Discount War Begins

Wandrik Panca Adiguna | 20 Desember 2010 01:55 WIB

JAKARTA: Giant retailers are involved in discount war to bolster sales turnovers approaching Christmas and New Year 2011.

Those retailers, among others, are Hero, Giant, Carrefour, Debenhams, Sogo, and Seibu. Outlets at malls and shopping centers-those inside and outside the buildings-like Pondok Indah Mal, Gandaria City, Senayan City, Plaza Senayan, Plaza FX, Grand Indonesia, and Plaza Indonesia are not only decorated with Christmas and New Year ornaments, but also offer discounts. Ramayana since December 3, 2010 has been offering the largest Christmas and New Year discount of 50% + 20% since many shoppers, especially Christian ones, will spend money on products approaching the big holidays. Moreover, Ramayana from December 17, 2010 has been offering a discount of 50% + 20% for one million branded shoes. Since October 29, 2010, the retailer has been offering a similar discount of 50% + 20% for 1001 men suits and other apparels. Last, On December 19, 2010 the retailer organized the Music Parade program. "It is true that retailers have implemented various strategies to attract as many consumers as possible, such as from offering direct prices to price discounts," told Secretary General of the Indonesian Retailers Association (Aprindo) Rudy Sumampouw to Bisnis in Jakarta yesterday. Rudy said Christmas and New Year were the second largest round of harvest season after Idul Fitri. "Christmas and New Year will bolster sales turnover by at least 25%. In addition, this [the discount program] will offset low sales in the past several months." Rudy guaranteed the hard works of retailers to bolster sales turnover by at least 25% would be made legally. Chairperson of the Indonesian Modern Retail Market Suppliers Association (AP3MI) Susanto revealed ahead of Christmas and New Year food and apparel prices had been relatively steady, save for some certain food and beverage (F & B) products, but they were also attributable to weather-interrupted production. "For example, rice prices increase 10%, leading to higher value despite steady volume." Demands for biscuit, candy, and cookie surged the highest. "However, the increases are not significant. I think the surging demands were more attributable to spending on disaster aids instead of on holiday celebration. Business is not too good at the moment. However, the business looks promising today due to spending on disaster aids, which can reach billions," explained Susanto. Steady prices Sugiyanto Wibawa, the Director of PT Hero Supermarket Tbk, disclosed prices tended to be steady despite surging demands. "Retailers don't increase prices since their suppliers also do the same." He said transactions had started increasing since last week, albeit not too significant. According to him, products that found their demands surging were usually F & B products like soft drink, fruit, snack, and biscuit. In the meantime, non-F & B products that usually found their demands increasing were ribbon, Christmas tree, and Christmas decoration. Satria Hamid Ahmadi, the Public Affairs Senior Manager of PT Carrefour Indonesia, confirmed price movement was still normal. However, he reminded, fresh product prices had been increasing due to weather problems. "It is impossible for retailers and suppliers to raise their prices arbitrarily since they are bound with contracts. Even regarding chili, the price of which has been surging in the traditional markets, we still try to maintain the prices at normal level." Satria added transaction ahead of Christmas and New Year usually soared one week prior to Christmas, with grocery products being the most hard-moving products. Furthermore, the visitation rate could jump 20%. In the meantme, at modern apparel shopping centers, like department stores, prices tended to be steady, with sales transaction surging quite significantly. "We usually experience harvest at the yearend. If other places experience harvest during Idul Fitri, high-end department stores instead would find their sales surging most significantly approaching Christmas and New Year," told Fetty Kwartati, Corporate Secretary of Mitra Adiperkasa (MAP), a company owning the licenses of high-end department stores like Sogo, Debenhams, and Seibu.According to her, several MAP-owned department stores were still offering normal prices with additional discounts during Christmas and New Year holidays. If the promotional period was over, the prices would be back to normal. Weather factor In the meantime, Director General of Domestic Trade at the Ministry of Trade Subagyo exposed several staple products now found their prices surging high due to weather. The high rain precipitation rate had affected harvest seasons, thus, lowering supplies and bolstering prices He pointed out that rice, sugar, and red chili prices surged by 30%. Meanwhile, staple product prices were estimated to jump by more than 15% on surging demands approaching Christmas and New Year. According to Subagyo, similar to the previous trend, demands approaching Christmas and New Year would increase 15%-20%, lower than a 50% hike during Idul Fitri. "Under such circumstances, prices may increase, but not significant. However, we have to anticipate the matter of distribution. We don't want distribution problems to further boost prices," said Subagyo. He added staple product prices increased variably. Rice prices, for example, had started increasing and had not declined even after Idul Fitri. "Combined with the absence of harvest, rice prices are steady, but at high level. As to sugar, the delayed milling season was predicted to lead to sugar deficit, thus, bolstering sugar prices." Subagyo continued the weather would not yet recover until May next year. "Amid the condition, combined with the surging demand, we have to be careful with the stock. If distribution is interrupted, prices will be uncontrollable." He asserted the Directorate General would coordinate with the relevant sub-agencies to confirm the distribution line from producers to end consumers would not be interrupted. According to him, the government would also launch several safeguard measures, such as rice market operation by the State Logistics Agency Bulog to reduce domestic rice prices. (may/na/13/wiw)

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