Retail Giant Makes Its Mark in Indonesia

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“Let’s just go to Carrefour, OK…” It is not just the persuasive nature of this advertisement that has made people flock to Carrefour, the French retail giant now operating 41 outlets in Indonesia’s major cities. Indeed, Carrefour is now the main destination for city residents when they go shopping.   

It is true that Carrefour Indonesia once received a lot of criticism and complaints from various parties, because the outlets are located in the downtown area, whereas in fact they are hypermarkets in format. This superstore is also accused of treating its suppliers arbitrarily by keeping prices down and collecting various burdensome fees.

In fact, this is just one of its strategies that enables it to sell at low prices while at the same time guaranteeing the quality of the products.   

According to Irawan D. Kadarman, corporate affairs director of PT Carrefour Indonesia, the hypermarket focuses on three main pillars it believes has made Carrefour the preferred shopping place for Indonesian consumers. “These three main pillars are competitive prices, a complete choice of goods and satisfactory services,” he noted.   

Carrefour first opened an outlet in Indonesia in October 1998 in Cempaka Putih. At the same time, Continent, also a hypermarket from France, opened its first outlet in Pasar Festival. In late 1999, Carrefour and Promodes (the parent company of Continent) agreed to merge their businesses all over the world. This merger led to the establishment of the world’s second largest retail business group under the name Carrefour.   

In Indonesia, Carrefour may be said to be one of the engines of the modern retail industry that pioneers the concept of shopping as part of entertainment and lifestyle. In Indonesia, this company is the stimulus for the rapid growth of the hypermarket business in the past decade.

According to the records of the Indonesian Association of Retail Companies (Aprindo), Carrefour’s sales account for 11.7 per cent of the total sales of some 7,000 members of Aprindo. Within 10 years, the company has recorded more than Rp 10 trillion in total sales. It is an extraordinary achievement indeed.   

With 41 hypermarket outlets plus 29 Alfa supermarkets, which have just been acquired, Carrefour has become a powerful distribution force. The area for product display is spacious – an outlet in Medan even measures 9,800 square meters in area — so it can accommodate a great number of shoppers. Products offered have become ever more varied. Carrefour sells no fewer than 40,000 product items.

“We have some 3,700 suppliers and 70 percent of them are small and medium enterprises with annual sales of less than Rp 500 million,” said Irawan D. Kadarman.   

Carrefour is indeed very serious in developing it supplier network. The retailer has even given an award to its best supplier. There are five categories of suppliers to Carrefour: wholesalers (foodstuffs and instant foods), fresh produce (vegetables, fruit, meat, chicken, fish and so forth), bazaar (household equipment, children toys, brooms and so forth); appliances (electronics) and textiles.   

Irawan dismisses the idea that Carrefour only cares about large suppliers and ignores small and medium enterprises. He asserts that Carrefour in fact wants to team up with small and medium enterprises. Even in the case of brand names that are not known, Carrefour offers a store brand or a private label. “In this way they can compete with established brand names,” he said.   

House brands can be found in the five divisions — electronics, fresh produce, wholesale, textiles and bazaar, each of which comprise several product items. The brand names used as the house brands are Carrefour Brand, Harmony and Blue Sky (specially for electronic products).   

Irawan, who earned his BSc in 1990 from Eastern Kentucky University, Richmond, KY, United States and his MEngSc from the University of New South Wales, Sydney, Australia in 1992, said that Carrefour had been making rapid progress thanks to the three strategic pillars. In practice, however, things are not as simple as a wave of the hand, he said.    Although business now operates on a huge scale, it seems that Carrefour, which now employs some 11,000 people, shows no signs of slowing down and continues expansion at an aggressive pace.

In 2007, for example, Carrefour entered a number of cities in Greater Jakarta, namely Bogor, Depok, Tangerang and Bekasi and opened outlets in Denpasar, Semarang, Bandung and Surabaya. It also introduced a new outlet concept, namely a Compact Store, as seen in Jakarta’s Cibinong and Cakung outlets. “We must make a lot of breakthroughs so as to be able to get close to our consumers,” Irawan said.   

Irawan said he was proud to work for the French retail giant, although personally he has no ambitions about his career. “I have just done my best,” said Irawan, who joined Carrefour in September 2005, after earlier working in the same position in PT Philip Morris Indonesia. (Burhan Abe)  

The Jakarta Post, July 09, 2008    

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