Increasingly Adding Stores, Erajaya's Profits Are Still Sluggish

Illustration. (Photo: Erajaya)

Jakarta - 2019 is a positive achievement for the distributor and retailer of communication devices, PT Erajaya Swasembada Tbk in market penetration. The reason is, Erajaya has inaugurated 252 new outlets throughout 2019.

In Erajaya's press release quoted on Thursday, December 2, it was stated that the growth of Erajaya outlets throughout 2019 increased by 30 percent compared to 2018 which was only 194 outlets.

The Chief Executive Officer (CEO) of Erajaya Group, Hasan Aula said the company's commitment is to continue to innovate and provide total solutions for customer satisfaction.

"By expanding the addition of stores in cities, the company presents stores with the aim of a comprehensive customer experience in accordance with Erajaya Group's commitment," he said.

He explained that the addition of aggressive outlets was accompanied by several new innovations, in the form of O2O omni channel services (offline to online and online to offline) and EraClub's Customer Relationship Management (CRM) program which will provide exclusive benefits for Erajaya Group consumers.

With the additions above, in total Erajaya has 1,049 outlets spread throughout Indonesia. As for the outlets under the Erajaya group such as Erafone, iBox, Urban Republic, MI Store, Samsung Experience Store by NASA, OPPO Store, Vivo Store, Huawei Store, including store operators such as Indosat Ooredoo Store, XPlore, and Telkomsel Grapari.

Adding new outlets has become Erajaya's focus throughout 2019, especially in second and third tier cities. Moreover, Erajaya previously set a target of 300 new outlets throughout 2019.

However, in the third quarter of 2019, Erajaya recorded an unsatisfactory financial performance, which recorded a net profit of IDR 165.59 billion. This figure has dropped 73.9 percent compared to the same period in 2018 which was recorded at IDR 636.5 billion. Meanwhile, sales from Erajaya during the nine months of 2019 only amounted to IDR 23.61 trillion, down 6.7 percent compared to the same period last year IDR 25.3 trillion.

Information technology research company from the United States, Gartner, once stated that 2019 was not a good year for global smartphone sales. Apart from the more innovative smartphone features offered, in fact, global smartphone sales continue to decline.

Gartner also reported a decline in smartphone sales in the last few quarters. This negative trend occurred in the third quarter of 2019 and is predicted to continue in the fourth quarter of 2019.

Gartner predicts smartphone sales by the end of 2019 to fall 3.2 percent compared to 2018. In 2018, smartphone sales also experienced a 4 percent decline from 2017.

Gartner estimates the total handsets - including feature phones and smartphones - to be sold by the end of 2019 to reach 1.74 trillion units. This number decreased slightly compared to 2018 which reached 1.81 million units.

Worldwide Device Shipments by Device Type, 2018-2021 (Millions of Units):

Device Type

2018

2019

2020

2021

Traditional PCs (Desk-Based and Notebook)

195.3

187.2

177.5

171.2

Ultramobiles (Premium)

64.4

69.8

75.2

81.4

Total PC Market

259.7

257.0

252.7

252.6

Ultramobiles (Basic and Utility)

149.6

146.1

144.6

142.4

Computing Device Market

409.3

403.1

397.3

395.0

Mobile Phones

1,813.4

1,745.4

1,771.1

1,762.6

Total Device Market

2,222.7

2,148.5

2,168.4

2,157.6

Source: Gartner