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. 
Indonesian Retail Industry – Major trends, Growth and Opportunities
Analysis: Indonesia’s retail industry and changes in consumer behavior
As one of the world’s emerging markets and high-growth nations, Indonesia is expected to have a rising economy. One of the indicators can be seen in high demand for consumer goods, reflected in the performance of several industries, including the retail business.However, the growth of Indonesia’s retail industry currently seems to be lukewarm and no longer as enticing as before. This is happen… 
Despite a slight slowdown in the national economy, Indonesia is expected to record solid economic growth in 2017 and beyond as the government enacts positive reforms to improve the business environment, headwinds against exports wane and infrastructure investment accelerates. While high unemployment and informal employment rates remain a barrier to household consumption growth, overall robust wage growth and positive demographic trends will support a strong consumer outlook.
The Indonesia Retail Report has been researched at source and features BMI Research’s independent assessment and forecasts for the retail sector. The report examines key drivers of retail sales growth and future prospects, including consumer spending and private sector investment.
BMI’s Indonesia Retail Report also examines the level of development and potential for growth of the retail sector, the commercial initiatives of major players, changing consumer demographics that influence demand and the regulatory environment. Key sub-sectors include mass grocery retail, autos, over-the-counter pharmaceuticals, computers and consumer electronics.
Benchmark BMI’s independent retail industry forecasts for Indonesia to test other views – a key input for successful budgeting and strategic business planning in the Indonesian retail market.
Target business opportunities and risks in Indonesia through our reviews of latest industry trends, regulatory changes and major deals, projects and investments.
BMI Industry View
Summary of BMIs key forecasts and industry analysis, plus a discussion of major industry developments and a snapshot of key short-term demand-driving macroeconomic movements.
Industry SWOT Analysis
Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the retail sector and within the broader political, economic and business environment.
BMI Industry Forecasts
There are four separate 5-year forecast modules in the retail reports. These are:
Headline Retail Forecast: Total household spending (local currency and USDbn, % growth, % GDP, per capita, per household), spending by retail sector (food & non-alcoholic drink, alcoholic drink, clothing & footwear, housing & utilities, furnishings & home, health, transport, recreation, education, restaurants & hotels, personal care & insurance (local currency and USDbn, % growth, % GDP, % of total spending)
Retail Sector Forecast: Breakdown of Food, Non Alcoholic Drink, Alcohol, Tobacco, Clothing, Footwear, Household Goods, Furnishings, Appliances, Glass and Tablewear, Household Textiles, Consumer Electronics, Garden Toys and Pets, Home and Garden tools, Personal Care, Personal Effects Spending (USDbn, % Growth)
Household Income and Numbers Forecast: Number of Households (000, % growth); gross income per household and per capita; net income per household and per capita; tax and social contributions per capita; breakdown of household incomes USD5000+, USD10,000+ USD50000+ (000, % of total); labour force, employment and unemployment (000, % change)
Demographic Forecast: Total population; Babies 0-12 months; Young Children 0-4yrs; Children 5-9yrs; Young Teens and Older Children 10-14yrs; Older Teens 15-19yrs; Adults 21yrs +; Young Adults 21-29yrs; Middle Aged 40-64yrs (000, % growth, male, female); Urban Population (000, % population); Rural Population (000, % population).
Provides a detailed country-specific analysis of the key trends and developments in the retail sector as a whole, as well as an assessment of the main drivers affecting the major retail segments including mass grocery retail, fashion, pharmacies, consumer electronics, home improvement and personal care. The market overview also considers the most effective store formats in a given country and the impact of these factors on the main international and domestic players development strategies.
This provides a brief overview of the key players in each subsection of the retail sector including MGR, Fashion, Home Improvement, Consumer Electronics, Pharmacies, and Department Store chains.
The Retail Reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports