Grocery wars await amid Indonesian retail woes

LARGER grocery stores in Indonesia face an uphill slog to regain profits in 2020, while minimarts will find it harder to expand, according to a new report.

Despite year-end festivities and expectations of higher food consumption, analysts at Fitch Ratings do not peg Indonesian supermarket and hypermarket revenue and earnings to pick up in 2019, after revenue shrank quarter on quarter in the July-to-September period.

Besides a seasonal sales dip, in the wake of a high base in the first six months, these large-scale retailers have also been hit by cuts to store count, and will still have to work on improving operational efficiency into 2020, said the analysts' report.

Hero Supermarket's Hero and Giant, Matahari Putra Prima's Foodmart and Hypermart, and Supra Boga Lestari's Farmers Market and Ranch Market were named as brands that have been challenged in the face of "increasing customer preference for mini-markets".

Meanwhile, the Fitch Ratings analysts believe that minimart chains Alfamart, run by Sumber Alfaria Trijaya, and Indomart, operated by Indomarco Prismatama, stand to benefit, alongside grocery retailers that target middle- to high-income customer segments.