The economic impact of minimart on traditional shop in Malang, East Java, Indonesia

Bayu Adi Kusuma, Sirirat Kiatpathomchai and Nuhfil Hanani A.R.
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Bayu Adi Kusuma: University of Brawijaya
Sirirat Kiatpathomchai: Prince of Songkla University
Nuhfil Hanani A.R.: University of Brawijaya

Russian Journal of Agricultural and Socio-Economic Sciences, 2016, vol. 49, issue 1, 3-12

Abstract: Minimart is a modern store similar to convenience store. In urban areas in Indonesia, it is hard to find a location without a minimart. The proliferation of minimart in urban areas feared would displace the traditional shop. The study aims to measure the economic impact of the minimart on the traditional shop in Malang. 172 traditional shops scattered in Malang was purposively chosen in this study; 86 shops located near to the minimart, and 86 shops located away from the minimart. Using difference-in-difference estimation, the simple model reveals that the drop in revenue (-125,116.28 IDR) was not significant; on the other hands, the drop in profit (-25,193.02 IDR) was significant. The econometric model shows that the minimart gives the negative impact on both revenue (-2.7%) and profit (5.5%). However, the impact was not significant. Furthermore, the interview reveals that the declining in revenue and profit was caused by the loss in the number of buyers. The decline in revenue and profit has happened due to many emerging new traditional shop. The new traditional shops come up with several innovations to attract the buyers. The presence of the new traditional shop has forced the existing traditional shops to take action to survive. The four actions that most traditional shops did were: diversify products, better display, adding new brands and lower the prices.

Keywords: CONVENIENCE STORE; MINIMARKET; TRADITIONAL RETAILER; EAST JAVA; DIFFERENCE-IN-DIFFERENCE (search for similar items in EconPapers)
Date: 2016
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