1. Adaptability and Capacity
building of traditional traders
presented on
The ASIAN FORUM on RETAIL and WHOLESALE BUSSINESS
8 th January 2008
Richmond Hotel , Nonthaburi
Thailand
By : Haniwar Syarif
Representative of Indonesian Alliance of Consumer
Goods Producers and Traditional Market Traders for
fair trade on Retail Business

2. Background
•
In recent years.. , Indonesian Producers who supplies their products to Hypermarkets especially
to Carrefour, has become aware that they have to give too big discount , which make them lose..
On the other side , traditional market traders can not compete , thus many of them have to close
their store.
•
Forged by the feeling of having the same “big and strong enemy” , and the believe the
problems faced by traditional traders and suppliers must be solved simultaneously
and comprehensively, we formed an alliance .
•
These producers are from food, beverage, cosmetics, garment and electronics
producers, the traders are from traditional market vendors association who have 12
million members throughout Indonesia, from.13.450 traditional markets
•
The first step is to push the government to make a regulation in which, the big
retailer can not abuse their buying power to get unjust trading term. For traditional
market, the regulation should make a clear zoning between every type of retail store ,
so there will be a fair playing field,. Also the government must help the small traders,
by upgrading small traders’s competence and improving the traditional market
facilities.

3. MODERN RETAIL GROWTH AND ITS IMPACT FOR
SMALL TRADER AND SUPPLIER
BIG FOREIGN RTAIL ENTERS
And OPENS NEW BIG DTORE
GRABS THE LOCAL MARKET
SHARE
HAS BUYING POWER ,
SQUEEZES SUPPLIER
TO GET BEST PRICE
GET A BIGGER MARKET
SHARES
MORE LOCAL RETAILERS
CLOSED
HAS STRONG DOMINANT
BUYING POWER POSITION
ASK MORE FEE& DISCOUNT
GETS LARGER MARKET
HAVE MORE BUYING POWER
SQUUEZES SUPPLIERS EVEN MORE
HAVE A DOMINANT SELLING POWER
(OPENS NEW STORE)

4. A. Challenges faced in the competition in
retail and wholesale business
•
•
•
Indonesia actually already has some regulations on retail business. For
instance Government of Jakarta, has a regulation, a hypermarket must at
least have a 2.5 km distance from the nearest Traditional market. But in
fact, not only one, but often more then two hypermarkets operate less then
2.5 km distance from a hypermarket.
Indonesia Commission for Competition ( KPPU) also has made KPPU
decision, KPPU No. 03/KPPU-L-I/2000, which stating indomaret ( a chain
retail store) is forbidden to make an expansion across a tradisional
markets. The management of Indomaret has said that they would obey the
KPPU decision. But in the reality , until today they still open their store
across the traditional market. Even more, in Cibinong and Ciledug , which is
in Greater Area Jakarta, Carrefour last month opened their stores just
across the Traditional market.
On the other side Carrefour ask more fee/discount compare to
hypermarket in Singapore and Malaysia.( sample from cosmetics products)

5. MODERN RETAIL GROWTH AND ITS IMPACT
FOR
SMALL TRADER AND SUPPLIER
• Data shows modern retail grow very fast. More
then 30 percent per year , while some of the
traditional market must be closed.
• If a traditional market is renovated, then the old
trader cannot buy kiosk at new renovated
market, because the price becomes to high.
• It is also often, perhaps once a week , we read
in the newspaper, a traditional market burnt. We
never know the real cause, but usually, after
that, the market is renovated and again, the old
trader can not buy a kiosk in the new market
because the price is unfordable.

6. ITC Mangga Dua
Hypermarket
Traditional merket
i
Radius 2,5 km
Mangga Dua Square
Carrefour
Megamall Pluit
Carrefour
Carrefour
ITC Cempaka Mas
Hypermart
Lindeteves
Carrefour
Duta Merlin
Carrefour
Puri Indah
Hypermart
Kelapa Gading
Carrefour
Season City
Hyperstore
Waduk Melati
Carrefour
Achmad Yani
ITC Kuningan
Carrefour
Alfa
Cikini
Giant Plasa Semanggi
ITC Permata Hijau
Carrefour
Carrefour
MT. Haryono
ITC Cipulir
Pusat Grosir
Cililitan
Alfa Rabat
Kebayoran Lama
Carrefour
Kramat Jati
Alfa Tendean
Giant
Kalibata
Carrefour
Lebakbulus
Giant Points Square
ITC Fatmawati
FAKTA I : MODERN Retail
VS TRADITIONAL

7. Total Fee/Discount on Hypermarket at
INDONESIA, MALAYSIA, SINGAPURA
(for Cosmetics)
Carrefou
r
Indonesia
Malaysia
Singapura
Giant
43,75 %
32%
Tesco
NTVC
42,25 %
30 %
Dairy
Farm
30 %
35 %
35 %

8. Traditional Market in Urban Centers
in Indonesia
• Most traditional markets are owned by city
governments.
• City governments in Indonesia usually have an Office of
Market Management (OMM), which manages
traditional markets. This office either entirely manages
the markets on its own or cooperates with private
companies. It is the norm of the OMM to set an annual
income target for every market manager. The target
usually increases year after year. Inability to meet the
target usually results in the market manager being
replaced.

9. Total moderrn retail in Idnonesia
Retail Type
Convenience store
2003
2004
200
5*
102
154
Modern Retail growth
2003-2006
131
896
956
961
4,038
5,604
6,27
2
Hypermarket
43
68
24
22
23
5,103
6,804
33,3%
2,351,535
3%
8,868
22 %
2,342,667
3%
7,47
0
146
%
% GROWTH
VS 2005
83
Wholesalers
2006
Supermarket
Minimarket
TOTAL
increase
vs th 2003
TOTAL
MODERN RETAILS
TRADITIONAL
RETAILS*
)* The amount of traditional retailer is not
included 12.650.00 trader on 13.450
traditional markets
Source : AC Nielsen,
* sampai dengan per Okt 2005
Total modern retail
store year 2001
3,865
3,865
Increase (%) from
yr 2001
132%
176%
3,865
193%

10. Modern Retail growth and it’s impact to traditional retail

11. Modern Retail growth and it’s impact to traditional retail
Total
Modern retail vs Traditional retail in Jakarta
449
500
80.00%
400
249
300
200
100
100.00%
156
159
78.79%
74.83%
61.03%
60.00%
151
42
40.00%
38.97%
25.17%
21.21%
20.00%
0.00%
0
1985
1995
TRADISIONAL
2004
MODERN
1985
1995
TRADISIONAL
2004
MODERN

12. FACT : Many traditional market
burnt on fire






Friday, June 29 2007, Kupang – : East Indonesia : not less than 100 kiosks at Oeba tradisional
market, burnt on fire
Sunday, July 1 2007, Kediri : East Java : at least 250 kiosks burnt on fire
Sunday, July 1 2007, Pacitan: Java, : fire at market tegalombo, pacitan happened. five kiosks in
this market was burned.
Wednesday,July 4 2007, Bogor: West Java: as much as 370 kiosks and store at market cigudeg,
regency bogor, quite finished on fire
Thursday, July 5 2007, Pekanbaru ;. Sumatra; Aarengka Market, pekanbaru, riau, on fire. at least
600 stores and burnt kiosk on fire
Wednesday, July 11 2007, Maros ; Sulawesi at least 638 trader lose their place to trades follow
a fire that destroy central market maros. as much as 626 kiosks, 12 store houses burnt
28 Juli 2007, Cianjur,west java at least 1.600 property kiosk tradesmans at market cipanas cianjurBurnt.
30 Juli 2007, Bekasi, west java 16 new market kiosks jatiwarna burnt on fire.
5 Agustus 2007, Barito Tengah,. , Kalimantan, Buntok market on fire. as much as 500 kiosks was
engulfed on fire "
7 Agustus 2007,. , Lampung, Sumatra , gayabaru Market onfire , 58 kiosk burnt . Estimated loss is at
400 million rupiah (approximetly $40.000).
8 Agustus 2007, Balikpapan. , Kalimantan. Balikpapan Traditional Market on fire and about 20 kiosk
burnt l
9 Agustus 2007, Semarang:, Central Java : great fire happens at Bandarharjo Traditional Market , ,
fire burnt almost 1.500 kiosk. ;the loss is estimated millions of rupiah.

13. B. The benefit of regulation in retail busines
•
•
•
•
•
•
The alliance believe a good and workable regulation for retail business is a must.
By bench marking regulation from other countries like from Japan Fair trade
Commission, . Dutreil and Galland law from France, and regulation from other country
like UK with their Code of Supermarket Practice, the alliance tries to give the
regulator (government ) a draft which include not only about how to make sure that
equal playing field between small trader and bigger retailer could be created, but also
a regulation about prohibiting the big retailer to ask fee which has no direct relation
with increasing the supplier sale.
W e also feel the need to have an independent regulator established to monitor the
relationships between big retailer and their suppliers, ensuring that big retailers do
not abuse their dominant position. It should have the power to investigate complaints,
and to impose sanctions on supermarkets that violate its standards
In empowering traditional market, the local government must have a clear
political will to help small traders in their area.
We are very happy , on December 2007 , the Presidential Decree for
regulating traditional market and modern store was signed .
Below we will see some important article on this decree , which we believe if
it could be carried out well , then the traditional market and suppliers can
have a chance to still exist and even have a good growth.

14. Zoning - base on Presidential Decree
about Traditional Market and Modern Store
arrangement
•
•
•
•
•
Wholesalers must be on artery road networks or primary collector
roads or secondary artery
Hypermarkets must be located on artery road networks or primary
collector roads and are prohibited to domicile on local road
networks and environment in local service areas or inner-city
neighborhoods (housing)
Supermarkets must at least be on local road networks and
prohibited to domicile on environment in local service areas or
inner-city neighborhoods (housing).
Mini markets may be allowed to domicile on environment in local
service areas or inner-city neighborhoods (housing), and
ownership eligibility must be on local small entrepreneurs.
Traditional markets could be on environment in local service
areas or inner-city neighborhoods (housing).

15. Other article on Presidential decree about
traditional market and modern
•
•
•
Management of minimarket chains must have top
priority to be distributor for small traditional store
using their network as distribution points for local small
store nearby.
Hypermarket and supermarket office hours should be
as follows , Monday until Sunday open 12 hours
starts at 10.00 until 22.00 local time
New shopping centre and modern store opening must
calculate society social economic condition,
traditional market existence, small and medium
vendors who exist in the surrounding area, and pay
attention about distance between hypermarket with
traditional market that already exist in the same area.

16. In order to Develop a Good Traditional Market ,
Regional Authority (local government is obliged to:
•
•
•
•
Find alternative financing source for
traditional market empowerment;
Increase the competence of traditional
trader and traditional market manager
To give the first priority to get a kiosk in
renovated traditional market to the
traditional trader who already have a
kiosk before the renovation
Evaluate traditional market management;

17. C. The development and adaptation of small
traditional store to compete with large scale
retailer
We think the small traditional store can exist and adapt if :
a.
b.
c.
d.
e.
f.
g.
Government makes a regulation about location for each type of store
( zoning) , where the equal playing field and fair trade is guaranteed
The management of traditional market is improved
The knowledge about retailing from the small trader improved by
conducting a competence based training.
Build awareness of every citizen to have more attention to small traders
and preference to buy from a local retailer.
It also a must make a regulation where the big retailer can not abuse their
dominant buying power to ask a very big discount from supplier, because
this will make the small trader in a very weak position.
In case of Indonesia , though already have a Presidential Decree, it still
have many question on how the implementation will be, since many
points on the article can be debatable
Some articles in Indonesian Presidential Decree about trading term
between supplier and big retailer are :

18. Some article in Presidential decree about
trading term
• Trading terms must be clear, just , fair , give a mutual
benefit and sign without any pressure,
• The above point consisited only of : Regular
discount,fixed rebate,conditional rebate,Promotion
discount,Promotion Budget,Distibution Cost, Listing Fee
• Costs that can be imposed is only those corresponding
with supplier’s product sale.
• Promotion cost and Listing fee should be set and used
transparently
• Suppliers can be fined if they failed to fulfill either
quantity or delivery time, Modern store can be fined if
they failed to pay to supplier timely.

19. D. How to survive in high
competition market.
• Alliance believes that we can not survive if the small
company must compete with much bigger company
without good regulation to make sure a fair trade is
practiced, where the dominant market position and
dominant buyer position is not abused,
• Besides the regulation of course ,we need also the law
enforcement.,
• The small traditional market traders need to be trained
to get a higher competence on retail business and how
to treat perishable goods.
• Since abuse of dominant buying power by squeezing
producer is one of the important problem , to solve it
then we need to:

20. •
•
•
•
•
•
•
Establish an independent supermarkets regulator that:
monitors relationships between big retailers and suppliers along the
whole food chain including overseas based suppliers
enforces new rules to ensure fair competition between big retailers
and their suppliers
finds remedies for any breaches that are discovered, and has the
power to enforce its rulings
addresses issues as they arise, and has the power to review the
rules on a regular basis to account for changes in buying practices
operates a strictly confidential complaints procedure for suppliers
operates a legally enforceable dispute procedure.

21. •
In case like in Indonesia , with regional autonomy , then we must
make sure every regional authority understand the regulation , and
have a political will to support the weak such as traditional market
trader
•
They are also responsible to carry out the rules as stated in the
presidential decree ,namely : find alternative financing source for
traditional market empowerment; increase the competence of
traditional trader and traditional market manager, to give the first
priority to get a kiosk in a renovated traditional market to the
traditional trader who already have a kiosk before the renovation