Indonesians call their country “Tanah Air Kita,” which means “Our Land and Water.” The archipelago comprises more than 13,000 islands spread over an area about four times the size of France. Lying halfway around the world, Indonesia is the planet’s hottest and wettest country, with abundant raw materials (natural gas, oil and more) and diverse natural habitats (numerous forests, animal species, flora and so on).

Unfortunately, Indonesia often only makes the international headlines after natural disasters, such as the tsunami that struck in December of 2004. This picture of the country is misleading, however. With 245 million inhabitants, Indonesia is a leading economic power that plays a key role in the Asia-Pacific region and, in particular, within the Association of Southeast Asian Nations (ASEAN).

The country is also a major growth area for the Carrefour Group, alongside China, Russia, India and Brazil. In 2007, Carrefour Indonesia, which is No. 2 in the retail sector and the leader in hypermarkets, experienced strong growth, with sales up 18.8% in the first half-year and double-digit growth in operating results before non-recurring items. During the year as a whole, Indonesia opened nine stores, as it did in 2006, and now has 37 hypermarkets, the latest of which was inaugurated in Cakung (in suburban Jakarta).

 

Population and consumption patterns

Indonesia is a mosaic of peoples, ethnic groups and religions, where Islam, Christianity, Buddhism, Hinduism and native religions exist side by side. It has more Muslims than any other country in the world, with some 200 million believers (87% of the population).

Indonesia is also the most populous country in Southern Asia. Its largest city, Jakarta, has nine million inhabitants, with 12 million in the Jabotabek conurbation as a whole. Nevertheless, most Indonesians live in the countryside. The country is young and growing, with 51% of the population under the age of 25. The middle class accounts for 10-12% of the population, which means 20-25 million consumers.

The Indonesian market was affected by the 1997 Asian financial crisis and, to a lesser extent, the tsunami of December 2004, but it is now experiencing steady growth (+5.1% in 2006). The better-off strata live in eight large cities, including Jakarta and the surrounding area, Bandung, Semarang, Surabaya, Medan, Makasar, Palembang and Denpasar. However, the poverty rate is still high, at 40%.

Distribution

Sales on the Indonesian retail market were estimated by AC Nielsen at 53.7 billion euros in 2005, making it the second-largest market in the Asia-Pacific region, after China. According to the Indonesian retailers’ association, APRINDO, modern retailing now accounts for 35% of the domestic market.

Consumers spend massive amounts buying from open-air markets, street peddlers and small shops, which still represent the bulk of market supply. They spend 60% of their budget on food (compared with 13% in France). Rice is the staple food, and the national dish is nasi goreng.

Large-scale modern retailing really took off at the end of the 1990s, when foreign investment in the country was being liberalized. Every Indonesian city now has at least one supermarket (of 1,000-4,000 sq.m). Local players like Hero (Dairy Farm Group), a supermarket specialist, and Matahari, which runs large retail stores, along with foreign retailers like Carrefour and Delhaize-Le-Lion, are playing a dynamic role in modernizing the local distribution infrastructure.

Carrefour Indonesia

Based on its position as a leader in hypermarkets and on its price image vis-à-vis its rivals, Carrefour has become the pacesetter in modern retailing for Indonesia in the eyes of both its customers and the country’s leaders.
Carrefour Indonesia opened its first store in October 1998 in Jakarta, deep in the midst of the Asian financial crisis. Since then it has grown steadily, partly by developing its own brand ranges, which now account for 6% of sales.
In 2006 and 2007, Carrefour Indonesia stepped up its rate of expansion, opening nine stores each year. As of the end of December, after opening the Cakung store in the suburbs of Jakarta (the last scheduled opening for 2007), there are now 37 hypermarkets, including the first “compact” hypermarket (5,000 sq.m, compared with an average of 8,000 sq.m in the country as a whole). The Taman Palem hypermarket in western Jakarta is also the first store in the country to obtain ISO-9001 certification, a pilot project that guarantees customers exemplary hygiene and cleanliness.
To meet local customer needs, Carrefour Indonesia is expanding its range of services. For five years, it has offered a credit card co-branded in partnership with GE Money, an affiliate of the US company General Electric. More than 530,000 such cards have been issued in the country.
Another innovation in 2007 involved the Carrefour Services Corners: special parts of the store where various services are grouped, such as stands for financial products, the low-cost airline Air Asia and subscriptions to television services, plus counters for mobile phone services, kiosks for developing film, and cash distribution points. This concept has seen particular development in the Lebak Bulus, Pluit Mega Mal, Semarang and Kiara Candong stores, and will be rolled out to 10 other stores by the end of the first quarter of 2008.
To offer its customers maximum choice and promote local produce, 98% of the products offered by Carrefour Indonesia are locally sourced. More than 3,000 Indonesian suppliers, the great majority of them SMEs, work with Carrefour stores to produce Carrefour brand and Low Price product lines. More than 30,000 small farmers also supply the hypermarkets with fruit, vegetables and meat. The first Carrefour Quality Line (CQL) contract has just been signed with PT Tirta Anugrah Abadi, a company that specializes in the production of shrimp.

 

Sustainable development

Carrefour Indonesia has always been supportive of the local population, particularly during the hard times that have struck Indonesia in recent years. Its actions have included providing financial aid and direct emergency assistance following the tsunami in Banda Aceh, the earthquake in Yogyakarta, the flood in Jember and other such natural disasters.

Working in close contact with the population, Carrefour Indonesia is promoting suppliers of Indonesian products, with particular emphasis on its policy of active partnerships with local SMEs (which comprise 78% of the 3,000 listed product suppliers).

Carrefour Indonesia also has a day-to-day presence among the population through its numerous development and solidarity programmes. Since July 2004, it has assisted in the activities of the ISCO to help disadvantaged children in parts of Jakarta, Surabaya and Medan. This project, supported by the Carrefour International Foundation, provides aid to more than 200 children. Carrefour Indonesia is also funding a micro-finance programme with the NGO Bina Swadaya to help set up 1,000 micro-businesses.

The hypermarkets take part in local events (donations in kind, for instance) and in financing improvements to primary schools in neighborhoods near the stores. Overall, Carrefour Indonesia – with the help of the Carrefour International Foundation – spent 650,000 euros in 2006 on such support activities.

With respect to the environment, the company carried out a programme to cut energy consumption in 2006. Within a single year, stores were equipped with a system for automated control of energy output, which led to a 15% reduction in the kWh consumption of the cold chain, cooking and electricity in general.

On a final note, Carrefour contributes to local development through its role in job creation (3,000 jobs created in 2006) and training. Some 70% of all hypermarket managers are Indonesians, and the group provided 98,000 hours of training during the year. Its Executive Trainee Programme (ETP) gives university graduates six months’ special training, and more than 685 students have already completed this course.