Indonesia’s retail market: the third largest in Asia

Indonesia’s retail market: the third largest in Asia

Only after India and China, Indonesia was the third-largest Asian country in terms of modern retail sales growth in 2016, with 10% increase. With a burgeoning middle class and increasing income Indonesian population represents a very strong consumer force that furthermore, have embraced mobile-first initiatives and are more connected than ever.

Indonesian consumers are also becoming increasingly sophisticated in their spending habits and product choices, as price sensitivity has decreased and the growing middle class is moving towards discretionary expenditures. Warungs and traditional retail remain the most frequented outlets, however, as income levels increase, the inclination to purchase foreign brands and the preference for modern trade outlets also increase.

As Mr. Roy Nicholas Mandey, Chairman of the Indonesian Retailers Association (Aprindo), said Indonesia continues to be an attractive country for retailers due to the enormous size of the population and the remaining potential market for retail development in certain areas of the archipelago, particularly in the east.

Although Indonesia’s Internet usage has strongly risen during the last years and social networking is certainly the most popular activity in Indonesia with over 72 million active users, consumers tend not to use this channel with commercial intentions. Indonesians still prefer to visit physical stores. However, social media is gaining traction and plays a strong role in the purchase moment as Indonesians research for online information before the decision making.

As Indonesia is expected to record the largest growth in department store sales by 2020, malls development continues across the country and mobile internet access dominates over desktop platforms, the country’s retail market present exciting new opportunities for retailers to engage with consumers via mobile and to develop new ways to influence the retail experience. And here is where OPI Digital Group sees an untapped opportunity of linking the online to the offline (O2O) supporting retail players to know better their consumers, connect directly with them and gain more traction to their outlets.