Giant Closes, Retail Observer: Big Box Doesn’t Evolve, It’s Only Price War

TEMPO.CO, Jakarta – Retail observer Yongky Susilo assesses that the decision to close all Giant outlets at the end of July 2021 is the impact of a series of changes in consumer behavior in the recent period.

Changes in consumer behavior, especially the upper middle class, which shifted from visiting large format stores to smaller outlets but were not followed by hypermarket innovation. “The big box format has not evolved for two decades. It’s just a price war,” said Yongky, Tuesday, May 25, 2021.

According to Yongky, hypermarket managers are still focused on selling grocery products. “The manager is not smart enough to make the shopping experience more interesting,” he said, who is also an expert staff member of the Indonesian Shopping Center Retailers and Tenants Association (Hippindo).

On his note, the hypermarket format has suffered negative growth in the last seven years. This is inseparable from the preferences of upper middle class consumers who no longer want to waste a lot of time shopping for daily needs.

The upper middle class tends to shop for style. “That’s why supermarket formats are more popular, such as Ranch Market, Foodhall, Grand Lucky and so on. The format needs to be reduced in big cities,” he said.

However, according to him, the hypermarket format still has opportunities, especially in secondary and tertiary cities where middle class people are still interested in the big store concept. As for big cities, business actors must be able to provide a different shopping experience.

Yongky also gave a message about the importance of location to PT Hero Supermarket Tbk. which plans to convert the former Giant outlets into IKEA or Hero Supermarket. If the location of the former Giant is in an area with a lower middle class majority, it certainly cannot be converted into a Hero Supermarket.

Likewise, if you want to turn a Giant outlet into an IKEA, you need an in-depth study of people’s purchasing power. “If (people’s purchasing power) is too low, people only come to walk in the shop,” he said.

According to Yongky, Hero Supermarket has a great opportunity to change Giant outlets to a more profitable format because the target market is the middle and upper class people. Therefore, the location that must be chosen is one that is close to the upper middle class and must be able to compete with supermarket formats whose brands are on the rise.


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