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After 180 stores opened this year, more are planned in 2019.
Indonesian mini-market operator, Alfamart, proposes to open 200 new stores in the Philippines in 2019. Alfamart currently has more than 500 stores in the country, located mainly in residential areas. The new planned stores will bring Alfamart’s Philippine store network to more than 700 by end of 2019.
The Philippine and Indonesian markets share similaries, which work to Alfamart’s advantage. Both have young populations and expanding middle classes. In both markets, shopper prefer to buy small packaged goods frequently rather than filling large baskets and weekly grocery carts.
The mini-mart sector in the Philippines is seen as an untapped sector with little competition. Unlike convenience stores, Alfamart also carries fresh and frozen food. Its product range is more extensive than that of a typical convenience store (see photo below):
Source: IGD Research
Alfamart’s risk in the Philippines is also mitigated by its majority stakeholder, SM Retail. SM operates 1729 stores nationwide in the Philippines. Alfamart will benefit from its large business network and high brand awareness.
Alfamart sees that it has more potential in the Philippines than other Southeast Asian markets, such as Thailand and Vietnam.
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Indonesian convenience store chain announces expansion plans.
PT Sumber Alfaria Trijaya, owner of Alfamart, announces that it will add another 800 outlets to the Indonesian market this year. This brings the total number of stores in their network to more than 13,000. Half of these new stores will be opened within the Java Island, with the remainder being spread across the territories of Sulawesi, Kalimantan and Sumatra.
Also, in this year, the chain will add another 150 stores to their network in the Philippines, increasing their total number of stores there to more than 500. While their existing 400 outlets are located in the Greater Manila area, these new stores are intended to extend Alfamart’s reach to regions outside of Manila.
These announcements come even as Alfamart announced that net profit for 2017 fell by 50% versus 2016. The final reported profits for 2017 was IDR 300.3bn (US$21.8m), even though net revenue increased by 9.4% to IDR 61.4trn (US$4.46bn).
PT Sumber Alfaria Trijaya CEO Hans Prawira said, “Last year was a relatively tough year, and I think it did not only affect us. We could not achieve our target, while operation costs increased.”
The decrease in profits reflect the lack of purchasing power of Indonesian consumers. Alfamart remains hopeful that the government would be able to find a way to resolve the problem.
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Alfamart minimart continues its rapid network expansion in the Philippines with 120 new stores expected in 2017.
Alfamart Philippines will continue to expand its existing network of 262 stores in the next two years to around 500. Alfamart's partner, SM Retail, operates larger retail formats, and so the addition of smaller formats placed in urban areas have helped establish retailer identity. New stores have also led to greater accessibility for consumers as the retailer strives to serve more unique shopper missions, and compete with the major convenience chains and neighbourhood stores.
SM Investments Corporation, Philippines’ leading conglomerate, has registered a 9% growth in consolidated revenues in FY2016. Its retail arm SM Retail has also grown by 8% in revenue to PHP 276.5bn (US$5.5bn).
The food group, which includes SM Markets (SM Supermarket, SM Hypermarket and Savemore) and WalterMart, continued to expand mostly in provincial areas last year. It added 33 new stores, most of which are stand-alone Savemore stores. SM’s food group continues to expand in various regions with a multichannel growth strategy to address the lack of organised retail.
At the end of December in 2016, SM Retail had a total of 2,110 outlets, comprising 57 SM Stores, 1,556 specialty retail outlets, 48 SM Supermarkets, 44 SM Hypermarkets, and 156 Savemore, 39 WalterMart and 210 Alfamart stores.
In 2016, SM Retail merged several leading specialty retail stores, creating an entity with more than 1,400 outlets. “Following the retail merger last year, the performance of our specialty retail has been boosted by discretionary spending, especially in areas such as home furnishings and do-it-yourself goods, tracking the strong consumption and overall growth of the economy,” SM president Harley Sy said.
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Alfamart, leading mini-market player in Indonesian, announces full year revenue growth up 16.2% to IDR56.1tn (US$4.2bn) and gross profit up 18.1% to IDR10.9tn (US$0.8bn) for 2016.
The retailer operated 13,745 stores by the end of 2016, of which 12,336 stores are under the Alfamart banner. 65.7% of the stores are located outside of Greater Jakarta area, compared to 60.4% a year ago. 3,383 of the stores are franchised stores, accounting for 24.6% in terms of number of outlets, an increase of 211 from last year.
To support the Alfamart banner, the retailer opened two new warehouses during the year, in Serang and Cianjur, both in Java. As of end of 2016, the retailer managed 40 warehouses in Indonesia (32 for Alfamart, 7 for Alfamidi and 1 for Dan Dan)
Besides the new online initiatives, such as Alfacart and Alfamind, Alfamart is experimenting new formats offline. Alfa Express is a new format, being tested at airports; Alfa Kiosk a new 25 sq. m concept, while Alfa Box is a new vending trial - both of which also offer online shopping and delivery.
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