Super Indo supermarket is growing its business during the pandemic.
By Robert Yota
The spread of the COVID-19 has negatively affected many industries. Bank Indonesia's (BI) latest Retail Sales Survey reports that the Real Sales Index (RSI), which measures retail sales growth, has been declining in the first two months of 2020. On year on year basis, RSI contracted 0.3% and 0.8% in February. The survey also predicts sales in March to contract further, estimating an annual drop of 5.4%. The government confirmed the first positive COVID-19 case in March. This trend is likely to continue as the government imposes stricter measures on social distancing, forcing malls and restaurants to close down or limit services.
Although malls are closing, the supermarket is among few businesses allowed to open and have the opportunity to profit from the situation. Among the players who gain from the windfall is PT Lion Super Indo. The company, which operates Super Indo and Super Indo Express supermarkets, currently manages 179 stores in Java and Sumatra (Palembang and Lampung) and already reported a pick up in sales figures.
"There was a drastic increase in sales in the first week of March when the panic buying occurred, just after the government announcement of the first positive COVID-19 cases in the country. However, we still see an increase in sales although the peak was the first week of March," said Super Indo chief executive officer Johan Boeijenga.
Compared to other supermarket chains in the country, Super Indo is known to be strong in the fresh produce segment like meat, fish, frozen food, vegetables, and fruits. The supermarket offers a more complete product variety in the segment compared to its competitors, and it is also the main revenue generator. The market differentiation strategy also seems to keep the company afloat and even growing in the era where the supermarket business is tumbling as customers began to shift their shopping online. The company's competitor PT Hero Supermarket, for example, has been closing down dozens of its outlets in the past couple of years after booking consecutive losses. Meanwhile, according to its parent company Ahold-Delhaize annual report, Super Indo recorded net sales of 486 million Euros (Rp 8.1 trillion) in 2019, which is an increase from 410 million Euros (Rp 6.8 trillion) in 2018. Furthermore, Super Indo earned a 50% jump in net income of 15 million Euros (Rp 251 billion) in 2019 from 10 million Euros (Rp 167 billion) in 2018. Super Indo is a joint venture between Dutch-Belgian retail holding company Ahold-Delhaize and Salim Group, with Delhaize owning a 51% stake of Super Indo and Salim Group owning the remaining 49%.
Super Indo has two large distribution centers in Cikarang and Mojokerto. Fresh and dry products from farmers are kept in storage before being sent to the branches. So far, despite the increasing demand, Super Indo still able to manage its inventory supplies and maintains prices. However, Johan admits, due to the depreciation of the rupiah against the US dollar, the price tag of imported products is hiking.
"In my opinion, COVID-19 has reminded us to focus more on our local suppliers," Johan says.
Johan notes that there is a shifting behavior of customers lately. Usually, the stores peaked on the weekend, but now customers coming to the outlets are spread throughout the weekdays. In the stores, safety measures are already implemented to reduce infection. Both customers and employees are required to be scanned with a temperature scanner upon entry and wear facemasks. Sinks are provided in front of stores for people to wash their hands before entering. In addition, hand sanitizers are available inside the store, and there are plastic dividers at the cashier.
"We also limit the number of customers inside the store at any given time. We also don't allow our employees with high body temperature to come to work until they have recovered completely," Johan says.
Home delivery service and pick up service are also available. Currently, Super Indo partners with third-party delivery services and customers could order groceries by Whatsapp and pick it up the next day. With the growing numbers of deliveries, Johan says, Super Indo is considering having their own delivery service. The company has plans to allocate more budgets on its capital expenditure in developing its online system as well as improving its current omni-channel services.
This year, despite the pandemic, Super Indo is targeting to open at least the same number of stores or more than the previous year. The expansion strategy is aimed at secondary cities in Java and Sumatra, like Kudus and Pekalongan. In April, the company has opened two new stores in Tangerang.
"We primarily target the vast middle-class market as we always strive to make our products affordable and reachable to as many people as possible. Since profit margins are shallow in the supermarket industry, we need to focus more on higher volume and higher density. Since half of Indonesia's population is in Java, we still want to focus on expanding on the island," Johan says.