The closing down of Transmart’s 12 outlets has affirmed the tight competition among retailers and the shifting of consumers behavior. Transmart is not the first player in the retail industry that had to close down its outlets. Giant, a hypermarket chain originated from Malaysia, permanently closed down its business in 2021.
Economist at the Center of Economic and Law Studies (Celios) Bhima Yudhistira said the public currently have a variety of shopping options. They can shop at modern retail stores in their neighborhood to online shopping where goods are delivered directly to their houses.
“This convenience and efficiency make people less interested to go shopping at hypermarkets,” he said, as quoted by kontan.co.id on February 2, 2023. “With more choices, the more competitive and fiercer the competition.”
The digitalization in banking and financing sector has helped consumers at ease to shop online. Meanwhile, retail industry has yet to rebound from the impact of the COVID-19 pandemic. Those two factors contributed to the closure of retailers.
Fierce competition from online shopping
Despite closing down its 12 outlets, Transmart, which is owned by conglomerate Chairul Tanjung, still operates its remaining 83 stores across Indonesia. Additionally, the company reduced the number of employees to help it survive.
According to Transmart Carrefour Vice President of Corporate Communication Satria Hamid, it was the impact of the pandemic. The outlet closing was common in the retail industry, which also affected most hotels and restaurants nationwide, he added.
“Since 2020, people have become more comfortable by shopping online. This is also our challenge to attract people to visit our outlets again,” Hamid said as quoted by Kontan on February 5, 2023. The company has provided an online shopping option for its consumers through transmartdelivery.com.
Transmart Carreour was one of the largest retail outlets in Indonesia with dozens of branches and thousands of workers. In 2010, PT Trans Retail Indonesia acquired 40% shares of PT Carrefour Indonesia worth US$ 300 million. The remaining shares were owned by Carrefour SA at 39%, Carrefour Nederland BV at 9.5% and Onesia BC at 11.5%.
In 2013, CT Corp took over the whole shares of Carrefour Indonesia, making it the sole shareholder. The acquisition of the remaining 60% shares cost US$ 750 million. The company then rebranded into Transmart and in 2018, it gradually expanded and had a total of 95 outlets.
Giant’s permanent closure
Before Transmart, Giant Indonesia, which is owned by PT Hero Supermarket Tbk, already suffered from the tough competition among retailers and closed down all 75 outlets by July 2021.
Hero took a drastic change by focusing more on the expansion of Swedish furniture brand IKEA.
“The company is also considering converting a number of Giant outlets into Hero Supermarket outlets,” said Director Hardianus Wahyu Trikusumo on May 25, 2023.
He said this was the company’s response to the dynamics of market changes to adapt and switch consumers behavior from hypermarkets to supermarkets or minimarkets. The business closure prompted the company to lay off its 15,000 employees.
“All Giant employees were affected by this decision. We are still considering the number of outlets that will be converted into IKEA or Hero Supermarket outlets,” Diky Risbianto, Hero Head of Corporate and Consumer Affairs, told CNBC Indonesia on May 26, 2021.
Other retailers face similar fate
Apart from Transmart and Giant, there are other retailers who were forced to close down some or all their outlets.
- PT Matahari Department Store Tbk
The country’s largest retail company closed down 25 of its 148 outlets, which are spread in 79 cities. Matahari has tried to cope with the shift in the consumers’ shopping patterns by allowing them to shop online through Matahari.com channel.
- PT Tozy Sentosa
The company, which ran Centro Department Store, was declared bankrupt by the Central Jakarta District Court on May 17, 2021. However, Centro still operates its 12 outlets in the Greater Jakarta, West Java, Central Java, East Java, Yogyakarta, Bali and North Sulawesi. The company also goes online at semua.sale to fulfill its consumers’ needs.
- PT Golden Anugerah Sejahtera and PT Golden Prima Retailindo
Golden Truly department store was once a hype place for Jakartans in the 1980s and 1990s. However, lack of shoppers forced the company to close down its business in December 2020. The management decided to shift into marketplaces of Shopee and Tokopedia to meet their consumers’ demands.