There are three main players in the world of trade in goods, the upstream sector (producers), the intermediate sector (distributors) and the downstream sector (retail). According to Roy Nicholas Mandey as Chairman of the Indonesian Retail Entrepreneurs Association (Aprindo), the function of modern retail is very strategic, not only being the spearhead of sales to consumers, but also being able to maintain the availability of goods, absorb labor, maintain inflation fluctuations, and maintain state fiscal resources. Unfortunately, despite playing an important role, modern retail has not yet entered the priority sector.
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He hopes that modern retail can enter priority sectors such as; food security, health, energy, telecommunications, and tourism. These sectors received attention amid the post-pandemic economic recovery that needed to be rescued. Retail should also be saved like any other priority sector.
According to Roy, there are two categories of members who are currently running a retail business. The first is a pure entrepreneur who runs a retail business without any other business. The second one has a business other than retail, such as property, banking, and other sectors. For the first the durability is relatively weak compared to the second. "The problem is that for the second one, cross subsidies can be done with other business fields in a group company," said the man who is an alumni of Jayabaya University.
The various strategic roles that exist in modern retail make Roy feel the need to convey that the modern retail sector also needs to be prioritized. “One of the main points of modern retail is its role as a guard when prices go up or down. Modern retail can keep inflation fluctuations at bay. The traditional market or the people's market cannot be controlled," he said. It is because of this important thing that modern retail needs to be supported in order to survive and be able to carry out that role.
Moreover, Aprindo, which was founded in 1994, has 150 members of local retail companies and national networks. From Sabang to Merauke there are 45,000 outlets. In addition to the management of the Central Executive Board (DPP), there are 32 DPD (Regional Leadership Council) and 97 DPC (Branch Leadership Council) throughout Indonesia.
According to Roy Nicholas Mandey, the fate of retail entrepreneurs in Indonesia is no different from those in other countries in the face of the COVID-19 pandemic. "Everyone faces the same problem, the pandemic has reduced people's visits to modern retail, the public has also limited the number of goods purchased and the amount of their budget. This clearly affects the growth performance of the modern retail business. We all pray that the pandemic will slow down and the situation will get better, so that the economy can recover," he told Edy Suherli, Savic Rabos, and Rifai from VOI who met him in the Cempaka Putih area, Central Jakarta, recently. Here is an excerpt of the interview.
The importance of retail in the distribution chain from producer to consumer?
As we know in the business world there is what is called the upstream sector, namely producers/manufacturing, then there is what is called the intermediate sector which brings goods produced from producers. And the last is the downstream sector which trades goods. So if in the trading world there are 3 players; upstream sector, intermediate sector and downstream sector. Talking about modern retail means that we are talking about the downstream sector, a sector where transactions are carried out between consumers/communities in buying basic daily needs.
What does it mean, how strategic the downstream sector is in our economic growth. Our Gross Domestic Product (GDP) in 2020 is 57.6 percent. It dominates the GDP formula is household consumption plus government consumption, plus investment, plus exports and minus imports. Of the many factors that make up our GDP, the most dominant in 2020 is the growth of the household consumption industry, which is 57.6 percent. Why is it so big? Now the population of our society is large, 274 million. This means that every day he needs to eat and drink for the daily needs of his life.
Second, the modern retail sector absorbs a lot of labor. Currently, nearly 2.5 million employees, both permanent and contract employees, work in modern retail stores. Retail is in the top 5 absorbers of labor in Indonesia after; agriculture, plantation, forestry, energy and retail.
Then the third retail is a place for the availability of goods and price stability. Modern retail, which is driven by corporations, is more able to regulate the availability of goods with its network. This may not necessarily be provided by traditional markets or people's markets. Based on Law Number 7 of 2014 concerning trade, there are indeed two types of markets, modern markets and traditional markets.
So modern retail can maintain price stability?
The role of modern retail is to be a guard when prices go up or down. Modern retail can keep inflation fluctuations at bay. If the traditional market or the people's market can not be controlled. According to a survey by AC Nielsen, there are nearly 3.7 million traditional markets, while in modern retail there are around 45,000 shops from Aceh to Jayapura. So prices are definitely more stable in us, because modern retail has networks and systems. Then the second order or our order also goes through a standard system. And thirdly, we have management for the management or operation of the outlets. It does not exist in traditional markets because the individual owners whose goods are supplied by parties who take more profit so prices fluctuate greatly. Therefore, modern retail is at the forefront to keep inflation normal in line with the government's expectation of 3 percent, plus-minus 0.5 percent.
Apart from that, what is the important role of modern retail?
All these retail companies get goods from the same source at the cost of goods. Then when selling to consumers because there are taxes that must be applied, we collect VAT tax from every item sold in modern retail. This modern retail outlet is the government's hope to get fiscal from VAT. There is also income tax from individuals/individuals and corporate income tax. Of these various reasons, of course, the most important reason for modern retail from time to time actually needs to be prioritized. But until now we have not become a priority sector.
This is Aprindo's record that we have been helping to provide basic needs/daily needs of the community, absorbing labor, and as a place to collect taxes. We hope that the existence of modern retail has not been given priority and can really progress and develop according to our expectations.
What are the retail categories? How many members now? Can foreign retailers also enter Indonesia?
Based on Law Number 7 of 2014 concerning trade and derivatives of the Copyright Act 11 PP 29, there are 5 types of modern retail in Indonesia. The first is that there are more minimarkets with an area of less than 100m2 at 80m2. Then the second Supermarket area of 1500 - 2000m2. Then the third hypermarket area of 5,000 – 6,000m2. Then the 4th one is a department store or those in malls and so on, which vary in size from 2,000m2. Lastly, wholesale or wholesalers have an area of 5,000m2 and above.
Foreign retailers used to be included in the negative investment list category, but now they are included in the positive investment list. But foreign retailers who want to enter Indonesia must cooperate with local partners. Foreign retailers who are dominant compared to their local partners are allowed to open in shopping centers or malls so that they are more integrated with mall facilities.
What is the condition of Aprindo members in facing the pandemic?
During this pandemic we have been badly affected. The problem is that there are mobility restrictions that prevent the public from visiting modern retail. All activities are mostly done at home; work from home, study at home, and so on. There are even weddings taking place at home. Even if there are visitors who buy, what are purchased are basic necessities. And they limit spending in both quantity and budget. That's what makes retail performance decline.
At the beginning of March 2020 when it was first announced by the government on March 3 afternoon in Depok, then it continued to move, April we locked down and entered Eid al-Fitr, the holy month of Ramadan. In April, May, the second week of the last year 2020, we were at the lowest point of our retail sales index. Our retail sales index surveyed by Bank Indonesia was minus 20.6 percent. Before the pandemic the number grew at a positive asking rate of 8 to 9 percent.
Its growth began to be seen in April 2021. When the first quarter we were at minus 0.74 for economic growth. The second quarter we are in a position that has not happened in a decade of positive 7.07 percent. At that time, from last year's lowest, which was never above the position above, we grew positively around 5 percent, that's extraordinary. The third quarter declined again when the government pulled the emergency brake (PPKM Emergency) to deal with the delta variant. In the third week of August, we are in a position that has started to improve, the control is better, the delta variant has been successfully suppressed and vaccinations are also increasing. So that our economic growth in the third quarter of 3.5 percent.
We hope that it is like now even though there is an omicron variant, but this can be localized. What we hope is that the current PPKM is clustering, not generalized. So if there is an area that has not shown vaccine performance above 80%, that area may be PPKM. Meanwhile, for areas where mobility has been relaxed, even though it is still progressing.
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Is there a retail entrepreneur who collapsed because of the pandemic?
The retail entrepreneur is considered strong because he is a corporation, but in fact, there are our members in mid-July 2021 yesterday who had to close all their outlets throughout Indonesia. Previously in 2020, it had closed almost 50 percent. Our members pay for electricity at commercial rates, other sectors can subsidize wages for their employees, we cannot. As a result, some of our members have taken over their business, and some have sold their business locations.
Retail needs to enter priority sectors in order to get funds for economic recovery, such as: food security, health, energy, telecommunications, tourism. Because retail also has to be saved.
How long can Aprindo members last in these difficult conditions?
For our members who only run their retail business, they are more vulnerable to collapse, but for those who are included in a business group, apart from retail there is property, for example, there are banking and others, so they can be cross-subsidized. This model can be stronger. Hopefully the third wave doesn't happen, so we can survive.
How about marketing cheap cooking oil for Rp14,000 per liter?
CPO (crude palm oil) is priced better at the global level, so exports are indeed better. Then CPO is used for biodiesel. This is what makes CPO reserves decrease, but demand does not decrease. Finally, the price of cooking oil, whose raw material is CPO, has increased.
Retail sells simple packaging and premium packaging. Simple packaging that has run out since mid-2021. Then Aprindo was asked for help to distribute simple packaged cooking oil from producers. The agreement is 11 million liters until January 2022. This amount is distributed by all Aprindo members who sell it at a price of Rp14,000. However, because the number is limited, in a matter of hours when it is opened it runs out immediately.
Roy Nicholas Mandey, One Travel Two Three Benefits
In the midst of his busy life as an entrepreneur and being the Chairman of Aprindo (Indonesian Retail Entrepreneurs Association), Roy Nicholas Mandey set aside time for traveling or sightseeing. You don't always have to go to foreign countries, domestically it's also okay for him. Once traveling he will achieve many benefits. As the saying goes, once rowing two-three islands are exceeded. "Why do I like traveling, because there are many benefits that can be achieved from traveling activities," he said.
However, the travel restrictions imposed by the government during the COVID-19 pandemic have slightly limited their travel plans. “During the pandemic, my activities were only at home and its surroundings. After leaving the restrictions, we must have social distancing and physical distancing. The situation is very different from before the pandemic. Unless it's very important and I have an assignment, I'm just traveling," he said.
Pandemic for Roy, is a time to reflect. Why there is a pandemic and what to do about this pandemic. “The first thing I want to convey is how we must always draw closer to the Almighty. Because there is calm, strength and there is a belief that we have the ability to overcome any situation with the help of the Almighty," he said.
Then, there must be an optimistic attitude so that we can rise after being affected by the pandemic. "We need to have an optimistic attitude. Optimism can spur our spirits. Why is that? Because optimism and enthusiasm is something that will encourage our minds, our eyes, our hearing, even the way we convey various kinds of suggestions or views and so on with positive things. When we are positive, of course, we hope that the results will also be positive,” he continued.
Apart from these two things, Roy continued, there is one more thing that needs to be taken care of; balance. “Our balance at work, our balance for recreation and relaxation. Also, balance with all problems, and balance with family," he said, adding that this balance cannot come alone. That balance must be pursued and achieved.
Find Inspiration
Before the pandemic hit, Roy was traveling regularly. Not only foreign tourists who are the target of traveling, domestic tourism is also the goal for vacationing with family. Labuhan Bajo is one of his favorite destinations.
“Why do I like traveling because there are many new things that we can absorb from that activity. For me abroad is okay, domestic is also good. Before the pandemic, my family and I went to Labuan Bajo. Everyone already knows that it's a very good place,” said the man who joined one of the biggest retailers in Indonesia.
There Roy not only vacation and pamper himself. He also witnessed community activities around tourist sites. "So I know how the habits of the people? What are their advantages that can be adopted and what are the prospects that can be opportunities," he said.
When traveling to foreign countries, especially relatively developed countries, there is one thing that Roy never forgets. He will see a retail store there. What is the progress like and the technology used. “There I always take the time to see retail shops with all the developing technologies and so on. What advances are applied there. This can be an inspiration and can be applied in my retail business in Indonesia,” he said.
Culinary tour
Visiting tourist attractions is usually a package with culinary exploration in the area visited, Roy also does the same. “One of Indonesia's culinary treasures that Roy often explores is coffee. Each coffee region has its own characteristics. If in Sumatra from the northernmost there is Gayo coffee in Aceh, Mandailing coffee in North Sumatra. Continue to the south of the island of Sumatra, each coffee area is unique in West Sumatra, Riau, South Sumatra, Jambi, Bengkulu and Lampung," he said.
Not long ago Roy visited Bangka Belitung Province. “It turns out that there is coffee there too. And I think it tastes good."
“If we go further east, starting from Java, Bali, Kalimantan, Sulawesi, NTB and NTT, Sulawesi to Maluku and Papua, we have coffee. And the taste is unique. This is a culinary wealth that can be explored and become its true potential. If the packaging and promotion are good, it can become an economic commodity that can increase the income of coffee farmers," he continued.
That's just in terms of coffee, a drink that many people like both for relaxing and when meeting with colleagues. Not to mention other culinary delights such as snacks or special dishes from each region. “So we are actually a country whose natural resources are significant from a culinary perspective. Of course, that is part of traveling. Even though there are also certain places where you can't enjoy the cuisine because the taste is very different," he said.
Roy is grateful that until now he can still enjoy a variety of dishes, except those that are medically prohibited for him. "I'm from a descendant who can't drink alcohol, if forced my skin will turn red," he said.
Although other types of food are not prohibited, Roy Nicholas Mandey applies the principle of balance and is not excessive in eating food. "Of course not too much and not too little, just enough," he said. And the enjoyment of the food, he said, the key is in the mouth. “The delicious size is only determined by 5 centimeters in the area in our mouth area. Once it's more than 5 centimeters, everything tastes the same in the stomach, there's no difference," he said with a distinctive laugh.
“Modern retail's role is to be a guard when prices go up or down. Modern retail can keep inflation fluctuations at bay. If the traditional market or the people's market can not be controlled. According to a survey by AC Nielsen, there are nearly 3.7 million traditional markets, while in modern retail there are around 45,000 shops from Aceh to Jayapura. So prices are definitely more stable in us, because modern retail has a network and system,"
Roy Nicholas Mandey
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