People start to look at mini retails rather than jumbo ones. (Image: Okezone Ekonomi)

Analysis: Shift in buying pattern in Indonesia, mini retail shows might

Alfonsus Adi Putra
Market & Investment
Indonesia Market
Jul 31, 2019
2760
Say “No” to Farmers’ Market, Hero, and all. It is time for mini retails to shine! Executive Director at Center of Reform on Economics (CORE), Mohammad Faisal, revealed that buying patter of Indonesian people has shifted from jumbo retails to mini retails.

The shift happened because mini retails succeeded in fulfilling the needs of Indonesian people with its product diversity, accessibility of location, and improved buying experience. The shift from jumbo retails to mini retails also caused buying frequency to change, from monthly to weekly or even daily.

Even, the traditional market which has become a daily haven for shopping could not stop the dominance of mini retail, as Indonesian people start to look away. Indonesian Modern Market Supplier Association (AP3MI) reported a 4% decrease in the traditional market’s sales.

Looking at the earnings growth stats, it is evident that mini retails begin to overcome jumbo retail gradually. Let’s take a look at the Q1 earnings report. Jumbo retails such as Matahari Department Store, Hero Supermarket, and Ramayana could only gain 1.7%, 0.5%, and -0.4% earnings growth.

Meanwhile, a significant earnings growths were seen in mini retails such as Indomaret, Alfamart, & Alfamidi which booked 57%, 13.9%, 12.7% growth. Faisal pointed out that the objective also has changed. Nowadays, Indonesian people only go to jumbo retail for leisure and entertainment.

The reality was contrary to the statement from Senior Economist, Purbaya Yudhi Sadhewa, saying that the retail sector was weakening due to nonoptimal monetary and fiscal policies from the Indonesian Government and Bank Indonesia (BI) since people’s buying power depends on these policies.

Faisal, on the other hand, disagreed with Sadhewa. According to him, people’s consumption trend is still ongoing. For instance, the household’s consumption growth was stable at 5%. Even though Faisal admitted that the trend slowed down due to Presidential Election, the slowing was not as contractive as in 2017.

Therefore, Faisal advised the Indonesian government to maintain consumption growth, especially in middle-class people since they are more aware of the ongoing trends and issues, especially trends and issues that could affect their income & consumption. Middle-class consumption contributed 60% to the household’s consumption total.

Source: https://www.cnnindonesia.com/ekonomi/20190731084348-92-416984/ada-pergeseran-pola-belanja-ritel-mini-unjuk-gigi

Market , Retail , Supermarket , Economy , Analysis , Purchase , Consumption