
modern retailers raises several issues, such as the elimination of the
traditional retail market. This is unavoidable due to their competitive ability
Draft of Thesis Proposal 9
is still low and also the lack of capital to support business activities of
traditional retailers.
Currently, the development of modern markets increasingly
flourishing and have started to intervene into the countryside. Among
Hypermarkets, Supermarkets, and minimarket, AC Nielsen (2010) record
that the fastest growing channel in Indonesia has been the mini-market,
led by local giants Indomaret and Alfamart. Over the decade, store
numbers increased from just over 2000 stores in 2001 to more than
11,500 stores in 2010. It is now difficult in many cities to stand on a corner
and not see at least 2 of these stores! The impact of mini-markets on
where people shop has been significant as their share of trade has
increased nearly six-fold to over 17%. To protect the local player,
government issued Presidential Decree No 112/2007. The decree stated
that only supermarkets under 1,200 square meters and minimarkets less
than 400 square meters should be owned by domestic investor.
Table 1 The number of Retail market in Indonesia period 2004 - 2009
No Kind of Store 2004 2005 2006 2007 2008 2009
1 Traditional Grocery Outlets
1.745.589 1.787.897 1.846.752 1.900.332 2.469.465 2.520.757
2 Minimarket 5.604 6.465 7.356 8.889 10.607 11.569
3 Supermarket 956 1.141 1.311 1.379 1.571 1.146
4 Hypermarkets 68 83 105 121 127 141
Source : Compiled from Nielsen (2004) – Nielsen (2010),
Kadin (2009) categorize the retail industry in Indonesia into two
categories; (1) Traditional Retail; and (2) Modern Retail.. The first is
traditional groceries, this category includes traditional market (wet market),
grocery stores and kiosks located at the edge of the road. The amount is
probably much less than the total number of traders in the field, given the
traditional traders in Indonesia are very numerous, and sometimes difficult
to determine the actual amount. The second type until the fourth is in the
Draft of Thesis Proposal 10
modern merchant category, which consists of Minimarket, Supermarket,
and Hypermarkets. Astonishing growth is the type Minimarket and
Hypermarkets. Within 6 years, the growth of both types of modern retail
traders has been doubled (see Table 1).
2.2.1. Traditional Retail Market Development In Indonesia
“Traditional Market” means a market that is built and managed by
the Government, the Regional Governments, Private Entities, State-
Owned Entities and Region-Owned Entities, including through cooperation
with private entities with such places of business as stores, kiosks, stalls
and tents owned/managed by small or medium traders, community self-
reliance or cooperative with smallscale enterprises, small capital and
dealing in commodities through bargaining; (President Regulation No 112
of 2007).
The role of traditional markets (shops or stalls), for this moment is
still larger than the role of modern market in contributing to the Gross
Domestic Product (GDP) of Non-Oil and Gas in 2000. It is a condition that
the opposite happens; that the modern market in the province, have a
greater contribution to revenues, as compared with the municipality /
district. The contribution of the modern market looks bigger in urban than
rural areas. Efforts to compensate for the speed of development of the
modern market by using the instrument levy does Generate Revenue
(Pendapatan Asli Daerah-PAD) which is greater at the provincial and
district levels. However, the redistribution of income is addressed by the
modern market in the form of higher capitalization. In addition, modern
market contributed to the PAD responded by submitting reporting lower
output and the occurrence of the phenomenon of increased hindrance
(entry barrier) to prospective new entrepreneurs to enter the modern
market (supermarkets).
Draft of Thesis Proposal 11
2.2.2. Modern Retail Market Development In Indonesia
According to the Regulation Of The President Of The Republic Of
Indonesia Number 112 Of 2007, “market” is means a place where goods
are dealt in by more than one seller that is referred to as either a shopping
center, traditional market, store, mall, plaza, trade center or other
reference; and “Modern Store” means an independent self-service store
that retails a large variety of goods through Minimarkets, Supermarkets,
Department Stores, Hypermarkets or grocers that constitute Grocery
Stores;
The modern retail market development in Indonesia, most retail
observers would immediately remember the name "Sarinah Department
Store". Sarinah department store may be cited as the first modern retail
presence in Indonesia. 1970s-1980s, continued growth in this retail
business format. The early decades of the 1990s, 'Sogo' -one of Japan's
largest retailer-was entering the Indonesian markets; this decade is often
referred to as a historical landmark entry of rite lasing in Indonesia.
Modern retailing in Indonesia and then developed so rapidly as the
government, according to Presidential Decree no. 99 year, 1998, issued a
retail business from the negative list for foreign investment (Pandin, 2009).
Before the decree issued, the number of foreign retailers in Indonesia is
very limited. Retail formats in Indonesia has continued to develop
according to the economic development, technology, and people's
lifestyles.
To view the early development of the modern retail market in
Indonesia, let us look at Figure 1. The figure show that in the period of
1968-77 there was only one supermarket registered in Jakarta. Then,
supermarket outlets began to spread rapidly after 1983 along with
economic growth and increases in income per capita marked as the
beginning of the green revolution era (Natawidjaja, 2005). The first
supermarket in Indonesia was recorded in the early 70s and there was no
further development for ten years.
Draft of Thesis Proposal 12
Source: Natawidjaja, (2005)
Figure 1 Early Development of Supermarket in Indonesia 1968-97
In the period 1978-1992, the supermarket sector grew 85% per
year. While the growth rate declined, expansion continued at 12% per year
between 1993 and 1997 (Natawidjaja, 2005). On that period, initially, the
development of supermarkets mostly in Jakarta, and then spread to major
cities (the capital of the province) on the island of Java, like Bandung,
Semarang, Yogyakarta, and Surabaya. In the mid-1990s, the concept of
hypermarkets started to go into Indonesia. It is characterized by the entry
of retail giants of French companies, "Carrefour and Continen" in 1997. In
Indonesia, they become one company by the name which operates 12
Carrefour hypermarkets in Jakarta, Surabaya, and Medan. In 1998, the
giant company USA "Wal-mart" also entered the retail business in
Indonesia. In that year also their first store on fire during riots in Jakarta as
a result of the multi-dimensional crisis in Indonesia. After the incident, Wal-
Mart then decided to leave Indonesia. After the crisis that hit Indonesia,
that moment is just like to bring fresh air in modern retailing developments
in Indonesia. Because the issues discussed was the decentralization of
development. With the issue of decentralization of development, the
construction of the shopping center began to spread to small towns in the
area. Natawidjaja, (2005) notes, there are two new actors in hypermarket
Draft of Thesis Proposal 13
business, Giant and Hypermart. Giant is managed by Hero Group and
Giant, a retail company from Malaysia. Hypermart is managed by Matahari
Group. As we can see on Figure 2, the number of hypermarkets is still
quite small but consistently increasing by 27% per year in the last 5 years.
Today, the modern retail business in Indonesia is expanding its
territory up to the remote areas quickly. Many opinions are pros and cons
of their existence. The presence of hypermarkets, supermarkets, and mini
markets, for most consumers of modern markets are providing an
attractive alternative to shopping. Not only offers the convenience and
quality products, but also their prices are also quite competitive –it is even
cheaper than the traditional market (Tambunan, 2004). On the other hand,
these circumstances make small retailers feel worried. Some small
retailers feel the true impact of the presence of modern markets, such as
hypermarkets, i.e. their income is significantly lower.
Source : Natawidjaja (2005)
Figure 2 Development of Modern Market in Indonesia period 1997-2003
Nowadays, Nielsen (2010) state That the "2000's" - a decade of
change for grocery retailing in Asia. And this is happening in Indonesia. If
you look at figure 3 above, it appears that modern developments in the
Indonesian market are growing very rapidly, especially the minimarket.
Draft of Thesis Proposal 14
Source: Nielsen 2004 – 2010 (diolah)
Figure 3 Development of Modern Market in Indonesia period 2003 -2009
Nevertheless, the rapid development of modern market often
created protest from the party that was inflicted, such as traditional market
or even modern retail itself. Even, the President Regulation No. 112 of
2007 about Arrangement and development of traditional market, shopping
center, and modern market, which was just validated in December 2008,
created a controversial. Especially, concerning the violation of modern
retail that is selling nine basic goods below the price of traditional market.
Even the violation of zone and distance that has been going on for a long
time, has taken many casualties from the traditional market. However, the
Association of Retail Businessmen Indonesia (Asosiasi Pengusaha Ritel
Indonesia - APRINDO) has filed a complaint from modern retailer about
the content of regulation of trade ministers No. 53 of 2008, among other
concerning trading term cost limitation from the juridical and commercial
aspect.
The phenomenon of the rise of retail business actually been seen
since the mid-1990s. A survey conducted by AC Nielsen (2006) showed
that the number of traditional markets in Indonesia, as many as 1.7 million
or 73% of the overall market, the remaining 27% of the modern retail
Draft of Thesis Proposal 15
market. Surprisingly is the survey conducted by FAO in 2006 which states
that between 1997 to 2003, the retail business increased by almost 30%,
with growth reaching 15% for modern retail and 5% for the traditional
market. This indicates a shift from public market into the modern market.
The growth rate is different than the traditional market is expected to
create increasingly eliminated from the competition arena. AC Nielsen in
its calculations mentioned that the elimination of the traditional markets of
1.5% annually. (Kadin, 2009)
Tabel 2 presents the number of hypermarket developments from
2003 until 2010. From the table, there are four big players in the
hypermarket business in Indonesia, namely: Carrefour, Alfa Gudang
rebates (in 2009 purchased shares of Alfa Carrefour), Hypermart, and
Giant. Table 2 also show how Carrefour dominated the hypermarket
market in Indonesia.
Table 2 Number of Hypermarkets (the 4 biggest player) in Indonesia periods 2009 - 2010 Brand Name 2003 2004 2005 2006 2007 2008 2009 2010 Carrefour 11 15 19 29 37 58 60 42 Alfa Gudang Rabat 23 35 34 32 31 16* 16* Hypermart - 4 16 26 36 43 43 46
Giant 10 12 17 17 26 30 34 *) : ex Alfa, become Carrefour
Source: AC. Nielson (2004); AC. Nielson (2005); AC. Nielson (2006); AC. Nielson (2007); AC. Nielson (2008); AC. Nielson (2009); AC. Nielson (2010) (compilation)
Draft of Thesis Proposal 16
Source: (Natawidjaja, 2005)
Figure 4 Hypermart and their locations in Indonesia
Figure 4 is the present distribution of hypermarket in Indonesia. In
gdari picture shows that most of the hypermarket is still there / is
concentrated in the area of Jakarta, Bogor, Tangerang, Bekasi an, ie by
58%. As for which dominate the market Hypermarket in several areas in
Indonesia is Carrefour.
Table 3 Number of Supermarket in Indonesia periods 2009 - 2010
Brand Name 2003 2004 2005 2006 2007 2008 2009 2010
Ramayana 80 85 82 81 71 95 93 93
Super Indo 37 44 46 50 56 63 64 65
Yogya and Griya 38 43 46 49 53 56 56 57
Giant 1 1 1 1 23 55 55 59
Hero 104 88 83 89 71 53 52 41
Matahari/ Foodmart 57 45 42 32 29 23 23 23
Borma 17 20 21 21 23 23 23 24
Gelael 18 13 13 16 16 15 15 15
Carrefour Express - - - - - 14 14 15
Hardy's - - - 11 12 11 13
Macan Yaohan - - - 9 8 8 13
Sri Ratu - - - 8 8 8 7 Source: AC. Nielson (2004); AC. Nielson (2005); AC. Nielson (2006); AC. Nielson (2007);
AC. Nielson (2008); AC. Nielson (2009); AC. Nielson (2010) (compilation)
Draft of Thesis Proposal 17
Still the same as the distribution of Hypermarket, supermarket
distribution is also concentrated in Java. Supermarkets are the biggest
percentage presence in the area of Jakarta, Bogor, Tangerang and Bekasi
(Greater Jakarta).
Source: (Natawidjaja, 2005)
Figure 5 Supermarket and their locations in Indonesia
Mini market is the self-service market just like supermarket that
have only one or two machines only, and only sell products basic
household needs (basic necessities). Minimarket, one of the modern
markets, currently is growing rapidly, offering convenience stores or
outlets because of its location close to consumers in the residential-
housing. According to President Decree No 112 of 2007 size of the store
or outlet is not too large, approximately not more than 400 square meters
and sells items 3000-4000 units. Mini market does not necessarily require
huge investment and most of its market share is an individual and
housewives, especially those who work and give priority to the
convenience and speed or time not long in the shop. Here the number of
minimarket in Indonesia (see Table 4). The data only show the five biggest
retail chains in Minimarket.
Draft of Thesis Proposal 18
Table 4 Number of Minimarket in Indonesia periods 2009-2010
Minimarkets 2003 2004 2005 2006 2007 2008 2009 2010 Indomaret 801 1.001 1.420 1.857 2.425 3.093 3.312 3.892 Alfamart 546 973 1.263 1.629 2.361 2.736 2.896 3.422 Yomart - 25 66 110 146 162 177 220 Star Mart 39 44 52 64 87 116 122 124 Alfa Midi - - - - - 60 71 109
Source: AC. Nielson (2004); AC. Nielson (2005); AC. Nielson (2006); AC. Nielson (2007); AC. Nielson (2008); AC. Nielson (2009); AC. Nielson (2010) (compilation)
Looking at a rapidly development of minimarket, minimarket
become the most rapid progress in retail business. Minimarket player, in
building its business, will build a minimarket in areas close to residential.
They will provide low prices to customers; in addition, they also provide a
variety of promotional and discount programs, making it very attractive to
customers.
Source : Natawidjaja (2005)
Figure 6 Minimarket and their locations in Indonesia
The minimarket players which dominate the market are Indomaret
and Alfamaret. Indomaret is the pioneer of Minimarket in Indonesia. In
Draft of Thesis Proposal 19
2001, Indomaret already have, more than 550 stores spread across
Jakarta, Bogor, Tangerang, Bekasi, Bandung, Surabaya and Yogyakarta.
Currently Indomaret growth rapidly and spread over the country. In 1997,
Indomaret decided to use franchise concept in their development of the
store. With this method, the number of outlets Indomaret increasingly
scattered in small towns.
Alfamart, is the second largest player in the retail format
Minimarket. Alfamart started Minimarket business sector by in 1999 with a
brand of 'Alfa Minimart' by Alfa Mitramart Utama Company. In 2002, the
company already has 141 outlets Alfa Minimart, and since then started
expanding exponentially with the new name of 'Alfamart'. Despite the
global economic crisis in late 2008, the Company achieved significant
growth in terms of market coverage, supported by a growing number of
stores amounted to 21.4% or 594 of 2779 in 2008 to 3373 in 2009.
2.3. The Impact of Modern Retailer on Traditional Retailers
Consumers generally put a cheap price in the first rank among
several factors in shopping. This usually applies to all commodities in
traditional and modern markets. In addition to price, in terms of service,
consumers are also very concerned about environmental security as a
very important factor. Consumers sometimes do not give a high priority on
commodity factors, namely: neat packaging, product availability, and
variety of the items sold. Similarly for factor services, consumers
sometimes regard; proximity of the location of the house, opening hours
are long, and the proximity of the location of the office. Toward consumer
goods, consumers generally place an accurate measure factors in the
second rank after the price. Another factor that can sometimes be the
concern of consumers when shopping is on: grading the quality of
commodities, and product counterfeiting. Consumers will evaluate the
behavior of traders who indicated fraudulent practice should be a priority to
be addressed. Consumers pay high attention to the importance of safety,
Draft of Thesis Proposal 20
comfort, and cleanliness at the time of shopping. Consumers do not take
priority over the location of the proximity factor shopping from home or
office.
There are indications that Minimarket provides consumer
satisfaction level higher than the traditional market. In general, the high
levels of consumer satisfaction to minimarket are on these factors: size,
packaging, hygiene, comfort, safety, and adequacy of public facilities. As
for traditional markets, factors that usually provide services such as low
levels of consumer satisfaction. In general, there are no attribute traditional
markets that provide high satisfaction to the consumer. In the development
of an increasingly developed market, the more negotiable the price factor
can be shifted by a factor of grading the quality and size accurately.
The common impact of the presence of minimarket, based on at a
glance observations in the field are: the number of types of merchandise,
the number of buyers, and the amount of labor. The existence of
minimarket will reduce the number of types of goods traded in traditional
markets. This indicates that, when the minimarket is built, the development
of the number of buyers, the number of suppliers, and the amount of labor
in the traditional market will tend to decline. The most prominent problems
are the development of the number of shoppers at traditional markets.
The Presence of minimarket, currently not negatively impacted the
performance of several indicators of traditional market traders, namely: the
average turnover, inventory turnover, and margin commodity prices.
Based on at glance observations in some traditional markets, the average
turnover in traditional markets showed a decline, but this should not be too
worried by the traditional traders. In terms of turnover of goods in the
traditional markets, it has not been influential. For the price margin at the
first glance indicator of the results of field observation showed no effect, so
it can be concluded that the existence of mini not negatively impact the
price margins in traditional markets. Overall attendance was minimarket
only negatively impact the number of shoppers at traditional markets. This
Draft of Thesis Proposal 21
suggests that the demise of the traditional markets is caused by changes
in consumer tastes. In response to this, one way for traditional markets to
survive can be done by way of retaining customers not to switch to modern
markets, namely by making traditional markets become more convenient
for consumers.
Traditional markets have non-economic advantages from the
perspective of macro-economic interests, namely the provision of choice of
business opportunities, employment, and the contribution of output,
although these options may conflict with the interests of local governments
to increase the original income (Pendapatan Asli Daerah-PAD). Therefore,
it is not surprising that the protection of traditional retailers have not got a
very important priority when viewed from the interests of regional
development. Delays in the development of traditional markets is much
less rapid than the modern market penetration has become evident that
the government tends to be more open to modern retail investment rather
than develop the traditional markets.
Draft of Thesis Proposal 22
Chapter III
Research Methodology
According to Baker (2000), a comprehensive evaluation is defined
as an evaluation that includes monitoring, process evaluation, cost-benefit
evaluation, and impact evaluation. This research is only considered on the
Impact evaluation. According to Baker (2000), impact evaluation is
intended to determine more broadly whether the program had the desired
effects on individuals, households, and institutions and whether those
effects are attributable to the program intervention. Furthermore, impact
evaluations can also explore unplanned consequences, whether positive
or negative, on beneficiaries. Effective impact evaluation should therefore
be able to assess precisely the mechanisms by which beneficiaries are
responding to the intervention (Khandker, 2009). Furthermore Impact
evaluation can be conducted by qualitative and quantitative methods.
Combining quantitative and qualitative methods is the ideal because it will
provide the quantifiable impact of a project as well as an explanation of the
processes and interventions that yielded these outcomes (Baker, 2000).
Qualitative analysis, as compared with the quantitative approach, seeks to
gauge potential impacts that the program may generate the mechanisms
of such impacts, and the extent of benefits to recipients from in-depth and
group-based interviews. Whereas quantitative results can be
generalizable, the qualitative results may not be. Nonetheless, qualitative
methods generate information that may be critical for understanding the
mechanisms through which the program helps beneficiaries.
On the basis of the above background, this study combines
quantitative and qualitative methods. There are two quantitative methods
that are commonly used in impact evaluation, based on baker 2000 there
are difference-in-difference (DiD) and use econometric models. The
qualitative method on impact evaluation conducted in-depth interviews
with key informants. This study used a questionnaire to the consumer, to
Draft of Thesis Proposal 23
the traders and a guide to the key informant interviews as research
instruments. The questionnaire of consumer contains questions about the
opinion of the consumer (consumer preference) and the question of trader
contains about the business and the impact of minimarkets, and also the
facts regarding the trader’s activities.
3.1 Analitical Framework
There are three tentative conclusions can be drawn from the first
impressions of retailing in developing countries (Paddison ,2005). First, the
study of retailing systems in developing countries encompasses a wide
range of environments, related principally to the importance of local, often
culturally embedded factors. Second, the study requires a dynamic
framework which is capable of capturing the interaction between world
economic influences and the place-specific forms of the retailing
environment. Third, whilst there are strong conservative forces which
ensure a degree of continuity in the retailing systems of developing
countries, there are equally rapid changes taking place resulting mainly
from the so-called modernization of retailing through the import of western
retail institutions and western types of consumer behavior.
In all economic systems the retail distribution of goods and services
is a vital link in the distribution channel from production to consumption.
This shows how important the retailing in the economy. Regardless of how
big the role of retailing in terms of trading volume transacted, retail is
important in all societies as a distribution mechanism as the economic and
social institutions. In developing countries this is mainly because of the
role of retail and marketing play a wider distribution system of basic needs'
(mainly food, but also other essential goods such as clothing). Traditional
retailers in developing countries occupy a strategic role in economic
development. For example, in Indonesia, most of the retail players are in
traditional merchants ranging from the trader in traditional markets, kiosks
/ shops and street vendors.
Draft of Thesis Proposal 24
Saat ini, di Indonesia, muncul format yang masih dianggap baru
oleh sebagian orang, yaitu “Minimarket”. Minimarkat walaupun dianggap
sebagai salah satu format ritel modern yang masih baru, dan masih
dimainkan oleh pamain lokal, namun format minimarket di Indonesia
mengalami perkembangan yang sangat pesat dalam 10 tahun terahir.
Sebelum muncul format minimarket, para konsunem membelanjakan
sebagian besar uangnya di ritel tradisional (termasuk pasar tradisional),
lihat gambar berikut:.Ritel tradisional mempunyai karakteristik:
a. Bukan sistem swalayan
b. Pilihan barang terbatas,
c. Kualitas barang terkadang rendah (sudah terlalu lama di toko)
d. Pelayanan kurang ramah
Figure. x the condition before Minimarket presence
Trad
Retail 1
Trad
Retail 2
Trad
Retail 3
Trad
Retail 4
Draft of Thesis Proposal 25
Gambar tersebut menggambarkan kondisi ritel tradisional sebelum
kehadiran minimarket. Secara umum consumen sudah terbiasa
membelanjakan uangnya pada toko tertentu yang menjadi prioritas/
langganan mereka. Dan itu biasanya sudah berlangsung lama. Ketika
tidak ada barang yang dibutuhkan pada toko langganannya, maka ia akan
ke toko lainnya, dan itu hal yang biasa terjadi.
Figure. Xx. The condition when the Minimarket presence
Kehadiran ritel modern dengan format yang baru seperti
minimarket, diindikasikan membawa dampak baik positif maupun negatif.
Trad
Retail
Trad
Retail
Trad
Retail
Trad
Retail
MINIMARKET
Draft of Thesis Proposal 26
Positif mungkin bagi koncumen, tetapi mungkin bnegatif bagi peritel
tradisional. Lihat gambar xx. Gambar tersebut memperlihatkan kehadiran
minimrket di wilayah (milayah pada gambar x). Minimarket dengan
karakteristik yang berbeda dengan peritel tradisional –harga persaing,
kualitas produk lebih baik, variasi produk lebih banyak, sistem swalayan,
serta pilihan produk yang lebih banyak– akan dengan mudah berkompetisi
dengan peritel tradisional dan dengan mudah akan menguasai pasar di
wilayah tersebut.
Pada saat minimarket hadir di suatu kawasan, kemungkinan
dampak positif yang timbul adalah bagi konsumen. Mengapa? Karena
secara teori, konsumen akan memilih ke tampat belanja dengan harga
lebih murah, dengan kualitas barang lebih bagus, dengan jumlah pilihan
lebih banyak, dan berbelanja di tempat yang nyaman. Oleh karena itulah
mengapa konsumen akan memilih berbelanja di Minimarket ketika barang
yang ingin di di toko langganannya tidak ada atau tidak tersedia. Pada
saat mereka berbelanja di Minimarket, pengalaman berbelanja yang
dialami oleh konsumen akan sangat mempengaruhi preferensi konsumen
untuk waktu belanja yang akan datang. Oleh karena itu, dapat
diindikasikan bahwa jika pelanggan sudah merasa nyaman berbelanja di
minimarket, maka mereka akan lebih memilih berbelanja di minimarket
untuk waktu belanja yang akan datang (bulan berikutnya). Ini adalah
dampak positif yang dialami konsumen.
Kemudian apa dampak negatif dari kehadiran minimarket? Jika
indikasi preferensi konsumen bahwa konsumen lebih memilih minimarket
untuk berbelanja pada bulan-bulan berikutnya, maka ini akan menjadi
dampak negatif terhadap pedagang tradisional (toko/ kios).Apa dampak
negatif yang dialami peritel tradisional adalah penurunan jumah konsumen
(pengunjung toko), panurunan nilai transaksi, penurunan stok barang,
lebih lanjut adalah penurunan pendapatan dan penurunan keuntungan.
Jika peritel tradisiona tak mau bersaing dengan Minimarket, maka ada
indikasi jumlah peritel tradisional akan mengalami penurunan sebagai
Draft of Thesis Proposal 27
akibat dari tutupnya beberapa toko karena dampak negatif minimarket
tersebut. (lihat gambar XXX)
Figure xxx The condition after/ selama adanya minimarket
Gambar xxx menunjukan bahwa setelah kehadiran minimarket,
jumlah konsumen pada beberapa peritel tradisional mengalami
penurunan. Sebagai akibat dari beralihnya tempat belanja konsumen ke
minimarkat. Namun apakah dampak tersebut signifikan, itulah yang
menjadi fokus utama dalam studi ini.
Trad
Retail
Trad
Retail
Trad
Retail
Trad
Retail
MINIMARKET
Draft of Thesis Proposal 28
3.2 Difference-in-Difference (DiD) Method
The difference-in-differences (DiD) estimator is one of the most
popular tools for applied research in economics to evaluate the effects of
public interventions and other treatments of interest on some relevant
outcome variables (Abadie, 2005). This method was used by
Suryadharma (2007) to evaluate Impact of Supermarkets on Traditional
Markets and Retailers in Indonesia's Urban Centers and used by INDEF
(2007) to evaluate the Economic Impact of the presence of Hypermarket
on Traditional Retailer/ Markets
DID method require the recording of circumstances in the two time
periods - before and after treatment (Abadie, 2005). In this study, the
treatment is opening minimarkets. Furthermore, there must also a control
groups (example: traditional traders/ shop/ kiosk without a minimarket in
the vicinity), and characteristics of treatment groups and control groups
should be similar. The Framework of DID method is shown in equation 1.
Impact = (T2 – T1) – (C2 – C1) (1)
where : T1 : the condition of the traditional traders before the presence of a
minimarkets near the traditional traders T2 : the condition of the traditional traders after the presence of a
minimarkets near the traditional traders C1 : the condition of the traditional traders where there is no
minimarket nearby for the same period as the treatment group (T1)
C2 : the condition of the traditional traders where there is no minimarket nearby for the same period as the treatment group (T2)
If the impact is significantly different from zero, then supermarket indeed impact traditional markets. In this study, the period of initial data (baseline) set in 2006. The
reasons underlying such determination is the presence of minimarket into
the sub-districts in Malang is on it. In addition, the determination of year is
also to ensure that traders are relatively still have good memories on the
situation at that time.
Draft of Thesis Proposal 29
3.3 Econometric Model
Suryadrma (2007) states that the DiD method is only calculate
differences between control and treatment groups were statistically
significant without controlling for other variables. Therefore, to look at other
conditions, it uses econometric model for the econometric model to control
other conditions that contributed to the results. According to him, the
conditions measured include merchant education level, type of
commodities sold, and the location of the store / kiosk. Furthermore, to
control the circumstances that are not observed, the location as dummies
are also included in some specific variables.
Suryadarma (2007) in his research using two forms of direct
econometric model that directly can be estimated (reduced forms). The
first one uses only the ex-ante (prior to the intervention condition) as
control variables, while others use both ex-ante conditions and the
changes. The model was used by Suryadarma is the model to be used in
this study. General model used is shown in equation 2 and 3.
∆Ci = α + βXi +γSi +εi (2)
∆Ci = α` + β`Xi +θ`∆Xi +γ`Si +εi (3)
where :
∆Ci : is the proportional change in performance indicators of trader i.
The performance indicators that we use are profit, earnings, and
number of employees.
Xi : is the control variable,
∆Xi : is the changes in the control variables, and
Si : is the variable that differentiates the control from the treatment
groups. To test two differentiating indicators: a dummy variable
and the distance to the nearest minimarket.
Draft of Thesis Proposal 30
3.4 In-depth Interview
Qualitative impact evaluation carried out on qualitative data
obtained by using in-depth interviews. In-depth interviews will be
conducted on the stakeholders in the retail sector: traders/ traditional
retailers (owners of shops/ kiosks) which are selected; minimarket
manager; relevant government officials in regional planning agencies,
traditional traders association, district trade office, in the research location
3.5 Sampling Framework
This research will be focus on the sub districts in Malang City with
the highest levels of minimarket density. Traditional traders/ kiosk / shop
that became the object of treatment were selected purposively according
to the following conditions: there are minimarket within a radius of 3
kilometers from the store/ kiosk, mini market begins to operate between
2006 and 2009, or if there are several minimarket, it has operated on that
period; for traditional traders in the control group, the traditional merchant
must be located in the same the district/ area as in the minimarket; store
location is more than 4 km from the minimarket, and traditional merchants
have never renovate his shop since 2006.
Draft of Thesis Proposal 31
REFERENCES