Retail Sector in Indonesia: Lulu Group Opens New Hypermarket
Lulu Hypermarket, the Abu Dhabi-based hypermarket chain and retail venture that was started by Lulu Group International in 2000, opened its second hypermarket store in Indonesia, and its 137th store worldwide. The new outlet in Indonesia was opened in Serpong (Tangerang, Banten). Previously, the group had already opened a hypermarket in Cakung (East Jakarta) in 2016.
The opening of the new hypermarket in Serpong is part of the Lulu Group's plan to expand its retail business in Indonesia. It set aside up to USD $600 million for this purpose over the next three years. Nandakumaer, Chief Communication Officer at Lulu Group Retail International, said the company targets to open 10 new stores up to 2020. Next year, in 2018, it plans to add two new hypermarkets to its network in Indonesia: another one in Sentul and one in Jababeka (West Java).
The group's new 60,960 m2 hypermarket in Serpong was inaugurated by UEA Ambassador to Indonesia Mohamed Abdulla Mohammed bin Mutleq Aghafli on Wednesday (06/09). The Lulu Group invested USD $25 million in the establishment of this new store.
Besides the Greater Jakarta region, the Lulu Group also selected Surabaya (East Java), Makassar (South Sulawesi) and Medan (North Sumatra) as locations for a Lulu hypermarket and departments store. Yusuff Ali MA, Managing Director of LuLu Group Retail International, said the company is eager to expand in Indonesia because Southeast Asia's largest economy contains a promising market with a massive 260 million population that has growing purchasing power. This view was confirmed by the positive response from the Indonesian consumers for the Lulu Group's first hypermarket in East Jakarta. This store was inaugurated by Indonesian President Joko Widodo in 2016.
Besides the hypermarket stores, the Lulu Group is also preparing the construction of a logistics center and warehouse where it can store products. It selected Marunda in North Jakarta, close to Indonesia's key Tanjung Priok harbor. However, only 15 percent of the products that are sold in Lulu Hypermarkets are imported from the Middle East. The remaining 85 percent are local products (mostly originating from Java).
Currently, the Lulu Hypermarket still controls a very small part of the (hyper) market in Indonesia. Therefore it will now first focus on enhancing brand awareness in Indonesia. It will largely use two strategies to improve its brand awareness: (1) promotions and (2) social media.
Meanwhile, the Lulu Group also invests heavily in local agriculture contracts in an effort to boost supplies of local products. In fact, because the group purchases many of its agricultural products directly from Indonesian farmers it can keep prices competitive. Nandakumaer added that the group would like to totally eliminate the role of the middlemen in the future as their role only has a negative impact on prices.
The Lulu Group is a relatively new player in Indonesia's retail industry (and hypermarket or department store sector) but Lulu already has stores in other countries including Malaysia, India and Saudi Arabia.