Indonesian retailers facing an uphill task

Petty Nugrahadi, an assistant manager at a cable TV provider, keeps 12 membership cards in a special case in her handbag. She acquired her first card, that of Metro Department Store, in 2005.

As time went by, Petty started shopping – and applying for membership – at different stores, most of which offer similar products. “I want to get the best prices from all of them,” she said.

Now the mother of one is also a member of Star Department Store, Pasaraya, Centro, Ace Hardware, The Body Shop, Accorhotels, Birds and Bees, Century Healthcare Pharmacy, Hypermart, Lotte Mart and the Ismaya Group of restaurants.

Petty is only one of the swelling middle-class with numerous cards from many customer loyalty programmes.

Dini Valdiani, a lecturer, has five loyalty cards in her purse – from those of rival department stores to a pharmacy.

As these cases show, there is not much customer loyalty in loyalty programmes.

Marketing analyst Yuswohady from Inventure Consulting said that at first, customer loyalty programmes were offered in a somewhat prestigious way to retain customers because it was every retailer’s nightmare to see their clients switch brands. Over time, however, economic benefit trumped prestige for educated consumers, he said.

“Signing up for membership does not prevent consumers from shopping elsewhere. They are much more knowledgeable, highly connected and have more buying power than before,” he added.

The Indonesian Retailers Association (Aprindo) deputy secretary-general Satria Hamid said retailers were fully aware of the customers’ multiple membership cards. “Customers have every right to apply for other loyalty programmes. But we are presented with new challenges now. Customers can discover, compare, evaluate and choose other brands solely on their merits,” he said.

However, he insisted it was still important to maintain loyalty programmes as members usually contributed up to 30 per cent of the retailers’ total sales.

The pull of middle-class purchasing power is what keeps retailers competing. Last year Bank Indonesia reported that the population with a “middle-class income” exceeded 140 million.

Fashion and lifestyle retailer Mitra Adi Perkasa (MAP), which holds licences of more than 100 brands, is coming up with a new strategy to beat the competition: a new membership card valid for purchases of all brands, according to MAP corporate secretary Fetty Kwartati.

“At the moment, we only have separate membership programmes for Debenhams, Sogo, Kidz Station and Sports Station,” she said, adding that the membership amounted to hundreds of thousands.

Meanwhile, Monica Hijau Lestari, which operates The Body Shop outlets, revamped its “bring back our bottles” policy last June to create a more “green” and intimate relationship with its 600,000 members.

By returning three used packages, members get five points to collect and exchange for free gifts. Prior to the change, they were required to return 25 packages.

Under the new policy, The Body Shop had seen an increase in member activity, customer loyalty manager Astrid Lewarissa said.

Ace Hardware Indonesia is trying to keep up with the others as well. The home furnishing company showers its 580,000 members, whose purchases contribute to 55 per cent of total revenues, with monthly discounts and two big annual sales.