Retail News Indonesia: Minang Mart Allowed to Grow in West Sumatra
Also on the regional level there exists protectionism in Indonesia. One example comes from West Sumatra, a province that is known for its beautiful countryside and Minangkabau culture. Local authorities in West Sumatra have closed opportunities for modern national convenience stores - such as Indomaret and Alfamart - to enter the province in an attempt to protect the local (small and mid-sized) retailers.
West Sumatra Governor Irwan Prayitno said all local districts and cities within the province agree on the need of protection for existing local retailers and therefore the arrival of big national convenience stores needs to be avoided. Instead, the local West Sumatra authorities particularly support the development of local convenience store chain Minang Mart (despite the fact that expansion of modern local retailers undermines the earnings of the traditional small and micro retailers in West Sumatra).
While small, modern convenience stores such as Indomaret and Alfamart have mushroomed in cities like Jakarta, Bandung, Yogyakarta and Surabaya you will not find any of these national brands in West Sumatra. West Sumatra Governor Prayitno added that local authorities were particularly concerned seeing the mushrooming of these modern retailers in neighboring provinces Riau and Jambi.
Minang Mart, on the other hand, is allowed to expand throughout West Sumatra. Not surprisingly this store is partly owned by the regional government of West Sumatra. However, the difference between Minang Mart and (other) modern retailers like Alfamart and Indomaret is that local micro and small traditional retailers can join the Minang Mart network using low-interest bank loan assistance (as such it is different from the franchise model like Indomaret and Alfamart). Through the Minang Mart program many food products are bought directly from the local producer (hence prices are lower) and supplied to the Minang Mart retailer who manages the sales.
There are four types of Minang Mart outlets, ranging from the modern convenience store located in a large building to the traditional street-type vendor. In that sense, the program indeed supports the traditional micro and small vendors. However, based on information from local media, most small retailers who want to join the Minang Mart network fail to meet the program's criteria. For this large group of rejects it will be difficult to compete with a Minang Mart.
This year local authorities target to open 300 new Minang Mart outlets across West Sumatra.