JAKARTA (TheInsiderStories)—The publicly listed retailers saw a slow growth due to low purchasing power in the first quarter of 2018.
Based on data from the Central Bureau of Statistics, the growth of public consumption, the backbone of Indonesia’s economy, was recorded only at 4.95 per cent in the first quarter of 2018, which was almost stagnant if compared to consumption rate in the first quarter last year at 4.94 percent.
The slow growth of consumption reflects on the financial performance of five benchmark retailers namely PT Matahari Department Store Tbk (IDX: LPPF), PT Sumber Alfaria Trijaya Tbk (IDX: AMRT), PT Ace Hardware Indonesia Tbk (ACES), PT Mitra Adiperkasa Tbk (IDX: MAPI), and PT Ramayana Lestari Sentosa Tbk (IDX: RALS).
Only two companies that recorded impressive revenue growth of more than 10 per cent, namely Mitra Adiperkasa and PT Ace Hardware Indonesia Tbk (IDX: ACES). MAPI recorded a strong performance in the first quarter (Q1) of 2018 with its revenue growing by 19 percent to Rp4.3 trillion (US$307.14 million) from Rp3.6 trillion in the first quarter last year. The company booked 506 per cent rise in net income to Rp358 billion from Rp59 billion in the Q1 of 2017.
Home appliances retailer Ace Hardware was also still able to raise its revenue by 21.7 per cent in the first quarter of 2018 to Rp1.57 trillion from Rp1.29 trillion in the first quarter last year. In addition, the company booked Rp208.89 billion in net income, a 35.54 percent rise compared to the first quarter of 2017.
However, the three companies recorded weak financial performance under 10 percent in the Q1 of 2018. The Ramayana recorded minus growth of 1.86 per cent to Rp1.05 trillion in the Q1 2018 from Rp1.07 trillion during the Q1 of 2017. However, the company still recorded 410.86 percent growth in net income to Rp14.67 billion in the Q1 2018 from Rp2.87 billion in the Q1 2017.
Furthermore, Matahari booked the lowest revenue growth of 5.94 percent to Rp1.96 trillion from Rp1.85 trillion in the Q1 2017. As a result, the company’s net profit rose only 1.04 percent to Rp246.73 billion in the Q1 2018 from Rp244.17 billion in the Q1 2017.
Sumber Alfaria recorded 6.61 percent in revenue in the Q1 2018 to Rp14.67 trillion from Rp13.76 trillion in the Q1 2017. Fortunately, the company was able to increase its net profit by 64.66 percent to Rp120.77 billion in theQ1 2018 from Rp73.3 billion in the Q1 2017.
The weak purchasing power also drove retailers to close outlets throughout 2017. Ramayana had closed 16 outlets last year to decrease production cost. MAPI also closed a number of outlets under Debenhams and Lotus brands due to the sales slowdown.
In our view the retail players must followed the rapidly growing trade trends through online trading to improve their financial performance in the future. Based on Indonesian E-Commerce Association data, growing GDP per capita figures, coupled with rising internet penetration and smartphone usage, give online shopping significant growth potential.
The retailers should change their mindset, the way of work, change the organizational model, increase the productivity, take an innovation to survive.