The Hindu Business Line : India, SE Asia nations can develop own retail formats

COUNTRIES such as India and Indonesia can develop their own unique retail formats instead of blindly following the growth paths of Western department store chains. Traditional retailers who understand local cultures and sensitivities can be roped in to operate in modern retail formats with the right kind of training, said Dr Herman Meerzork, business partner of Mr Hari Darmawan, Hony Chairman, Matahari Corporation, Indonesia.

Delivering the keynote address on behalf of Mr Darmawan, who could not be present, at the 6th KSA Retail Summit here, Dr Meerzork said Indonesia represented the changing face of retailing in Asia. He said retailers in Indonesia have adapted the best of Western practices to suit local cultures in Indonesia. Small entrepreneurs and retailers have a place in the scheme of things in Asia and expansion by global retailers who buy direct from manufacturers at competitive prices could wipe them out.

After the financial crisis in Indonesia, organised retailers have changed tack and are now promoting "malls with kiosks" where the kiosks are run by individual entrepreneurs who earlier typically ran mom and pop operations. Each of the kiosks itself could be owned by the entrepreneurs. The mall would provide the modern, air-conditioned ambience and services. "The malls with kiosks can give traditional service in a modern retail format; you can never motivate an employee, no matter how much you train him, as much as an entrepreneur," said Dr Meerzork.

He said that till the first quarter of 2003, 1.8 million sq. ft. of retail space was added in Indonesia. However, the pace of growth in the past three years has been rapid and this period has seen 2.1 million sq. ft. of retail space added in Indonesia. However, despite the rapid growth of new malls all over the country, organised retail was still only seven per cent of the overall retail market. In India, it was only two per cent, so the potential was huge in both the countries, said Dr Meerzork.

Outlining the growth and success of Mr Darmawan and the Matahari Corp, which owns 80 department stores across Indonesia, Dr Meerzork said his success was because of his intense focus on people, whether it was staff, managers or customers. "His golden rules for success were to lead with a cool head, warm heart and by active hands and feet," he said. The other ingredients of being a successful retailer were to coach your people all the time and provide them with the learning opportunities to grow. Investing in educating staff, and sending senior managers with potential abroad to see other cultures and develop their world view was one of the methods followed by Matahari. Its other philosophy was to select small and medium size suppliers with a passion to grow and work closely with them for mutual benefit. In fact, today Matahari has a Suppliers Club and some of them have grown to be large entities themselves, explained Dr Meerzork.

Dr Meerzork, who was outlining the theme: `Building to last: a retailer's successful journey', said that Mr Darmawan insisted that people had to show courage in decision-making while abiding by the highest standards of honesty and integrity. "He believed in transferring everything he knew to people around him and was also sensitive to the welfare of employees and their aspirations," he said. Retailers too should have a sense of responsibility as many livelihoods depended on the top man. "And, when the time is right, one should be able to hand over the reins to the next generation," he added. Which is what Mr Darmawan did.