The Indonesian retail sector is projected to witness a CAGR of 13.8% by 2024. The market is segmented by product category, distribution channel, and market dynamics.
- The retail sector in Indonesia remains one of the most promising markets among Asian countries, on the back of its large population and growing middle class with higher household purchasing power and increasingly modern spending habits.
- In 2017, private consumption was affected by higher prices for food, electricity, and fees for vehicle registration, and in 2018, it is supported by lower credit cost, increasing employment, and an expansion of social welfare.
- In Indonesia, household consumption has slowed down in the past two years, which is a great concern, as household consumption has been the biggest driving factor for the economy, and is of greater importance than investment, exports, and government spending.
- Private consumption in the form of household spending has always accounted for more than 50% of the nation’s GDP yet, there has been a slowdown in consumption growth.
- The retailers profit margins decreased in 2017, and are expected to remain stable in 2018. Previous year some initiatives were taken to boost sales after the more subdued retail performance,
Scope of the Report
A complete background analysis of the Indonesian retail sector, which includes an assessment of the parental market, emerging trends by segments and regional markets, significant changes in market dynamics, and market overview, is covered in the report
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Key Market Trends
Private Consumption accounts for Major Contribution to GDP
- In 2017, household consumption was an important component to watch, because it accounts for about 56.6% of the Indonesian GDP. A sustained recovery in private investment and increased public spending on infrastructure may keep the growth momentum going.
- Consumption expanded by 5.14% in the first quarter of 2018, breaking the 5% threshold for the first time, after President Joko Widodo introduced several measures to preserve purchasing power, including freezing retail fuel and electricity prices.
- Distribution of holiday bonuses and civil servants 13th-month wage strengthened peoples’ purchasing power, and therefore, triggered rising consumption. Meanwhile, stable food prices come on the back of the government's decision to open the gates to import items, such as rice, sugar, meat, packaged cooking oil, and fuel.
- Bleak household consumption is often cited as a reason for Indonesian sluggish economic growth in the recent years. Despite falling interest rates, consumers remain hesitant to spend on various items, such as cars, homes, etc.
- Moreover, Indonesia's retail sales grew just 2.6% in December. Analysts claim that the Indonesian consumer now prefers to save his/her funds on a bank account rather than spending it.
- Traditionally, the Indonesian food and beverage industry is a lucrative sector for foreign direct investment (FDI) in Indonesia.
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The Food and Beverage Sector plays a Vital Role in Indonesian Economy
- The F&B sector plays a vital role in the Indonesian economy. In the primary sector, production of raw material for the F&B industry by plantation, agriculture, and fisheries accounted for around 14.3% of Indonesian GDP, as of 2018. In the secondary sector, manufacturing of F&B accounted for 5% of GDP and 27% of all manufacturing output.
- Indonesia’s position in the global F&B market is uncertain, as on one hand, Indonesia is one of the largest producers of palm oil, fish, cocoa, and coffee, exporting its production surpluses abroad, while on the other hand, Indonesia relies on imports of products that cannot be produced (either at all or in sufficient quantity) locally, such as wheat, dairy, or processed food products.
- However, in an attempt to transform the Indonesian economy, the government is pursuing policies both to reduce the country’s reliance on imports and to strengthen the manufacturing sector, which also benefits the F&B sector.
- Next to the contributions of the F&B sector to GDP, several other indicators also confirm the strength of the Indonesian F&B market. During the past two years, the food and beverage Industry has grown tremendously and is anticipated to show snowballing profits during the forecast period.
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The report covers major international players operating in the Indonesian retail market. In terms of market share, few of the major players currently dominate the market. However, with the technological advancement and product innovation, mid-size to smaller companies are increasing their market presence, by securing new contracts and tapping new markets.
Table Of Contents
1.1 Key Deliverables of the Study
1.2 Study Assumptions
1.3 Scope of the Study
2. RESEARCH METHODOLOGY
3. EXECUTIVE SUMMARY
4. MARKET INSIGHTS AND DYNAMICS
4.1 Market Overview
4.2 Customer Behavior Analysis
4.3 Industry Attractiveness - Porter's Five Forces Analysis
4.7 Industry Value Chain Analysis
4.8 Technology Snapshot
4.9 Insights On Distribution Channels In Retail Trade
4.9.1 Hypermarkets and Supermarkets and Convenience Stores
4.9.2 Specialty Stores
4.9.3 Department Stores
4.9.4 Other Distribution Channels
4.10 E- commerce Trend in Retail Sector
5. MARKET SEGMENTATION
5.1 By Product Category
5.1.1 Food and Beverage and Tobacco Products
5.1.2 Personal and Household Care
5.1.3 Apparel, Footwear and Accessories
5.1.4 Furniture, Toys and Hobby
5.1.5 Industrial and Automotive
5.1.6 Electronic and Household Appliances
5.1.7 Pharmaceuticals, Luxury goods, and Other Products
6. COMPETITIVE LANDSCAPE
6.1 Vendor Market Share, Mergers & Acquisitions
6.2 Company Profiles
6.2.1 PT Matahari Putra Prima Tbk
6.2.2 Ramayana Lestari Sentosa
6.2.3 Mitra Adiperkasa
6.2.5 PT Trans Retail Indonesia
6.2.6 Hero Supermarket group
6.2.7 Erajaya Swasembada
6.2.8 AEON Group
6.2.9 Lotte Mart
6.3 INVESTMENT ANALYSIS ON THE INDONESIAN RETAIL SECTOR
6.4 FUTURE OF THE INDONESIAN RETAIL SECTOR
*List Not Exhaustive
8. ABOUT US
** Subject to Availability