The convenience store industry is one of the fastest-growing industries in Indonesia. This is because the presence of international convenience stores is somewhat diminished as most locals have a preference for domestic convenience stores. The most popular of these stores are Indomaret and Alfamart.
These two stores are widespread all over Indonesia. Both have thousands of outlets located all over the country. Their popularity is primarily attributed to their fair pricing and convenience. These stores also provide free Wi-Fi and air conditioning. However, Indomaret and Alfamart are not the only convenience stores which exist within Indonesia’s lucrative convenience store industry.
The remainder of the convenience stores in the country are smaller convenience stores which have accepted several franchise agreements allowing them to operate such stores.
Convenience stores in Indonesia are mainly preferred by most locals because of the fair prices on their products. Unlike other stores, convenience stores offer sitting spaces for ready-to-eat meals. This is a concept which has led to the attraction of many customers who eat while using the Internet with the free Wi-Fi offered. These stores also stock groceries which customers might be seeking.
Convenience stores take into consideration the changes in consumer needs and preferences. This means:
Another advantage of convenience stores is that they have positive customer relations. Customers’ interests are put first at all times. This has enabled them to retain a large number of customers thus enhancing their credibility in the market. Their 24-hour operational routine also makes it possible for consumers to enter at any given time to shop. This fact is highly appreciated by many long-distance travellers and motorists.
Starting a convenience store in Indonesia can be done in either of two ways.
Whichever method is selected, several factors have to be taken into consideration such as effective planning and finance sourcing.
For many people, franchising is a more suitable option because it does not take up much capital with regard to setup, advertising, and marketing. To effectively start a franchise, initial franchise fees must be paid. A franchisee is required to pay a one-off initial fee which is usually decided upon by the franchisor. Marketing fees will also be incurred.
At some point, a franchisee will be required to actively participate in funding a marketing and advertising campaign established by the franchisor. Royalties must also be paid; depending on the franchise, royalty percentage amounts vary. The average percentage in Indonesia, however, is between 5% and 6%.
Regardless of the total revenue collected, some franchisors set the revenue at a fixed periodic amount. The fee is often expressed as a percentage of the total gross revenue collected. In some cases, a franchisee may even be obligated to purchase specific products or services from the franchisor or affiliates of the franchising company.
However, the franchisee must be cautious as the prices may prove to be uncompetitive in some cases and therefore lead to severe financial losses. Apart from all the franchising costs incurred, the cost of acquiring the required operational licenses must also be considered.
If one chooses to start a convenience store from nothing, several other costs are incurred.