RETAIL MODERN - JAKARTA. Large retailers, such as supermarkets and hypermarkets, will likely continue to experience subdued growth in 2019, which will benefit minimarket operators, Fitch Ratings says.
“The shift in customers' preference toward shopping in smaller quantities has heightened competition. The trend has hurt the growth of hypermarkets and supermarkets,” Fitch said in a press release on Wednesday.
PT Matahari Putra Prima (Hypermart) has reported top-line contraction since 2016. Its revenue fell 13.8 percent year-on-year (yoy) in the first nine months of 2018 after declines of 7.1 percent in 2017 and 2 percent in 2016, in line with a reduction in the number of its stores by 19.3 percent yoy in the first nine months of 2018 and 13.4 percent in 2017.
PT Hero Supermarket’s (HERO) revenue declined 6 percent yoy in the first nine months of 2018 and 7 percent in both 2016 and 2017, excluding its non-food retail business.
HERO, like Matahari, has been reducing the number of its food-related outlets by almost half to 189 throughout 2014 until the first half of 2018. HERO also announced earlier this year that it planned to close another 26 of its stores in 2019.
The changing trend has helped the revenue growth of PT Sumber Alfaria Trijaya (Alfamart) reach 8.8 percent and Indomarco Prismatama (Indomaret) 10.2 percent in the first nine months of 2018.
“Consumers' preference for shopping in smaller quantities is unlikely to be reversed in the medium term due to the practicality and proximity of minimarkets to buyers' homes,” Fitch said in the statement.
