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Retail Market Overviewretailers have since focussed on catering to the middle to upper income group in major cities. Conversely,the expansion of local minimarkets has outpaced foreign competitors in terms of outlet growth. This growthis further boosted by franchised businesses which are now more common in Indonesia. Leading retailerssuch as Indomaret and Alfa have enjoyed strong growth over the past three years, having expanded theirpresence deeper into smaller cities and neighbourhood areas. The total number of Indomaret and Alfaminimarkets is estimated to have reached over 1,300 outlets each.2.5.4 HypermarketA very large commercial establishment that is a combination of a department store and a supermarket. Asmentioned earlier, the development of hypermarkets in Indonesia began in 1998 with the opening ofCarrefour and Continent. Their foray into the domestic market had a significant impact on the retail scenein Indonesia. With a wide range of goods offered, ample space, complemented by good amenities forcustomers (i.e. more pay points and parking facilities), along with a commitment to provide the lowest pricepossible, this format quickly gained acceptance among local consumers.Currently, there are three major retailers competing in this market—Carrefour, Giant and Hypermart. Thelatter was introduced by the Matahari Group, offering a new concept and flexibility and promoting a “morecompact” hypermarket.2.5.5 Specialty storesSpecialty stores are relatively small retail outlets specialising in a narrow range of merchandise. From theearly period of modern retailing in Indonesia, the specialty store format has been the most common form ofretail outlet in the market. However, it was dominated by local “mom-and-pop” retailers. Along with thegrowth in the domestic retail industry and demand from the middle and upper income group in the 1990s,the specialty store format evolved into a more sophisticated and professionally managed business. Sincethe recovery from the financial crisis, there has been a steady growth of specialty store chains entering themarket, including both local and foreign brands as well as premium brands catering to the upper incomegroups and foreign tourists.A recent trend is management companies that control the roll-out of major international brands. Keyplayers in this segment include Mahagaya (Mango, Prada, Hugo Boss, Etiene Aigner etc), Club 21 (DKNY)and the publicly-listed Mitra Adi Perkasa, which has exclusive control of the expansion of popular brandsranging from sport apparel such as Reebok, Spalding, Union Bay, Airwalk, fashion brands including CalvinKlein, Marks & Spencer, NEXT, Zara, Top Shop and Top Man, children’s toys such as Bandai, Nikko,Barbie, Disney, OshKosh and cafés and restaurants such as Starbucks, Krispy Kreme and Pizza Marzano.According to ACNielsen, the growth of the above mentioned modern retail formats is outpacing thetraditional market, yet the latter still dominates Indonesian retailing with a market share around 66%. Thisproportion, however, is expected to continue to diminish over time.Figure 2.5.1: Market share of modern and traditional retail, 2006Percentage Share10090807060504030201002000 2001 2002 2003 2004 2005 2006*YearMinimarketSupermarketTraditional Shop* Notes: Up until JuneSource: ACNielsen Retail Index 2006F-27