Alfamart Owned By Conglomerate Djoko Susanto Still Confident To Add 1,000 More Outlets This Year, Capital Expenditure Prepared Up To IDR 3.5 Trillion

JAKARTA - The manager of the Alfamart retail network belonging to conglomerate Djoko Susanto, PT Sumber Alfaria Trijaya Tbk (AMRT) is optimistic that the target of adding 1,000 new outlets by 2022 can be achieved. This was announced by the company in the midst of the risk of rising inflation and declining purchasing power.

AMRT Director and Corporate Secretary Tomin Widian explained, until the first quarter of 2022, the addition of outlets has reached around 300 units. The realization of capital expenditures in the first three months of this year reached IDR 800 billion from an allocation of IDR 3.4 trillion to IDR 3.5 trillion.

"The expansion went as expected. During the Festive season in April and May, store growth was not as intense as in the previous months, but after that, it returned to its original speed. Until the end of March, 300 new outlets had been opened," Tomin said in a written statement, quoted Monday 11 July.

The Sumber Alfaria Trijaya outlets and subsidiaries throughout 2021 grew by around 7.27 percent or an increase of 1,275 outlets compared to 2020. The addition of these new outlets brings the total outlets to 18,810 units, consisting of 16,492 outlets owned by AMRT and 2,318 outlets owned by subsidiaries.

Fitch Ratings in its research estimates that AMRT's performance will improve in 2022, along with more outlets and less competition in the larger retail segment. The accumulated number of AMRT outlets and PT Indomarco Prismatama as the manager of the Indomaret retail network is estimated to reach 40,000 units by 2022.

Both are managers of the largest retail network in Indonesia. AMRT's first quarter 2022 average daily sales per store (SSSG) exceeded pre-pandemic levels in the same period in 2019 and 2020, as competition eased due to the closure of Giant hypermarkets and supermarkets and recovery in public spending.

Normalization of retail operations and shopping centers will benefit minimarket management companies, but supermarket and hypermarket managers will not enjoy the same benefits even though inflation is rising.

Alfamart's average daily sales per store rose to IDR 13.3 million in the first quarter of 2022 with more than 19,000 consolidated stores in operation. In the first quarter of 2020 and the first quarter of 2021, the average daily sales per Alfamart store were only IDR 13 million and IDR 12 million, respectively.

In contrast, PT Hero Supermarket Tbk (HERO) closed its Giant hypermarket operations in 2021 due to low sales. The closure of Giant prompted small format retailers such as Alfamart and its biggest minimarket competitor, PT Indomarco Prismatama (Indomaret), to accelerate store openings even during the pandemic.

"We expect the number of outlets to exceed 40,000 units for Alfamart and Indomaret by the end of 2022, from around 38,000 in 2021 supported by the addition of more than 1,000 stores by each company in 2022," said Fitch Ratings.