Consumer spending has increased steadily in Indonesia, thanks to increasing incomes that have strengthened economic activity. The growth in consumer spending is faster than income, mainly because of the increase in consumer confidence due to the country’s beautiful economic prospects and a low unemployment rate, which reinforces their confidence Their future income.
Nearly two-thirds of the country’s population live in rural areas, accounting for about 58 per cent of the country’s total consumption expenditure. Thus, urban dwellers account for one third of the population, but 42% of the country’s consumer spending.
Known brands are not only pleasing to consumers because of their design or functionality, but also because they are sold as an international standard. White-collar and young professionals with high wages often look for branded products and are accustomed to comparing local and imported products.
Spending on rent, food and transportation accounts for about 60% of consumer spending. Consumers are therefore cautious when it comes to buying other goods and tend to look for cheap and reasonable quality products, in order to be able to offer themselves fashionable products elsewhere.
The consumer’s profile and purchasing power
Indonesia is one of the most dynamic emerging economies in Southeast Asia. It has a young and large population. The under-30s represent 46% of the population, but the fastest growing tranche is that of the somethings, it has earned 7 million people in the last 7 years (160% growth).
New generations are increasingly shopping in convenience stores and are more likely to shop online, especially for clothes and appliances. Online commerce is still in its infancy, with giants like Amazon not yet present on the market, unlike very sophisticated and practical sites like Lazada and Tiki.
The changes that Indonesia has experienced over the last 10 years have led to a rapid change in marketing for consumers.
The Indonesians are now more confident in their future incomes, building on the country’s economic development, which is pushing household incomes and spending. As a result, Indonesians are more likely to buy fashionable goods and quality products to raise their standard of living, although most of the time their income level is not comparable to those in Western countries. Foreign brands and suppliers are distributing more and more products of average price or with a good value for money, to satisfy this new demand.
Jakarta sees shopping malls and supermarkets multiplying, although Indonesians still prefer traditional businesses such as traditional pasar or small family businesses called “Warung“. These types of trade offer a highly personal consumption experience that allows residents of the surrounding area to create links with the managers of these stores.
Read full report about Business Opportunities in Indonesia.