Here’s a story about Waluyo Sutrisno. A 56-year old, who has been running a small, traditional retail shop in Wates, Yogyakarta for the past 12 years. Has he been affected by the growth of modern retail such as minimarts/convenience stores? What are his thoughts on them?

Waluyo’s shop is a 56 square meter space at the village of Sendangsari. He employs 3 people to help him run the shop from 05:00 AM to 10:00 PM everyday. His shop is not a self-service shop, and that doesn’t seem to cause any problem. Waluyo told us on Sunday (Feb. 16) that his shop was always busy. His customers are typically locals from around the neighbourhood and/or tourists visiting the area. He claimed that he could generate revenue of up to 5 million rupiah with up to 1 million rupiah profit per day.

Waluyo told us that he did not feel threatened with the presence of convenience stores in his district. He believes that he already has loyal customers and that he has the edge for offering cheaper price than the modern stores. Interestingly, however, Waluyo also told us that he’s in fact interested in expanding his business by opening a modern retail shop on a different location.

“I have been thinking to become a franchisee of a chain of convenience stores, either in Yogyakarta, Solo or Klaten. But I don’t want to open it in the village because I am aware that the price is too expensive for the villagers,” Waluyo said. “I don’t want to open [another convenience store] in an area that already has many convenience stores. What’s the point? I would lose money instead of generating profit. One of the reasons why I want to expand my business is so that I could retire within four years and still keep myself busy.”

Entrepreneurs must, by law, register their traditional stores. Nevertheless, Waluyo admitted that he has never registered his business. He decided against registering his business due to the consideration that his is just a small business and that the shop is a part of his house. With no experience in legal registration, opening a formal entity like a modern retail shop will be an interesting journey for Waluyo.

A modern retail store should be established and registered either as an incorporated entity or unincorporated entity. So there are business registration red tapes that Waluyo must go through. In addition to that, for the retail space, Waluyo would have to obtain a Building Management Domicile Certificate from the district office (Kelurahan) as well as a Disturbance Permit from the licensing agency at the regency level and provincial level. Other than that, Waluyo would also need to obtain Permanent Business License (SIUP) and Business License for Modern Store (IUTM) from the district and provincial level Department of Trade and Industry. And, if the modern retail shop is a part of a chain, Waluyo would have to obtain a Franchise Registration Certificate.

Waluyo’s story is an interesting variation to the report we published last week about the growing anxiety against the aggressive expansion of convenience stores in the regions. More and more local governments have reacted against such expansion by refusing to issue any more business license for convenience stores. Bandung began doing so in 2013 with Sragen recently joining the cause.

If Waluyo is correct to assume that the modern convenience stores in his district pose no threat because of the price point, the question we’d like to ask is whether or not he’s right to be relaxed about it. Should there be improvement in infrastructure and management of bureaucracy, cost for logistics would also come down. If that were to happen, convenience stores would have the edge. What would happen to mom-and-pop shops then?

By Elisabeth Oktofani

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