Retail ‘war’ starts even before shoppers enter the store: Alfamart
At the front line is Alfamart's CRM platform that analyses consumer shopping behaviour.
In marketing jargon, the moment of truth or MOT is considered the time when the shopper finally gives an impression after interacting with a brand, product, or service. This theory, however, is considered less relevant in the midst of rapid digital developments, claimed Ryan Alfons Kaloh, marketing director of PT Sumber Alfaria Trijaya Tbk, the operator of Alfamart Group convenience store. He argued that the battle starts before the shopper even goes to the store.
This is why Alfamart invested to build knowledge and understanding of consumer shopping behaviour with its Customer Relationship Management (CRM) platform. Through big data analysis, CRM provides relevant promotions offered through various online platforms based on the shopper shopping patterns gathered from the physical outlets. From the data obtained, Alfamart is able to know the business prospects of each of its 16,500 outlets across Indonesia.
“It’s like shoppers have been escorted before going to the store to make transactions. In the midst of digital development, business owners need data so that they can process it into knowledge and be able to promote their business digitally, such as through mobile phones or Whatsapp,” Ryan said in an exclusive interview with Retail Asia.
Alfamart started to build the CRM platform in 2016 and has since seen positive results, Ryan disclosed. From 2019 to 2021, Alfamart has been seeing strong double-digit growth in sales. In 2021, sales from membership grow more than 30%. Last year, members contributed more than 35% of total Alfamart sales.
“Amidst the pandemic and challenging situation, we were saved by knowledge from our CRM, because the promos given were targeted to members,” Ryan said.
Based on Alfamart’s financial reports as of 30 September 2021, the company posted a 12.10% increase in net revenue to IDR63.18t (US$4.4b) from IDR56.36t (US$3.9b) in the same period in 2020.
Launch of Alfagift
The data gathered and analysed through the CRM platform were used by Alfamart to build Alfagift in 2016. It is a loyalty program application that gives updates on promos and vouchers to its members.
In 2019, Alfamart relaunched Alfagift with added features that support Alfamart’s goal to achieve an ideal Online to Offline (O2O) model. In the same year, it acquired PT Global Loyalty Indonesia (GLI) which developed a member point program for Alfamart.
“Since 2019, Alfagift is fully managed by GLI. [But in terms of management,] they are completely independent. It’s not just a sideline for one department. That makes Alfagift a digital membership platform that enables CRM activation, as well as transactional capabilities,” said Ryan, who also serves as the CEO of GLI.
This partnership launched a new version of Alfagift, an integration of both offline and online shopper knowledge capabilities into the transactional applications. Various features were also developed based on big data analysis on shopper shopping behavior, such as personal offers and personalised shopping lists with products offered based on both online and offline historical transactions, as well as cross-selling promotion supported by shopping affinity algorithm. It was also able to offer various payment options to COD options and free shipping.
Confident that online will complement, and not completely substitute, the offline shopping experience—Alfamart aimed to synergize between shopping at Alfamart’s physical outlets and online at Alfagift. For instance, Alfamart learned in its physical outlets that shoppers want large packaging. CRM brings this knowledge online. Also, CRM ensures that the promotional benefits apply to both sales channels and there is no conflicting price strategy.
Alfagift is expected to be able to widen its segment and connect to shoppers who cannot be reached through Alfamart outlets. The company aimed to be a Total Groceries Solution that does not just rely on around 4,000 products sold at Alfamart outlets, but also by providing premium items and fresh ingredients. For example, now shoppers can buy premium goods that are not sold in physical outlets but are available online, such as olive oil, premium spices, and special supplements.
“We will provide these items through online channels, which we have not been able to do before because of the limited shelving and retail selling spaces,” Ryan said.
To ensure the supply chain, Alfamart cooperated with many business partners with services like logistics. Until the end of 2021, Alfamart has 32 distribution centres that can each supply goods according to the location of the outlets.
True Community Store ambitions
The company opened 750 new outlets in 2021 following its ambition to provide various services needed by the community, Ryan claimed.
Alfamart has opened collaborations with various parties, including digital finance companies from e-wallet, QRIS to digital banking. Alfamart also cooperated with e-commerce to supply grocery items in their digital applications such as with GoMart and Blibli.
More than just being a grocery store, it strives to add more value to its offerings by also being a logistic/delivery hub with the launch of Alfatrax. Alfatrax allows buyers who want to return goods they purchased online, to be returned at Alfamart outlets.
Alfamart’s extensive network has spawned collaborations with partners who provide e-services products, where Alfamart serves as a payment point for more than 6,500 services ranging from telco credit, public utilities, multi-finance, e-commerce, top-up e-wallet, and other financial services.
Targeting the younger generation, it has also opened co-working spaces and hangout places that sells various snacks through Alfa X. Currently, Alfa X is available in eight outlets located near university campuses in Greater Jakarta, Yogyakarta, and Surabaya.
Per day, the company records more than 5 million transactions and another 1 million transactions from shoppers who come to Alfamart to make payment points.
Alfamart is increasingly confident in adding new outlets outside Java Island whose potential is wide open. In 2021, Alfamart will begin to expand services in eastern Indonesia and become the first modern retailer to serve the people of Sorong, West Papua and Kupang, NTT. At the beginning of 2022, Alfamart has also served the people of East Belitung to fulfill their daily needs.