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The Business Strategy Behind Indomaret and Alfamart’s Store Locations

Why do Indomaret and Alfamart stores almost always stand side by side across Indonesia? This isn’t coincidence—it’s a calculated business strategy rooted in economics, competition, and consumer behavior.

From Traditional Shops to Modern Convenience Stores

Before minimarkets, Indonesians relied on traditional warungs and small shops. These were often inconvenient—limited stock, inconsistent pricing, and less comfort. The entry of Indomaret (1988) and Alfamart (1989) changed the retail game by offering:

• Clean and organized stores
• Standardized prices
• Friendly service
• Wide product selection

Franchise Power and Growth

Both brands expanded rapidly using the franchise model. By 2022, Indomaret had nearly 20,000 outlets supplied by 42 distribution centers with over 5,000 products. Alfamart followed closely with 15,000+ stores and continuous yearly growth. Their rivalry is fierce—but their proximity is even more fascinating.

The Hotelling’s Law Effect

Economist Harold Hotelling’s principle of minimum differentiation explains why competitors cluster together. Applied here:

• Two stores selling the same goods will gradually move closer to capture overlapping customers.
• The safest spot is in the middle of consumer traffic—often leading to side-by-side locations.

This is why, just like McDonald’s vs Burger King or Target vs Walmart in the U.S., Indomaret and Alfamart appear as inseparable twins of Indonesian retail.

Leveraging Competitor Research

Another reason for their proximity? Smart strategy. If one franchisee spends heavily on market research and finds the best spot, the competitor can simply piggyback by opening next door. This reduces costs while ensuring a proven customer base.

“Why spend millions on research when your rival has already done it for you?”

Competition Beyond Location

With nearly identical products and services, both chains differentiate through innovation:

• Indomaret introduced Point Coffee and KlikIndomaret (online shopping).
• Alfamart countered with Beanspot Coffee and AlfaMind—a virtual store concept using augmented reality.

Even promotions are cleverly managed. While both offer regular discounts, they avoid discounting the same product at the same time to prevent destructive price wars. Instead, they share the market while maintaining competition.

Lessons for Entrepreneurs

The Indomaret vs Alfamart rivalry offers timeless business lessons:

• Location is everything—whether offline or online, being in the busiest “street” matters.
• Competition breeds innovation—new services are often born out of rivalry.
• Follow the leaders—big players’ location choices can guide your business decisions.

Final Thoughts

The next time you see Indomaret and Alfamart standing side by side, remember—it’s not coincidence. It’s the invisible hand of economics and strategic planning at work. In today’s competitive world, sometimes the smartest move is not to stand apart, but to stand close—right where the customers are.

What do you think? Is this strategy sustainable, or will one eventually outpace the other? Share your thoughts below!

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References:

• Video: Strategi Bisnis Dibalik Posisi Gerai Indomaret dan Alfamart
• Channel: Dr. Indrawan Nugroho
• Watch on YouTube