Metro Group has announced that it is to open its first cash and carry in Jakarta, Indonesia in 2012, joining forces with Indonesian investment holding Sintesa Group

The partnership will facilitate the market entry of its cash and carry business into Indonesia, southeast Asia’s largest economy. Metro will open at least 20 cash and carry outlets in Bandung, Jakarta, Surabaya, Central Java, Bali and Sumatra. Indonesia will become the 34th country where Metro Group is present and the 31st member in Metro Cash & Carry’s international country portfolio, which consists of five Asian countries - China, India, Japan, Vietnam and Pakistan.

Bunny Khurana, managing director of Metro Cash & Carry’s Indonesian business, said: “Indonesia offers a huge potential for our wholesale concept. There is a growing demand from businesses like restaurants, caterers and small retailers - our potential core customers - for a reliable supply source of high-quality goods.”

Metro Cash & Carry said up to 90% of the assortment on offer would be sourced locally. “We will heavily invest in training suppliers, like farmers and local producers, to apply international quality standards and sustainable and efficient production methods,” said Khurana.

Retail sales have grown rapidly in the country in recent years due to its population of 230 million and strong income growth. Although there are still millions of people living under the poverty line, per capita spending in local currency has almost doubled every five years since the 2000s. Combine these characteristics with a highly fragmented market where the top five account for less than 5% of the market and Metro’s choice of entry is not surprising.

In fact there are far fewer retailers operating in the county than would be expected in such a promising market. In1998, the Asian economic crisis saw Walmart pull out of Indonesia after ending a joint venture with the country’s powerful Lippo Group. At present there are no other cash and carry operators, but those foreign retailers that are there, such as Dairy Farm, Lotte Market and hypermarket leader Carrefour, are following a strong growth path.

However, Indonesia is not a market without difficulties. Competition is growing as retailers can directly invest in the market. Furthermore retailers face restrictions governing location, store format and size and this may significantly affect Metro’s success in the future.

Isabel Cavill, senior retail analyst, Planet Retail

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