Islamic business development of Madurese-owned ethnic-based grocery stores: Study from Indonesia

Abstract

The retail grocery business is experiencing rapid expansion in several major Indonesian cities. A significant proportion of these establishments is owned and managed by a particular ethnic group, specifically the Madurese community hailing from East Java, who take pride in their identity as Muslim entrepreneurs. This research endeavors to investigate the fundamental factors contributing to the sustainability and expansion of Madurese-owned Muslim-run grocery stores as ethnic-based grocery stores (EGS). The data for this study were acquired through observations and in-depth interviews with key figures among EGS owners and staff. The findings highlight that the pivotal strategy for the success and growth of EGS lies in their capacity to adapt and emulate modern retail outlets. Furthermore, the principles of cooperation, familial bonds, cultural preservation, and adherence to Islamic values that have been fostered within the Madurese Muslim ethnic groups residing in urban environments play a significant role. Additionally, the distinctive relationships between store proprietors and employees contribute significantly to the swift proliferation of EGS across Indonesia.

Keywords:

• survival strategy transformation
• Islamic business development
• ethnic-based grocery store

1. Introduction

In recent decades, there has been a notable upsurge in the establishment of grocery stores with an ethnic focus in Indonesia, commonly referred to as ethnic-based grocery stores (EGS). This trend was documented in the 2019 report by Statistics Indonesia. One prominent category within the realm of EGS is the Madurese-owned grocery stores (toko kelontong Madura), which are retail outlets owned and operated by individuals belonging to the Madurese community, hailing from Madura Island in East Java, Indonesia. These Madurese-owned grocery stores are characterized by a distinct set of values, particularly rooted in the domains of religion and culture. Within the context of these Madurese-owned grocery stores, the religious dimension assumes a significant role, propagating the belief that sustenance is preordained by a divine power. Notably, this belief no longer functions as an inflexible doctrine governing day-to-day activities, as elucidated by Wafiruddaroin and Rezeky in their 2022 study.

The proliferation of EGS is readily apparent, with their numbers now reaching into the thousands, and collectively generating a monthly turnover in the billions of rupiah. This phenomenon is particularly pronounced in Indonesia’s capital city, Jakarta, and its surrounding areas, where EGS has coalesced into a tightly-knit, ethnically-driven business community marked by a strong sense of solidarity (Ram et al., 1999). These establishments, by definition, predominantly offer culturally specific products and merchandise (Yi et al., 2020).

Simultaneously, EGS has assumed the mantle of a miniature retail authority within the capital, consistently garnering government attention due to its sustained growth and role as an integral component of the Micro, Small, and Medium Enterprises (MSMEs) community. These community-oriented grocery stores, strategically positioned for local residents’ convenience, make substantial contributions to the economy (ekon.go.id). Their enduring presence underscores their resilience and adaptability, even in the face of competition from modern retail establishments and heightened business rivalries in metropolitan settings.

Until now, research within the grocery store sector has predominantly revolved around three core dimensions. Firstly, investigations have delved into the external pressures that either drive these grocery stores toward success or lead to their demise. Secondly, scholars have probed the issues related to accessing capital, the very bedrock of entrepreneurial initiatives, and the challenges associated with managing grocery stores in urban hubs. Thirdly, researchers have explored how the grocery store development strategy model has evolved into a pivotal topic within business discourse, particularly within the context of the COVID-19 pandemic (Donthu & Gustafsson, 2020). However, the transformative aspect of ethnic-based grocery store business development strategies within metropolitan settings has remained conspicuously unexplored.

This study aims to dissect the trajectory of Islamic businesses within grocery stores situated in Indonesian metropolitan regions and elucidate the complexities of their business networks. Specifically, it delves into the case of Madurese-owned grocery stores. The data amassed will undergo rigorous scrutiny, focusing on EGS survival and growth in Jakarta and its surrounding areas, known collectively as the Jakarta Metropolitan Area or Greater Jakarta. As a result, this research furnishes valuable insights that can inform strategies for populist economic development grounded in ethnicity.

The study posits three hypotheses concerning the development of grocery store businesses. Firstly, it posits that EGS operating extended hours throughout the day will outshine their counterparts with limited operating hours, primarily due to heightened accessibility and enhanced customer convenience. Secondly, the research postulates that robust interconnections and networks among entrepreneurs of the same ethnicity within the EGS industry will exert a positive influence on the survival and growth of individual stores. This will be achieved through knowledge-sharing, resource pooling, and collaborative endeavors. Thirdly, the study suggests that the establishment of client-patron relationships within ethnic-based grocery stores, characterized by emotionally charged bonds rooted in shared ethnicity, will foster higher levels of trust and confidence from the parent company. Consequently, this will lead to greater delegation of responsibilities and increased empowerment of employees.

Furthermore, these three hypotheses will undergo in-depth analysis within the framework of Islamic economics. This approach aims to strengthen and harmonize the work ethic of the Madurese, who are renowned for their adherence to Islamic Sharia principles. This research builds upon previous work by Yi et al. (2020), which examined the food shopping patterns of one of the largest immigrant groups characterized by distinct ethnic traits. Another related study was conducted by Wafiruddaroin and Rezeky (2022) regarding the mechanisms that sustain the existence and solidarity of ethnic traders within the urban context. This current research endeavors to refine and expand upon both of these studies, centering on the business strategies adopted by ethnic-based grocery stores within Indonesian urban landscapes.

2. Literature review

2.1. Traders and trading

Trade, as an activity, involves the exchange of goods or services through mutual agreements (Garidzirai, 2022; Shekhar, 2013). Traders in the Javanese societal context can be classified based on their sales methods and the volume of goods they handle (Alexander, 1987). According to Alexander’s research detailed in her publication Trade, Traders, and Trading in Rural Java, traders, regardless of gender, fall into two categories: bakul and juragan, classifications determined by their sales practices and business scale. Precisely, a bakul refers to an individual who retails merchandise in small quantities, primarily sourced from agents or middlemen. Conversely, a juragan represents a seller involved in extensive sales, typically equipped with significant financial capital. A juragan operates on a large scale, often directly procuring goods from farmers, serving as intermediaries or bulk purchasers. Meanwhile, tengkulak are individuals who purchase products and settle payments after successfully reselling them (Megasari, 2019). Agents, on the other hand, function as brokers or middlemen with established relationships between suppliers and distributors (Gama et al., 2018; Medin, 2021).

Within this marketing structure, the patron-client relationship plays a pivotal role, characterized by its vertical nature. This relationship is marked by instrumental friendship between the superior and inferior parties, often resulting in the inferior party experiencing significant dependence (Carrier, 2018). Scott (1972) outlines the key characteristics of the patron-client relationship as follows: (1) disparities in economic resource ownership, (2) reciprocity, (3) loyalty, and (4) personal relations. This dynamic is notably present in the patron-client interaction between entrepreneurs and furniture workers. In this scenario, the patron assumes the responsibility of providing economic protection to their client, while the client reciprocates by offering all available resources and unwavering service to the patron, typically through work (Anisrawati et al., 2018).

This patron-client relationship is underpinned by the patron providing protection, and the client, in turn, diligently carrying out their patron’s orders. This exchange aims to yield profits from sales, with workers receiving economic security from their superiors during challenging times (Rokmah & Handoyo, 2015). Several factors contribute to the survival of clients within this patron-client system, including (1) a lower risk of business failure, (2) challenges in securing strategic business locations, and (3) limited profitability when starting their enterprises independently. The furniture business continues to thrive due to the persistence of this patron-client cycle. Former clients, having adopted their patron’s work methods, establish their own businesses utilizing the same system (Anisrawati et al., 2018; Schroeder & Halsall, 2016).

2.2. Strategies for business continuity

The framework of business continuity strategy revolves around the interconnectedness of business entities. This relational aspect is vividly depicted in the model introduced by Alexander (1987), where trading participants establish affiliations with one another. This structure underscores the multifaceted journey of goods, traversing several hands before eventually reaching consumers, thereby influencing the escalation of product prices. Consequently, producers often assume a powerless stance in determining their product prices, ceding this authority to intermediaries.

However, the landscape of business continuity strategies has undergone transformation with the advent of the Internet of Things within the societal trading paradigm (Palmaccio et al., 2021; Zaguia, 2023). The internet serves as a dynamic platform enabling producers to engage their target consumers directly (Chan, 2015). Numerous studies corroborate that the internet and social media serve as conduits for businesses without conventional establishments, allowing them to penetrate the market and exert control over pricing dynamics (Permana & Cendana, 2019). In essence, the potency of business sustainability strategies hinges upon their adaptability (Kooli et al., 2022; Messabia et al., 2022a).

The tenets of the business continuity strategy also encapsulate a spectrum of strategies and tactics employed by business proprietors to bolster the survival prospects of their enterprises. These strategies, in turn, tend to shift in response to the intricate ebb and flow of the business environment. Naidoo (2010) outlines several approaches for sustaining business operations, encompassing: (1) diversification through the offering of diverse products aligned with customer preferences; (2) revenue augmentation by introducing novel products, exploring new markets, or nurturing innovation; (3) cost reduction by scrutinizing and minimizing production expenses; (4) focused marketing efforts targeting specific audiences; and (5) augmentation of cash flow. In tandem, Gama et al. (2018) accentuate aspects that entrepreneurs and traders prioritize within survival strategies, encompassing: (1) financial capital; (2) physical assets; (3) ecological resources; (4) human capital; and (5) social capital. Notably, Gama et al. (2018) investigation reveals intriguing facets of traders’ survival strategies underscored by social capital elements, such as social norms, networks, and trust. In the throes of intense business rivalry, the significance of strategic acumen, especially in fostering business continuity, cannot be overstated.

2.3. Islamic business development

Islamic business operations, particularly within Indonesia, are intricately linked with the burgeoning Islamic economic ecosystem. This economic domain in Indonesia has witnessed gradual but substantial growth over the years, positioning itself for potential future recognition as the world’s largest Islamic economy. This progression is buoyed by an expansive market and a robust real economic sector operating in strict adherence to Sharia principles. Emulating the ethical business conduct exemplified by the Prophet Muhammad (peace be upon him), the Indonesian Muslim community upholds virtues such as honesty, trustworthiness, and the provision of high-quality goods, among other ethical tenets. The enduring vitality of Islamic commercial enterprises is inherently tied to the continual innovations spearheaded by diverse stakeholders. These innovations encompass the adoption of best practices in business operations and collaborations spanning a spectrum of actors, including entrepreneurs, governmental institutions, and private enterprises. This collaborative approach serves as a blueprint for crafting innovative business models within the ambit of investment entrepreneurship (Kooli, 2020; Kooli et al., 2022).

Business development is often characterized by the profitable expansion of a company’s goods or services targeting specific market segments. In this context, Zhao et al. (2021) define business development as the process of advancing a business beyond its current state. Such expansion is influenced by three fundamental elements: markets, consumers, and relationships. Moreover, Paulraj and Saravanan (2019) underscores that business development entails the continuous enhancement of communication, public relations, sales, and marketing to secure a prominent position in the market, whether through existing or novel product offerings.

Business development typically revolves around ideas, initiatives, and activities aimed at enhancing a company’s overall performance. This encompasses augmenting revenue, expanding business operations, and bolstering profitability through strategic partnerships and astute business decision-making. As highlighted by Chiarini et al. (2020), key considerations in business development include networking, referrals, sponsorships, advertising, leadership, and content marketing. Business development is tasked with delivering substantial results in a brief timeframe while concurrently devising long-term strategies and tactics for sustained corporate growth (Farih, 2016; Minonne & Turner, 2012; Yanto et al., 2021).

Furthermore, business development can be facilitated through a patron-client system involving capital owners and workers. This system represents a form of socio-economic relations within society designed to mitigate the risks associated with unstable employment and income (Lukiyanto et al., 2018; Tahir & Umar, 2008). Patron-client relationships are deemed highly effective in securing economic and social needs. An enduring example of such a relationship exists in the poultry farming sector in small Indonesian cities. Social support within patron-client arrangements is paramount, particularly considering the inherent uncertainties in achieving desired outcomes and the capital required for production (Messabia et al., 2022b). This enduring patron-client relationship within traditional poultry farming underscores its effectiveness, even in contemporary settings. For traditional societies, the patron-client relationship represents an alternative perceived as more effective and efficient (Aida et al., 2020). This reciprocal relationship enhances the welfare of both parties, reinforcing their bond. Furthermore, in Javanese society, the boss-client (patron-farmer) relationship manifests as a business model rooted in the Javanese cultural ethos of communal assistance, proven to be efficacious for business development within rural communities (Lukiyanto et al., 2018). Importantly, the development of grocery stores in Indonesia is imbued with Islamic values, particularly evident in areas dominated by the Madurese community, known for its strong religiosity. In the evolution of their businesses, these grocery stores prioritize ethical principles such as honesty, trustworthiness, and the provision of quality products, consistent with Islamic teachings.

3. Methodology

This research adopts a qualitative methodology that centers on the transformation of strategies for enhancing ethnic-based grocery stores (EGS) in metropolitan settings. The study encompasses 15 active participants involved in EGS operations in Jakarta, including EGS proprietors and employees who play pivotal roles in various EGS business activities.The research commences with an extensive desk review to delineate pertinent themes within the existing literature. Subsequently, in May 2021, a series of preliminary observations is conducted to validate the interview guidelines, which will be utilized during in-depth interviews with the respondents.

Over a span of three months, a total of 15 interviews are conducted (Table 1), involving multiple informants representing distinct facets of the EGS landscape. These categories comprise: 1) dedicated EGS employees, tasked solely with overseeing EGS operations and entrusted with full authority for store management; 2) EGS workers who also hold ownership stakes in the EGS establishments; 3) EGS customers who experience firsthand the presence of EGS and engage in direct interactions with these establishments.

Table 1. Informants and their status

Informant	Category	EGS location
I1	Owner of “Barokah” grocery store	Tanah Tinggi, Central Jakarta
I2	Owner of “Kasih Ibu” grocery store	Bambu Utara, West Jakarta
I3	Owner of “Naila” grocery store	Tanah Tinggi, Tangerang, Banten
I4	Owner of “Warung Mimin” grocery store	Poris Plawad, Tangerang, Banten
I5	Owner of “Tasya” grocery store	Cikeas, Bogor, West Java
I6	Owner of “Barokah II” grocery store	Perigi Lama, Pondok Aren, Tangerang, Banten
I7	Owner of “Warung Abi” grocery store	Pajang, Tangerang, Banten
I8	Owner of “Warung Afif” grocery store	Cipinang Jaya, East Jakarta
I9	Owner of “Arbun” grocery store	Jatake, Tangerang, Banten
I10	Owner of “Selviana” grocery store	Bukit Tiara regency, Tangerang, Banten
I11	Owner of “Barokah Putri” grocery store	Mampang Pancoran Mas, Depok, West Java
I12	Owner of “Naila 1” grocery store	Jl. Melati Tanah Tinggi, Tangerang, Banten
I13	Owner of “Bunak” grocery store	Celincing Jati Negara, East Jakarta
I14	Owner of “Warung Agus” grocery store	Tanah Tinggi, Tangerang, Banten
I15	Owner of “2 Saudara” grocery store	Jl. Cimanggis, Depok, West Java

Furthermore, the research extends its scope by incorporating data derived from online sources, encompassing platforms such as YouTube and online media outlets that feature content related to EGS in Jakarta.

The data collected is subsequently subjected to analysis following analytical approach, which encompasses several key stages. These stages encompass data reduction, data display, and data verification. Data reduction involves the selection and categorization of relevant information related to the research objectives. Subsequently, the data is visually presented through tables and incorporated into narrative excerpts, preserving the original context and essence of the data. To enhance data robustness and credibility, a triangulation process is employed, cross-referencing data from multiple sources. This structured data is then subjected to analysis through three primary methods: restatement, description, and interpretation. Restatement involves the restating of informant statements, incorporating interview excerpts to convey the perspectives and insights of EGS stakeholders. Description entails the mapping of patterns concerning strategic transformations among EGS actors. The interpretation phase assigns meaning to the business development strategies pursued by EGS through a comprehensive content analysis approach. These meticulous analytical stages collectively serve as the foundation for drawing meaningful conclusions from the research findings.

4. Results

4.1. Characteristics of ethnic-based grocery stores in Indonesia

As one of Indonesia’s ethnically distinct groups, the Madurese community exhibits unique characteristics, including distinctive business strategies, which often emerge as a subject of interest in ethnographic studies of entrepreneurship, particularly in characterizing specific ethnic behaviors (Anderson et al., 2018). The research findings indicate that grocery stores owned by Madurese shopkeepers operate around the clock, employing a shift system managed by family members. During the daytime, the owner’s wife oversees the shop, while the male family members procure stock from the agent’s shop. The male family members take turns operating the shop from noon to night. However, when the management involves external workers, a dedicated schedule is established, coordinating both shop maintenance and stock procurement.

These grocery stores never close their doors, operating continuously without holidays. The uninterrupted service aims to provide optimal customer convenience, allowing shoppers to visit even during late hours. Despite the potential for lower sales volumes during these times, adherence to the practice of 24-hour operations is seen as a means to maximize turnover. Additionally, the non-stop operation mitigates challenges associated with opening and closing the store, especially given the extensive range of items typically displayed outside.

Customer satisfaction hinges not only on the round-the-clock service but also on the efficiency of late-night transactions. Maintaining consistent service quality throughout the day and night is paramount. Some shops experience heightened activity during late hours, particularly if they are situated along major thoroughfares frequented by late-night commuters.

Moreover, these grocery stores adopt a competitive pricing system. According to informants, pricing standards vary, with a typical selling price margin hovering around 10%. For items that are more challenging to sell, the margin may extend to 15%. This pricing approach allows these stores to coexist, and sometimes thrive, alongside modern retail establishments. The informants assert that their prices are consistently lower than those of modern stores, particularly for essential commodities. Comparative price observations reveal disparities, with some items offered at reduced rates in these grocery stores. It’s worth noting that these apparent savings result from differences such as operational costs and lighting conditions. Nonetheless, customers in the capital city prioritize affordability over the shopping environment, often seeking lower prices, especially for essential items like cooking oil and rice.

The pricing strategy aligns with Islamic principles, emphasizing moderation in profit-taking. The 10% margin on the selling price, a common practice among these grocery stores, conforms to the viewpoint of Imam Al Ghazali, who recommends profit margins ranging from 5% to 10%. Imam Al Ghazali’s perspective underscores that excessive profit-taking, even in the absence of deceit, is considered oppressive. Hence, adhering to fair profit margins reflects the store owners’ commitment to ethical business conduct.

Furthermore, Madurese-owned grocery stores are distinguished by their comprehensive inventory, encompassing both primary and secondary necessities. Several EGS establishments stock a wide array of items, including cosmetics, fuel, and LPG. If a customer requests an item that is temporarily unavailable, it is promptly noted and made available as soon as possible. These grocery stores often attract a loyal customer base, including local residents and street vendors. Recognizable by their characteristic appearance—small, densely stocked shops—many EGS outlets emphasize their Madurese identity, often displaying a sizable sickle as a symbolic marker indicating their affiliation with the Madurese community.

4.2. Ethnic-based merchants network

An essential hallmark of Ethnic-based Grocery Stores (EGS) is their interconnected distribution across neighborhoods. Locating these stores in proximity to areas where residents congregate, be it permanent residences or boarding houses, confers a significant advantage for business expansion. Nearly every neighborhood in Jakarta features the presence of EGS establishments. While it’s common for EGS to be established within each neighborhood unit, they are typically not clustered in the same alley. Informants emphasize that the emergence of a new grocery store is invariably linked to the existence of older ones, with a mutually agreed-upon minimum distance of approximately 3–4 electricity poles, or more precisely, about 500 meters between EGS stores.

Furthermore, Madurese proprietors avoid establishing their grocery stores in locations where shops run by other ethnic groups, such as the Batak and Kuningan Sundanese communities, are situated. This practice serves to prevent both physical and non-physical interactions. Physical interactions tend to pertain to the Batak ethnic group, whereas non-physical interactions are typically associated with the Kuningan Sundanese community. According to the informants (I1, I3, I5, I9, I13, I14), the strategic positioning of these stores, often at alley entrances, is more pivotal than their size. Store dimensions are generally not subject to specific standards, but as a rule of thumb, a minimum area of 3 × 3meters suffices.

Beyond store locations, kinship and friendship-based connections hold substantial significance in the development of EGS businesses. The presence of the store is typically clustered based on the ethnic icon manifested in the store’s name. These store names signal emotional bonds and mutual assistance among Madurese proprietors, stemming from their shared Madurese heritage. Renowned for their strong work ethic, the Madurese also exhibit a profound sense of solidarity regardless of their geographical dispersion. This characteristic aligns with Islamic teachings, emphasizing the establishment of fraternal bonds among Muslims. Islamic doctrines enjoin followers to engage in acts of kindness, foster harmonious relationships, exhibit care and love towards others, refrain from disrupting solidarity, and promote affection for others akin to self-love. In addition to these directives, Islamic teachings underscore the performance of specific rituals and acts of worship as a testament to one’s devotion to Allah. Many of these rituals relate to social endeavors (Kamiruddin, 2006).

The cultivation of ethnic-based solidarity serves to furnish a sense of security for EGS proprietors, thereby anchoring their commitment to store development. Locations in close proximity, emotionally tethered by shared ethnicity, have demonstrated their ability to provide security assurances for store ownership and operation. Moreover, this proximity fosters collaborative efforts and the exchange of valuable information conducive to store development, such as accessing economical wholesale sources for specific items. The adjacency of these stores also guarantees mutual security; storekeepers vigilantly watch over each other’s establishments. Various channels of contact are often established, including social gatherings, columns, and other routine informal meetings.

4.3. Client-Patron Relationship between EGS Workers and owners

Broadly, most Ethnic-based Grocery Stores (EGS) owned by Muslim Madurese are directly managed by their owners. However, data collected from informants reveals instances where EGS is operated by hired workers. In such cases, the worker assumes full responsibility for all aspects of EGS management, including sales, restocking, and earmarking approximately 10% of the store’s daily turnover. The owner, on the other hand, retains control over the overall operation of the grocery store.

At the outset of their employment, a thorough inventory is typically conducted to catalog all items and their respective prices. Subsequently, daily sales reports are compiled by the workers/owners. For at least one month, the owner or their designated representative scrutinizes the store’s management records. The level of trust bestowed upon the shopkeepers by the owners is remarkably high and is reciprocated by the shopkeepers’ diligent care of the store as if it were their own.

Basic necessities such as food and beverages for the storekeeper are covered by the shop owner. Even the transportation from the storekeeper’s residence to the store location is typically the responsibility of the shop owner. Workers or storekeepers at EGS such as the ones owned by Madurese are typically granted full autonomy in store management. If a worker opts to invest a portion of their salary as store capital, it can result in a substantial capital difference at the end of the contract period. This dynamic fosters a mutually symbiotic relationship between the storekeeper and the owner, wherein the storekeeper perceives the store’s progress as benefiting them, not solely the owner. This imbues the storekeepers with enthusiasm for advancing the store since they believe that the store’s success ultimately benefits them.

The extent of delegation granted by EGS owners to the shopkeepers hinges on a profound sense of trust within the Madurese ethnic community. Shop owners place complete trust in the shopkeepers, firmly believing that they will execute their responsibilities with integrity. Islam underscores the significance of trust when entrusting someone with responsibility, as exemplified in hadiths from the Prophet Muhammad (peace be upon him). A hadith collected by Imam Ahmad states: “The faith of someone who is not trustworthy, and the religion of someone who does not fulfill his promise is imperfect,” while the one narrated by Abu Hurairah says:

The Messenger of Allah said: “If the mandate has been wasted, just wait for the destruction to occur.” Then there was a companion who asked, “What is the meaning of ‘mandate being wasted’, O Messenger of Allah?” He replied, “If matters are not left to experts, then wait for the destruction”. (collected by Bukhari)

This sense of trust becomes an imperative for EGS workers, as they are entrusted with the maintenance and operation of EGS with the expectation of trustworthiness to prevent harm to any party.

The enduring impact of the reciprocal trust between EGS owners and the responsible shopkeepers results in long-term partnerships. These partnerships culminate in EGS owners expanding their business footprint through franchising, effectively developing a network of client-patron stores.

The shop system is a pivotal factor contributing to the proliferation of ethnic-based stores. Storekeepers often acquire new locations and aim to establish their own shops based on their experience, both as social capital (related to managing a store, store development management, and maintaining good relations with agents and customers) and economic capital (financial resources). This dual capital foundation enables shopkeepers to establish new stores, akin to a franchise model. The new shops are poised for growth in terms of quality and quantity. Derived from the grocery store system utilized by the Madurese, this approach enables them to thrive and expand in diverse settings, including bustling metropolises like Jakarta.

4.4. Development strategies of EGS in metropolitan areas

The ethnic-based grocery store (EGS) system presents an intriguing model reliant on the symbiotic relationship between owners and shopkeepers. The ensuing portrayal elucidates the collaborative management approach prevalent in ethnic-based grocery stores, especially those operated by Muslim Madurese in urban centers.

From Figure 1, EGS owners exhibit profound trust in entrusting shop management to shopkeepers, concurrently remunerating them for their services. Shopkeepers assume responsibility for store maintenance, customer service, sales tracking, and stock replenishment. EGS owners, however, maintain oversight over stock levels and overall store management, ensuring customers can readily access their necessities, facilitated by the diligent service of the shopkeepers.

Figure 1. EGS management Illustration.

Source: Processed data by authors (2023)

The resilience and evolution of ethnic-based grocery stores in Jakarta stem from a strategic transformation, encapsulated within three key factors. Firstly, ethnic-based grocery stores have not only endured but thrived by prioritizing exceptional customer service through round-the-clock operations, thus providing customers with unhindered access. Secondly, a robust and interconnected network has emerged among entrepreneurs of the same ethnicity engaged in the grocery store sector, fortifying their collective resilience. Thirdly, the client-patron relationship, framed by emotionally charged ethnic bonds, has imbued owners with the confidence to entrust shop management fully to their workers.

5. Discussion

This study highlights the adaptive strategies employed by ethnic-based grocery store (EGS) business operators in metropolitan areas to effectively respond to the demands of the modern market within the context of the free trade era (Ilman Irianto, 2014; Naafi’a, 2021; Rusdianti & Sukayat, 2021). This strategic shift, observable among EGS proprietors, entails a transition from traditional approaches to more contemporary ones, thereby aligning their businesses with the evolving dynamics of the commercial environment in which they operate (Gomes et al., 2019; Karpunina et al., 2020; Latukha et al., 2020; Zoppelletto et al., 2020). This transformation is integral to the sustainability of EGS, and it thrives on the adaptability and robust interpersonal relationships shared among EGS stakeholders of the same Madurese ethnicity (Alexander, 1987; Palmaccio et al., 2021; Permana & Cendana, 2019).

The shift from traditional to modern grocery store strategies has significantly influenced the expansion and enhancement of these ethnic-based businesses, both quantitatively and qualitatively. This transformation is characterized by its swiftness, with data illustrating that within a mere 1–2 years, workers who initially served as caretakers have developed the capabilities to become EGS owners in their right. This strategic evolution is further propelled by the Madurese people’s acumen in business management, a response to the competitive pressures they face.

Beyond the realm of business strategy transformation, numerous studies emphasize the phenomenon of survival and growth across various business sectors, including retail. This impetus for survival and growth often arises in response to external pressures exerted on businesses (Latukha et al., 2020).

Notably, this study unveils three distinctive findings. Firstly, businesses that thrive often face substantial pressures and actively engage with the sources of such pressure. As newcomers, EGS entrepreneurs prepare themselves with an array of capital, encompassing both social and economic facets, to navigate the challenges and thrive. Secondly, the competition does not revolve around ethnic dynamics but extends to the broader metropolitan context. Lastly, the transformation of EGS strategies within the framework of Islamic economics showcases that adherence to Islamic principles can competitively position EGS, even amidst modern retail establishments within metropolitan areas (Moraes et al., 2020; Oonincx et al., 2015; Sánchez et al., 2019; Vasconcelos et al., 2017).

These findings offer valuable insights to traditional ethnic-based shop operators, urging them to adapt and transform their strategies to persist and flourish amid evolving market demands. Owners of Ethnic Grocery Stores are encouraged to continually innovate, leveraging available resources, swiftly seizing opportunities, and effectively responding to challenges. Moreover, they should aspire to transition from shopkeepers to shop owners. Government support is also recommended, particularly in providing access to capital for EGS development, with a focus on nurturing shop owners instead of perpetuating a workforce of shop employees. Additionally, intensive coaching should be provided to EGS businesses to minimize potential conflicts, both internally among ethnic Madurese and externally with other ethnic groups.

The business transformation model implemented by Madurese Muslims mirrors the Prophet’s business model, despite not necessarily being grounded in formal theoretical knowledge of this model. Their business operations are deeply rooted in religious values, fostering honesty, effective communication, the cultivation of interpersonal relationships, the establishment of strong bonds based on shared Madurese ethnicity, and a reputation for trustworthiness when entrusted with responsibilities. These ethical underpinnings contribute to the enduring success and popularity of their businesses, not solely driven by profit motives but by the aspiration for blessings in their entrepreneurial endeavors.

6. Conclusion

The phenomenon of ethnic-based grocery stores (EGS) in the Jakarta Metropolitan Area, Indonesia underscores the pivotal role of strategic adaptation in the success and development of these ethnically oriented retail businesses. EGS proprietors have demonstrated their ability to not only survive but thrive by emulating modern retail establishments as a strategic response to the competitive landscape within metropolitan areas characterized by free trade. Moreover, this transition from caretaker or worker to proprietor of an EGS business is facilitated by the cultivation of social and economic capital, encompassing experiential knowledge and behaviors aligned with Islamic values such as honesty, effective communication, and trustworthiness in entrepreneurial pursuits.

This study reaffirms the notion that businesses can achieve resilience and growth when subjected to constructive external pressures. EGS enterprises, in particular, have thrived by adapting to the challenges posed by the evolution of modern retail dynamics. This adaptation has been underpinned by the development of essential competencies, both in terms of cognitive and business acumen.

Furthermore, this research offers a compelling illustration that ethnically based businesses, guided by Islamic principles, can successfully compete with other enterprises, even within the bustling confines of metropolitan cities. In doing so, it challenges prior assumptions that the proliferation of modern retail outlets would diminish the presence of traditional Islamic ethnic grocery stores. This study introduces a novel perspective by emphasizing that ethnicity serves as a catalyst for the resilience and advancement of entrepreneurial endeavors, even within the complex milieu of metropolitan environments.

Nonetheless, it’s important to acknowledge certain limitations in this research. Firstly, the study’s sample is confined to ethnic grocery store entrepreneurs within specific areas within and around the Indonesian capital, thus not fully encapsulating the broader landscape of ethnic-based grocery stores in other metropolitan settings. Secondly, the study conducted its research under the abnormal circumstances presented by the pandemic. Lastly, the research is primarily centered on a single case, specifically strategic transformation as a form of EGS adaptation. In light of these limitations, future investigations should delve into the reasons behind ethnic-based grocery stores choosing the capital city over other urban centers and explore the perspectives of consumers who opt to patronize ethnic grocery stores.

Acknowledgments

The authors extend their sincere appreciation to the participants and all contributors who offered their invaluable support throughout the course of this research. Furthermore, the authors express their gratitude to the diligent efforts of the editors and reviewers, whose perceptive comments and recommendations significantly enriched the quality of this work. Any remaining errors or oversights, however, are solely the responsibility of the authors. This study culminates from the authors’ profound interest in the subject matter at hand and their recognition of the substantial growth potential within the realm of ethnic-based grocery stores (EGS) in the foreseeable future. Particularly, the authors envision a rapid expansion and noteworthy economic contribution from EGS establishments owned by the Muslim community from Madura, a region in East Java from which a majority of the authors hail. Presently, these EGS entities are predominantly concentrated in the urban hubs of Java. Nevertheless, it is plausible that their influence may extend to other islands, driven by the robust work ethic and unwavering determination of EGS entrepreneurs. Moreover, the incorporation of Islamic values by proprietors and caretakers holds the potential to enhance the trustworthiness and appeal of EGS among a broader clientele.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Zainal Abidin

Zainal Abidin was born on July 1, 1980, in Pamekasan, Madura, East Java. Presently, he holds the position of lecturer, specializing in Fiqh Muamalah, Islamic Economics, and the History and Thought of Islamic Economics, at the Madura State Islamic Institute (IAIN Madura). Additionally, he serves as the Dean of the Faculty of Islamic Economics and Business (FEBI) at IAIN Madura. Dr. Abidin completed his undergraduate studies (S-1) at the Sharia Study Program (ahwal al-syahsiyah) at STAIN Pamekasan. He pursued his master’s degree (S-2) in Islamic Finance at IAIN Sunan Ampel Surabaya and subsequently earned his doctoral degree (S-3) in the field of Dirasat Islamiyah in Islamic Economics at UIN Sunan Ampel Surabaya. In addition to his role as an educator, Dr. Abidin holds the position of Director in Chief of the journal Iqtishadia at IAIN Madura. Furthermore, he has actively participated in numerous international conferences hosted in various cities.