Business Format Overview
Hypermart continued to become the key driver of MPPA’s retail business in 2019 with 85.6% contribution to total sales. Hypermart is one of the Indonesia’s modern retail hypermarkets for the growing middleincome family nationwide, with an extensive product selection covering Grocery, Fresh Food, Bazaar, Softlines and Electronics merchandise. Hypermart has its competitive advantages as the results from our capabilities developed through intensive retail & customer studies, detailed sales and profitability analysis by SKU as well as a nationwide distribution network to move products from Distribution Centers and suppliers to stores.
MPPA continues to strengthen Hypermart business with a goal to provide the international standards of retail offerings with a modern shopping environment and consistent shopping experience at every store throughout Indonesia. The challenging market environment and changing customer-shopping behaviors in 2019 led the Company to execute a series of adaptation and improvements to Hypermart in order to bring back its competitive strength within the industry and customers choice.
Hypermart has to remain competitive in the market while at the same time it is required to operate more efficiently to sustain its profitability. The Company realigned the Hypermart’s format and business model into a more consumer-centric outlook with an enhanced approach to serve the consumers’ demanding needs. Significant focus was given to a tighter selection of Fresh Products, food and groceries and fast-moving household products needed by consumers daily supported with attractive prices. Hypermart’s store size were also adapted to the new standard for a more effective and efficient operation. The continuing cost reduction and higher productivity at store level also drive to regain Hypermart’s productivity and profitability going forward.During 2019, Hypermart successfully relaunched 24 existing stores, opened 1 new store and closed 6 stores following MPPA’s consumer retailing focus. The Management also took prudent decision by closing several unprofitable stores in order to reduce unnecessary costs while maintain profitable stores within its store network. By 2019 year-end, the Company operated 102 Hypermart stores in more than 70 cities across the country.
Through its Foodmart Fresh and premium Foodmart Primo supermarket formats, the Company focuses on fresh foods, bakery, ready-to-eat (RTE) products as well as a wide variety of local and international products. The formats provide a convenient shopping experience with modern store atmosphere and cater the needs of modern Indonesian customers who put value on convenience with quality fresh products.
The Foodmart format has been expanded further to increase the focus on high quality fresh foods and provides only the freshest products to customers.
Foodmart Primo, as the premium supermarket format for refined customers, offers international products, more variety of quality fresh products and a large RTE section providing eat-in or quick take-away meals, café and boutique bakery.
In 2019, the Company relaunched 3 existing stores, opened 11 new stores and closed 1 store for a net total of 26 stores actively operating at year-end.
In 2019, the Company launched its latest store format - Hyfresh, a community supermarket format with greater focus on fresh and groceries products at attractive prices to attract middle-class households within the communities for shopping daily needs.
This Hyfresh format is the Company’s latest interpretation for the future store should look like adapting from the changing market environment. There are 8 Hyfresh stores actively operating by 2019 yearend.
Boston Health & Beauty (“Boston HBC”) continued to deliver good performance in 2019 with positive sales growth and profitability. Boston HBC is positioned to offer a comfortable and modern health & beauty store concept with additional health consultation services at selected stores. Several larger stores at prime location were also added with pharmacy services in order to provide a total health solution for customers.
During 2019, Boston HBC relaunched 10 stores, opened 3 stores and closed 8 stores leading to a total of 69 stores actively in operation.
FMX convenient stores are located at strategic locations such as malls, apartments, offices, railway stations and other public places for convenient, fast purchases within local communities. FMX differentiates itself from other Indonesian minimarket operators with modern layouts, large ready to eat and drink sections and a wide assortment of grocery with a focus on snacks. Basic financial services such as ATM’s, cellular airtime top ups and bill payments are also offered in the stores. The Company is optimistic that FMX offers great growth opportunities through store expansion at good, crowded location to capture its maximum potential as modern convenient stores in the future.
During 2019, the Company opened 5 new stores and closed 1 outlet leading to a total of 16 stores in operation.
As an impact of MPPA’s renewed consumer-retailing focus, the Company further reduced its exposure from the unprofitable B2B business, including Smartclub, in 2019. It closed 1 Smartclub store and there is only 1 remaining store in 2020.
An efficient logistics platform helps MPPA to drive productivity improvement.
The Company operates 3 Distribution Centers, strategically located at Balaraja - Banten, Cibitung - Greater Jakarta and Porong - East Java, encompassing 67,822 m² of distribution space and 66,717 pallet positions. Nearly 54% of the Company’s store sales come from merchandise that flows through our Distribution Centers.
In 2019, MPPA relocated its older Surabaya Distribution Center to a new, modern distribution center facility with higher capacity at Porong, East Java. The new DC has an approximately 20,736 m² of space with 23,690 pallet positions, would play a key role in distributing products to Eastern Indonesia, while MPPA’s main Distribution Center at Balaraja, Banten continues to distribute products to Western and Central Indonesia. Cibitung Fresh Food Distribution Center now has the leading industry-standard freezer and chiller capacity to provide higher service levels to all stores in the dairy and frozen foods categories.
Within 2019, the distribution operation management continued maintaining and developing the up-to-date technology necessary to meet merchandise supplier delivery requirements while providing world-class service levels to our customers. Current distribution technologies such as radio frequency scanning, paperless picking solutions by voice-directed (voice picking system) and single pick technology result in paperless, faster operations that are then extensively utilized to support the ability to use automatic data collection, record every aspect of product movement, evaluate cross-docking opportunities and manage returns.
|Location||Space (m²)||Capacity (pps)||No. of SKUs||WMS|
|pps = pallet positions|
The Company’s distribution center network ships products more frequently to stores with speed and accuracy in order to maintain a high “In-Stock” position at all stores. The logistics network that MPPA has created is both a competitive advantage and barrier to entry for retail entrants in Indonesia. Strong logistics capability is a key reason why the Company can be the first to market in the outer islands and provide unparalleled service levels to the stores.