Informative Industrial Analytic for Effective Retail Business Performance: A Case of Emerging Economy

Abstract

This study analyzed the Indonesian retail industry’s structure, behavior, and performance in 2018-2020. It is essential because the potential of the retail industry in Indonesia is one of the most significant contributors to GDP and employment. Thus the retail industry has a very strategic role in the Indonesian economy. If a few companies dominate the market, it will become an obstacle for external companies to enter the retail industry, which can lead to a decline in the level of profits and the overall performance of the retail industry. This study aims to identify and analyze the structure, behavior, and industry performance of the retail industry in Indonesia in 2018-2020. This study uses data on public companies listed on the Indonesia Stock Exchange. The data were analyzed using CR4, industrial behavior, and Price Cost Margin analysis. The results show that the average value of CR4 in the Indonesian retail industry in 2018-2020 is 60.276%. It means the structure of the Indonesian retail industry is a tight oligopoly. This condition has led to several behaviors carried out by industry players in the retail industry in Indonesia to increase profits and expand their market share. These behaviors include product strategy (product differentiation), price strategy (second and third-level price discrimination), and promotion strategy. The overall performance of the Indonesian retail industry still needs to improve because the PCM value of the Indonesian retail industry in 2018-2020 is less than 50%. This study recommends that companies pay attention to strategies to increase their competitiveness. Government supervision is needed on business activities that are indicated to be too dominant in their position and make it difficult for new entrants to the retail industry in Indonesia. Companies also need to pay attention to production efficiency in their business, not only focusing on controlling market share so that the strategy can effectively create higher profits.