Business Format Overview
MPPA’s core retail business is still being contributed by Hypermart, which delivered 84.5% of the total revenue in 2020. Despite a halt to most new stores expansion and store relaunch due to pandemic, MPPA still put great priority in transforming the Hypermart’s concept into a new, smaller efficient yet modern hypermarket format 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.
Hypermart is one of the Indonesia’s modern retail hypermarkets for the growing middle-income 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.
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. The continuing cost reduction and higher productivity at store level were also driven to regain Hypermart’s productivity and profitability going forward.
During 2020, there was no new Hypermart store opened but the Company relaunched 5 existing stores following MPPA’s consumer retailing focus and in order to reduce unnecessary costs while maintain profitable stores within its store network. By 2020 year-end, the Company operated 100 Hypermart stores (including 2 temporary closed stores to be opened in 2021) 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 2020, the Company did not open any new Foodmart and Primo stores, and it closed 1 Foodmart permanently for a net total of 25 stores actively operating at yearend (including 2 Primo and 2 Foodmart stores on temporary closures to be opened in 2021).
The Company launched its latest store format - Hyfresh in late 2019, which is 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. The Company will put equal priority for this new format as future expansion path in reaching the communities looking for fresh food retail in the New Normal era post pandemic.
By end of 2020, the Company opened 2 new stores while it closed 1 store permanently for a total 9 stores in operation (including 2 temporary closed stores to be opened in 2021).
Boston Health & Beauty (“Boston HBC”) continued to deliver good performance in 2020 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 2020, Boston HBC did not open any new stores and closed 7 stores permanently for a total of 64 stores in operation (including 2 temporary closed stores to be opened in 2021).
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 within 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 2020, the Company closed 2 outlets permanently and operated a total of 14 outlets at year-end (including 1 temporary closed stores to be opened in 2021).
As a result of MPPA’s renewed consumer retailing focus, the Company only operated 1 outlet in 2020.
|Store||Contribution to Total Sales||Net Sales (Rp billion)|
|Boston Health & Beauty||0.7%||45|
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 66,755 m² of distribution space and 76,952 pallet positions. Nearly 54% of the Company’s store sales come from merchandise that flows through our Distribution Centers.
Relocated from the previous Surabaya DC in 2019, the new DC in Porong (East Java) has an approximately 20,367 m2 of space with 29,718 pallet positions, would play a key role in distributing products to Eastern Indonesia, while MPPA’s main DC 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 2020, 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 first to market in the outer islands and provide unparalleled service levels to the stores.
The Company owns and operates its Information Technology Division. The division has important contribution and achievements for the Company in formulating and developing the management information system at the Company’s retail business.
The Company utilizes systems used by global retail companies, such as “RETEK Information System” and “Oracle Finance and Oracle Human Resources Management System.” For its Distribution Centers, the Company utilizes Manhattan Warehouse Management System program.
In term of data management, the IT Division operates 24/7, with Data Recovery Plan (DRP) in-place to ensure continuity of operations. The data information is presented in formats which enables users to analyse big data and obtain insights for better decision making process. The Company is commited to continue the development of its information technology, in-line with its growh trajectory.