Professional Documents
Culture Documents
Deloitte Indoensian Consumer Insight PDF
Deloitte Indoensian Consumer Insight PDF
Foreword 3
2. Spending patterns 14
4. Communication channels 24
5. Buying channels 27
6. e-Commerce 32
7. Geographical differences 34
Looking ahead 37
Appendix 39
Contact us 42
Foreword
The Indonesian consumer has come a long way. Buoyed by rapid economic growth and the corresponding surge in
disposable household incomes, the Indonesian consumer is an optimistic and increasingly sophisticated one. Over the
last few years that we have conducted the Deloitte Consumer Insights survey, we have witnessed how the price-
sensitive Indonesian consumer’s focus has shifted from price-based purchasing decisions into a quest for value-for-
money propositions as they weigh price considerations against desirable product attributes.
In this third edition of the survey, we reveal some of the recent evolutions of the Indonesian consumer that have
emerged from the results of the third edition of the Deloitte Consumer Insights survey conducted in the first quarter
of 2016 across 2,000 households via face-to-face interviews in five major cities: Jakarta, Bandung, Makassar, Medan
and Surabaya.
We begin by exploring a number of developments in the overall Indonesian consumer sentiment, as well as in their
spending patterns, buying behaviours, brand preferences, communication channels, and buying channels. To account
for the increased consumption and expenditure of the Indonesian consumer, this edition of the report will feature
insights on a list of product categories that have been expanded from the previous two editions. Specifically, as
incomes increase, Indonesian consumers are purchasing greater quantities of electronics products and appliances as
these products – typically perceived as non-essentials – are increasingly becoming necessities for many.
Then, we take a look at some of the latest developments of the e-commerce landscape in Indonesia, which has
begun to offer a number of innovative solutions to previously unserved, or underserved, markets. At this point, it is
worth mentioning that the rise of online communication channels and e-commerce is fuelling a radical change in the
way Indonesian consumers make purchase decisions. As you will see later in this publication, the average Indonesian
consumer today often does his or her pre-purchase research online and, depending on the type of product in
question, adopts a myriad of different strategies to complete the purchase either online or offline.
Finally, we examine a few of the geographic differences between the key retail markets of Indonesia. It suffices to say
that Indonesia is a very vast and heterogeneous market. We hope that this publication, as a snapshot of the evolving
Indonesian consumer, provides a glimpse into the considerations that consumer and electronics products companies
as well as retailers will need to make when crafting their strategies to enter and grow in this diverse archipelago.
Eugene Ho
Southeast Asia Industry Leader
Consumer & Industrial Products
3
The evolution of the Indonesian
consumer
To say that Indonesia is a vast and geographically disparate country would be an understatement: with its 258 million
inhabitants spread across over 6,000 islands1, it is the world’s fifteenth largest economy and fourth most populous
country after India, China and the US. Driven by rapid urbanisation and a relatively youthful population, Indonesia’s
Gross Domestic Product (GDP) has been growing at an average rate of 6% throughout the last decade2, with private
consumption rates of up to 57% of GDP3 – significantly higher than neighbouring commodity exporters Malaysia and
Thailand. For retail companies looking to invest in Southeast Asia, Indonesia represents a market that is brimming
with promise. But first, they will need to take stock of the dynamic and ever-changing Indonesian consumer.
Confident consumers
The profile of the Indonesian consumer has been steadily evolving along two key dimensions: the increase in
disposable household incomes, and the rise in urbanisation rates. Over the last decade, Indonesia has experienced a
steady growth trajectory in terms of GDP, and this has ultimately led to an increase in household disposable incomes.
Coupled with growth in its population size, this trend has given rise to a significant middle class with headroom to
increase discretionary spending (see Figure 1).
The number of households with high annual disposable incomes of over IDR 120 million (approximately US$10,000)
has doubled between 2006 and 2011, and has continued to increase ever since then (see Figure 2). According to
estimates, Indonesia’s middle class – consisting of households with incomes between IDR 36-120 million – will also
expand to include 32 million households by 20204, representing a solid foundation for growth in consumption.
1
Indonesia. The World Bank. http://data.worldbank.org/country/indonesia
2
Indonesia GDP Annual Growth Rate. Trading Economics. http://www.tradingeconomics.com/indonesia/gdp-growth-annual
3
Household final consumption expenditure, etc. (% of GDP). The World Bank. http://data.worldbank.org/indicator/NE.CON.PETC.ZS
4
Indonesia’s Rising Middle Class to Transform the Country’s Consumer Market. Euromonitor International. 3 July 2012. http://blog.
euromonitor.com/2012/07/indonesias-rising-middle-class-to-transform-the-countrys-consumer-market.html
4
Figure 1: Population demographics in Indonesia (2005-2015)
Million
300
258
250 234
211 20%
3% 17%
200 High income
12%
(More than IDR 120 million per annum)
150 25% Upper middle income
38% 40%
(IDR 60-120 million per annum)
Lower middle income
100 (IDR 36-59.9 million per annum)
60% 30% 29% Low income
50 (Less than IDR 36 million per annum)
15% 11%
0
2005 2010 2015
Figure 2: Number of households with annual income above IDR 120 million and real growth rate in
disposable household income (2006-2020)
Million
35 12%
30 10%
Number of households
25
8%
Real growth rate
20
6%
15
4%
10
2%
5
0 0%
2006 2008 2010 2012 2014 2016 2018 2020
5
An uncertain economic environment
However, in the face of weaker international demand for commodities and slowing growth in investments, there is a
chance that Indonesia’s exponential growth rates in GDP and disposable household incomes may begin to taper off.
In fact, there are already signs of this happening: in 2015, consumer spending was evidently weaker than previous
years5.
The distribution of wealth, too, remains uneven. While the middle and higher income segments are enjoying rapid
improvements to their standards of living, the proportion of population living in absolute poverty remains at a
worrying 11%. In the low income segment, disposable household income growth is also significantly lower than that
of the other income segments (see Figure 3)6.
This growth in the middle class is extending well beyond the metropolitan area of Jakarta, with the retail markets
outside Java – particularly those in eastern Indonesia, such as the cities in Sulawesi, Maluku and Papua – rapidly rising
in importance7.
Figure 3: Percentage change in disposable household incomes in the low, middle and high income groups in
Indonesia
30% 29%
28%
Annual disposable household income
20% Decile 10
15%
10%
8% 7% 7%
5%
3% 2% 2%
0%
2006 2011 2020
Source: OECD (2015)
Note: Decile 1 represents the lowest 10%, Decile 5 represents the middle and Decile 10 represents households with the top 10% of
disposable incomes.
5
Indonesia: Constraints Prompt Slower than Expected Growth. The World Bank. 8 July 2015. http://www.worldbank.org/en/news/
press-release/2015/07/08/constraints-prompt-slower-than-expected-growth
6
Indonesia’s Rising Middle Class to Transform the Country’s Consumer Market. Euromonitor International. 3 July 2012. http://blog.
euromonitor.com/2012/07/indonesias-rising-middle-class-to-transform-the-countrys-consumer-market.html
7
Construction Sector Growth Highest in East Indonesia. Katadata. 6 April 2016. http://en.katadata.co.id/news/2016/04/06/
construction-sector-growth-highest-in-east-indonesia
6
Deloitte Consumer Insights
This third edition of the Deloitte Consumer Insights survey explores a number of macroeconomic and technological
trends that are shaping the Indonesian consumers' behaviours. As with previous years, the report includes analyses
on the spending patterns and buying behaviours of the Indonesian consumer. It will, however, delve deeper into
the consumption patterns of key consumer product categories: in particular, electronics products and appliances
categories have been introduced in this edition to better reflect the increased interest and expenditure of Indonesian
consumers in this segment. In addition, the report will take a look at the growth of the promising e-commerce
industry in Indonesia, and explore the evolution of the information sources that Indonesian consumers rely on in their
consumption journeys.
Methodology
The survey was conducted in the first quarter of 2016 across 2,000 households via face-to-face interviews in five
major cities – Jakarta, Bandung, Makassar, Medan and Surabaya – with respondents selected from seven household
income levels across the low, middle and high income segments. The sample had been constructed as such in order
to be representative of Indonesia’s overall population in terms of geographic distribution, gender, and age.
Consumers were surveyed on their spending patterns, buying behaviours, brand preferences, communication
channels, buying channels, e-commerce activities, and geographic differences across eleven product categories:
7
Demographics of survey respondents
Consumer Survey (n = 2,000 households)
10% Jakarta
Bandung
10% Makassar
Medan
10% Surabaya
60%
10%
50% 50%
15-24 20%
25-34 26%
35-49 40%
50-64 14%
Percentage of survey respondents
Monthly household income distribution of survey respondents vs. actual household income distribution
Monthly household
income, IDR million
Actual 7% 26% 42% 14% 11% Less than 3
3-4.99
Survey 5-9.99
26% 15% 26% 13% 20%
10-15
More than 15
Percentage of survey respondents
Income distribution
Monthly household
Jakarta 4% 7% 15% 13% 9% 52% income, IDR million
Bandung 5% 26% 19% 21% 23% 5% 1% Less than 1
1-1.99
Makassar 10% 22% 17% 12% 24% 10% 5% 2-2.99
3-4.99
Medan 6% 26% 15% 18% 20% 9% 6% 5-7.49
Surabaya 7.5-10
5% 29% 13% 17% 22% 11% 3%
More than 10
In order to accurately reflect the actual demographics of the Indonesian consumer market, quotas were set on
the survey samples to achieve the appropriate distribution of gender, age, and geographical location of the
respondents, and weights were applied to adjust for minor over-representations and under-representations
that occurred in the data set.
8
For this edition of the report, the Deloitte Retail Insights screening exercise was once again conducted to shed light
on some of the key aspects of Indonesia’s retail activities.
Methodology
200 retail outlets across the spectrum of Traditional and Modern Trade channels – Wet Markets, Street Hawkers,
Minimarkets, Supermarkets and Hypermarkets – were screened to gather information on their product availability,
shelf visibility, and promotions for 13 non-electronic, consumer product sub-categories:
Additionally, to account for the increasingly important electronics products and appliances segment, 48 electronics
products and appliance retailing outlets – consisting of Traditional Electronic Stores, Modern Electronic Stores, and
Hypermarkets – were screened for four electronics products and appliances categories:
9
Overview of retail screening
Retail Screening (n = 248 retail outlets)
19% 24%
Jakarta
Bandung
Makassar
Medan
19% 19% Surabaya
19%
Types of retail outlets screened (n = 200) Types of retail outlets screened (n = 48)
(non-electronics products and appliances) (electronics products and appliances)
20% Warungs
20% Supermarkets
33% Hypermarkets
20% Hypermarkets
10
1. Overall consumer sentiment
Figure 4: Overall consumer sentiment and plans for increased spending in 2016
29% 14%
35%
Percentage of total population
28%
60% 60% 60%
49%
20% 20% 20%
15%
0% 0% 0%
Sentiment towards Plans to increase Overall intended
economic climate spending incease in spending
No 26-50%
Moderately optimistic
10-25%
Pessimistic
<10%
11
On closer inspection, low household income respondents seem to be more optimistic than their wealthier
counterparts, with 100% of households with monthly household incomes of less than IDR 1 million indicating
moderate or strong optimism. But herein lies the paradox: as household income levels increase, optimism and
pessimism levels both increase simultaneously. In the high income segment, 37% and 27% of the households express
optimism and pessimism respectively (see Figure 5).
Figure 5: Consumer sentiment in Indonesia and plans for increased spending in 2016
12
The manifestation of such a dual consumer sentiment may be caused by the downward pressure of a slowing
economy on wages. Although the average Indonesian minimum wage is expected to rise by a considerable 10.5% in
2016, this growth rate is slower than those in 2015 (12.8%) and 2014 (19.1%)8. However, urban salary growth rates
– especially in Jakarta, Surabaya and Bandung – far exceed provincial and rural salary growth rates (see Figure 6).
Figure 6: Percentage of increase in minimum wages for five major cities in Indonesia
35%
32%
Jarkata
30%
30% Bandung
Makassar
26% Medan
25% Surabaya
23%
Minimum salary increase
5%
0%
2014 2015
The differences in the optimism levels between this survey and the previous survey could also be explained by the
fact that the previous survey was conducted immediately after Indonesia’s presidential election, in an environment of
reform and elevated optimism following President Joko Widodo’s victory. A year later, as the enthusiasm and jubilation
subsides, Indonesian consumers have become more cognisant that it will be some time before the full impacts of
the economic reforms can be felt. In the longer term, however, these stabilising changes are seen as more likely to
contribute to a positive growth in consumer optimism levels.
8
Berapa Upah Minimum di Indonesia di Tahun 2015? Indonesia Investments. 20 November 2014. http://www.indonesia-investments.com/id/
berita/berita-hari-ini/berapa-upah-minimum-di-indonesia-di-tahun-2015/item2633
13
2. Spending patterns
1,10 2015
Less than 1 1,14
+3% 640,000
2016
Monthly household income, IDR million
1,70
1-1.99 1,77
+4% 270,000
3,20
2-2.99 2,50 -22% Even
3,70 -13%
3-4.99 4,20 200,000
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 * Index represents gap between median
incomes and expenditures per month
Expenditures on items in the Basic Necessities cluster have increased 6 percentage points from 27% to 33% as
compared to the previous survey (see Figure 9). This is in contrast to the expenditures in the Welfare and Leisure
cluster, which have decreased by 12 percentage points, from 27% to 15%. Meanwhile, expenditures on the Housing
and Transport cluster have held relatively constant.
Leisure and
Food holiday Transportation
Welfare and
savings
Note : Nine product categories included in the study have been excluded from the three main clusters defined above
14
Figure 9: Overall expenditures across the three consumer product clusters (2015 and 2016)
-2% 20%
+6% 6% 5%
27%
-12%
10%
5%
9%
8%
15%
3%
27%
22%
14% 9% 12%
11%
3%
Beverages Credit Card Welfare & Saving Transportation Housing & Utilities
Furthermore, an examination of the expenditures by monthly household income levels reveals three key insights.
Firstly, low income households (less than IDR 3 million) are allocating a higher share of their monthly household
incomes to Basic Necessities such as food and beverages, which hovers persistently at 27-42% of total household
income. The lowest income bracket (less than IDR 1 million) also reported an increase in expenditures on Housing
and Transport items as compared to the previous survey, from 12% to 16%. This implies an increased spending
on greater quantities and more varieties of Basic Necessities, driven by increasing household income levels and an
optimistic consumer sentiment amongst the low income segment. Another contributing factor could have been the
cut in fuel subsidies in 2015, which is likely to have caused a short-term negative effect on households in terms of
increased fuel costs, either directly or indirectly9. This is also reflected in the rising Consumer Price Index which have
increased by an average of 20 basis points every month for the past year10.
9
Indonesia's Fuel Subsidies: Action plan for reform. International Institute for Sustainable Development. May 2012. http://www.iisd.org/
library/indonesias-fuel-subsidies-action-plan-reform
10
Indeks Harga Konsumen dan Inflasi Bulanan Indonesia, 2005-2016. Badan Pusat Statistik. https://www.bps.go.id/linkTabelStatis/view/
id/907
15
Secondly, and perhaps unsurprisingly, the tendency to allocate expenditures to non-essential and premium products
such as leisure activities, holidays, or electronics products and appliances, is strongly correlated with household
income levels (see Figure 10). For instance, Basic Necessities account for 42% proportion of monthly expenditures
for the low household income segment and only 19% for the high household income segment, while Welfare and
Leisure accounted for 4% of monthly expenditures for the low household income segment and 19% for the high
household income segment.
The point of inflection, as observed in the previous two editions of the survey, appears to remain at the IDR 5
million household income level where households generally start to have a surplus in spending budget (see Figure
7). Generally, respondents who have reached this level of income increasingly allocate more of their expenditures
towards non-essentials, due to the increased income levels as well as access to financial products (i.e. Credit Card)
that can bolster spending. This year, however, the survey also revealed an increase in spending on Welfare and
Leisure items at the IDR 3-4.99 million monthly household income level.
A B C
2015-2016
Monthly household income, IDR million
Packaged foods Personal Hygiene Housing & utilities Small Household Appliances
Beverages Household Cleaning Leisure & Holiday Major Household Appliances
Tobacco Communication & Media Credit Card Instalment Digital Camera & Other Gadgets
Clothing & Footwear Transportation Welfare & Savings Audio Video Electronic Product
Thirdly, there are three classes of products that exhibit clear expenditure patterns across household income levels (see
Figure 11):
• Expenditure Pattern 1: Proportion of expenditures relatively constant at all household income levels
Examples of products in this category include Beverages, Personal Hygiene Products, and Transportation.
Assuming that, on a per capita basis, the quantities required for these products do not vary significantly, this
finding suggests that consumers with higher household incomes tend to consume more expensive or premium
products in these categories. Specifically, they may consume more “affordable treats” as their incomes rise: for
instance, they may choose packaged specialty / health drink over bottled mineral water, or premium cosmetics over
mass market ones.
For consumer product companies, this represents a latent opportunity to differentiate market offerings with
different price levels to target consumers at various household income levels.
16
• Expenditure Pattern 2: Proportion of expenditures decreases as household income levels increase
Examples of products in this category include Household Cleaning Products, Packaged Foods, and Tobacco.
As the per capita quantities of these products do not change with household income, they tend to account for
a lower proportion of expenditure as income levels increase. Products in this category generally offer limited
opportunities for luxury pricing.
While the low household income segment may not opt to spend on these items, there are opportunities for
consumer product companies to offer premium value propositions to the higher household income segments and
to target the emerging middle household income segment, who are beginning to increase their expenditures in
these categories.
Figure 11: Three classes of products that exhibit clear expenditure patterns across household income levels
Pattern 1:
Constant
%Share of Expenditure
%Share of Expenditure
%Share of Expenditure
across
income level
%Share of Expenditure
%Share of Expenditure
Pattern 2:
Decreases as
income
increases
%Share of Expenditure
%Share of Expenditure
%Share of Expenditure
Pattern 3:
Increases as
income
increases
(Luxury
groups)
Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More
than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than
1 10 1 10 1 10 1 10
Leisure & Holiday Credit Card Instalment Electronics Products & Appliances Welfare & Savings
17
3. Buying behaviour and brand
preferences
Across all product categories, Price and specific category drivers – such as Comfort for Clothing and Footwear and
Taste for Packaged Foods – remain the top two attributes influencing purchasing decisions. But, as compared to last
year’s survey, Price has increased in importance for Indonesian consumers (see Figure 12), likely due to the lower
overall consumer sentiment and an increased focus on value-for-money when making purchases.
Figure 12: Ranking of product attributes by importance for six product categories
18
Specific category drivers
• Audio and Video Electronic Products, Digital Cameras and Other Gadgets, Major Household Appliances,
and Small Household Appliances: In contrast to their preferences in other product categories, Indonesian
consumers across all household income levels prefer Foreign brands over Local ones in this category (see Figure
13). But this preference exhibits slight variations by geographical locations: in Surabaya, for instance, Local brands
dominate the Small Household Appliances market (see Figure 14). This could be due to the fact that Surabaya is the
home base of two local electronic manufacturers, Maspion and Polytron.
92% 7% 92% 6% 94% 6% 94% 1% 98% 8% 92% 23% 77% 72% 28% 89% 11% 89% 11% 84% 16% Foreign
Local
1-1.99 10% 90% 10% 89% 9% 91% 7% 93% 2% 97% 11% 89% 18% 82% 76% 24% 81% 19% 90% 10% 65% 35%
2-2.99 13% 87% 21% 77% 14% 86% 7% 93% 3% 94% 19% 81% 19% 81% 75% 25% 87% 13% 79% 21% 66% 34%
3-4.99 13% 87% 32% 65% 14% 86% 13% 87% 7% 93% 28% 72% 17% 83% 83% 17% 89% 11% 87% 13% 74% 26%
5-7.49 13% 87% 34% 62% 13% 87% 10% 90% 4% 96% 24% 76% 16% 84% 83% 17% 90% 10% 86% 14% 69% 31%
7.5-10 19% 81% 40% 56% 24% 75% 15% 85% 6% 94% 37% 63% 15% 85% 80% 20% 90% 10% 86% 14% 71% 29%
More than 10 20% 80% 53% 42% 25% 75% 20% 80% 8% 92% 45% 55% 16% 84% 87% 13% 91% 9% 87% 13% 77% 23%
2%
Source: Deloitte Consumer Insights survey (2016)
19
Figure 15: Brand preferences for electronics products and appliances categories by household income level
Audio and Video Digital Camera and Major Household Small Household
Electronic Products Other Gadgets Appliances Appliances
Less than 1 15% 38% 2% 20% 20% 22% 39% 2% 27% 10% 18% 46% 9% 19% 9% 34% 37% 15% 14%
Monthly household income, IDR million
5%
1-1.99 16% 37% 8% 17% 18% 20% 33% 8% 23% 14% 14% 44% 12% 20% 7% 19% 36% 4% 9% 31%
3% 2% 2% 1% 1% 1%
2-2.99 12% 42% 7% 14% 21% 13% 39% 11% 24% 11% 8% 49% 6% 16% 20% 12% 36% 6% 12% 33%
3% 2% 1% 2%
3-4.99 6% 39% 15% 23% 13% 8% 32% 15% 32% 10% 5% 52% 16%1 4% 11% 10% 35% 13% 16% 23%
3% 1% 2% 3%
5-7.49 6% 42% 16% 19% 15% 9% 35% 18% 29% 9% 7% 47% 16% 17% 12% 12% 30% 11% 17% 29%
1% 1% 1% 1% 1%
7.5-10 5% 39% 17% 20% 16% 6% 29% 16% 40% 8% 5% 45% 14% 23% 12% 13% 24% 10% 24% 28%
2% 1% 1% 1%
More than 10 3% 44% 21% 21% 9% 6% 24% 22% 40% 5% 4% 46% 19% 20% 9% 5% 37% 14% 20% 20%
2% 3% 2% 2% 1%
The most preferred Foreign brands tend to be Chinese, Japanese or Western, with Japanese brands dominating
across all household income groups and Chinese brands doing better with the low household income segment.
Western brands, on the other hand, have gained favour with consumers in the high income segment (see Figure
15).
Price, Trusted Brand, Technology and Overall Quality emerged as the top four attributes influencing the purchase
decision in this product category. Although key features such as Trusted Brand, Technology, and Overall Quality
become increasingly significant as household income levels increase, Price remains important across all income
levels, even for those with household income levels of above IDR 10 million. But competitive pricing does not
always means cheap prices, especially for consumers who are willing to pay more for the offerings of their choice.
What is worth noting here is that After Sales Service – an attribute often considered important by manufacturers –
was ranked as the least important across all household income groups in the survey (see Figure 16).
• Beverages and Packaged Foods: Taste remains the major attribute for the choice of Beverages and Packaged
Foods, although Health is steadily emerging as an important consideration. Brands competing in this category
will need to find the ‘sweet spot’ with the right combination of flavour and taste, as well as offer products at an
appropriate price point and distribute them through the right channels.
• Clothing and Footwear: Comfort and Price are the key drivers of purchasing decisions in this product category,
indicating an overall commoditised attitude. Appearance, as well as Size and Fit, are gaining in importance,
although this trend has different connotations for the low and high income segments. Regarding Size and Fit,
the considerations are more about the aesthetics and style of the product. For example, high household income
consumers purchasing “slim fit” designs are usually concerned with Size and Fit especially due to the tight fit
fashion preference. Older consumers aged 65 and onwards are also demanding more in terms of Appearance and
Comfort in this category.
20
Figure 16: Ranking of product attributes by importance for electronics products and appliances categories by household income level
(Monthly household income, IDR million)
Availability 3% 3% 6% 3% 5% 7% 5%
After Sales 2% 2% 2% 1% 2% 2% 3%
Service
Availability 5% 5% 3% 7% 7% 9% 7%
21
• Household Cleaning and Personal Hygiene Products: Price remains the most important consideration, but the
Health attribute has gained ground in this edition of the survey.
• Tobacco: Attributes such as Overall Quality and Price are the most important attributes in this category, with Trust,
Safety and Health taking a backseat. This is partly due to the fact that many well-established and long-standing
brands are already present in the market.
Indonesia has one of the highest prevalence of male smokers at nearly 65%, and although the proportion of
female smokers have traditionally been extremely low, they are also gradually increasing and stood at nearly 7% in
201311. At the same time, smokers in Indonesia are also heavily influenced by advertising, which usually features
pop stars and celebrities – on billboards, print media, online video commercials, and TV – enticing new and
ex-smokers to pick up the habit12.
Monthly household
income, IDR million
11
Menkes Luncurkan Iklan Layanan Masyarakat (ILM) Korban Rokok. Kementerian Kesehatan Republik Indonesia. 10 October 2014. http://
www.depkes.go.id/article/print/201410130001/menkes-luncurkan-iklan-layanan-masyarakat-ilm-korban-rokok.html
12
Indonesia's smoking epidemic – an old problem getting younger. The Guardian. 22 March 2012. http://www.theguardian.com/
world/2012/mar/22/indonesias-smoking-epidemic
22
Figure 18: Product attributes ranked by importance among consumers purchasing different price options
Beverages
Taste 27% 26% 26%
Price 20% 21% 25%
Health 23% 20% 15%
Trust 11% 12% 12%
Overall Quality 10% 11% 13%
Safety 9% 10% 9%
Confectionery
Taste 32% 32% 31%
Price 24% 22% 17%
Health 19% 17% 18%
Health is a
Trust 9% 10% 12%
relatively
Overall Quality 8% 9% 12% more
Safety 7% 10% 10% important
attribute for
Packaged Foods consumers
choosing
Taste 27% 29% 24%
items that
Price 23% 21% 15% are higher
Health 18% 16% 20% priced
Trust 12% 13% 15%
Overall Quality 11% 10% 15%
Safety 9% 10% 11%
Personal Hygiene
Taste 23% 22% 18%
Price 22% 20% 24%
Health 15% 16% 15%
Trust 15% 14% 15%
Overall Quality 14% 15% 15%
Safety 12% 13% 13%
23
4. Communication channels
Getting social
Traditional media such as the TV remains the most trusted source of information in Indonesia, followed by word of
mouth channels. For many Indonesian consumers, their purchasing decisions were highly influenced by Relatives,
as well as Friends and Colleagues (see Figure 19). They are also increasingly adopting new sources of information
and socialising through online and social media: the average Indonesian spends nearly three hours on social media
everyday13 – and this figure may be even higher in Jakarta, the social media capital. E-commerce, though still nascent
at this point in time, is also growing, with multiple innovative start-ups, both local and foreign, competing in the
market across multiple product categories.
Preferred sources
of information (%)
TV 21%
Relatives 20%
Friends and Colleagues 19%
In Store Promotion 18%
Digital Media 7%
Outdoor Ads 6%
Print Ads 6%
Expert 2%
Radio 1%
Indonesian consumers also appear to be gradually changing their behaviours in their search for information and
engagement with brands. As compared to the previous survey, the importance of traditional media such as TV, Print
Advertisements, or Outdoor Advertisements has declined across all household income segments, as consumers
begin to embrace digital channels instead (see Figure 20). The exceptions to this are the households with monthly
incomes of less than IDR 1 million, as well as certain fashion-related product categories in of Jakarta. Online channels
are undoubtedly growing in importance: even when watching TV, 90% of Indonesians reportedly look at a “second
screen”, that is, their mobile phones14.
13
Digital in numbers Indonesia. Seno Pramuadji. 17 February 2014. http://www.slideshare.net/senopramuadji/digital-in-numbers-
indonesia-compilation/
14
Indonesia Market Report - Q4 2015. GlobalWebIndex.
24
Figure 20: Sources of information by product category and brand type
Percentage change in
digital media share
(2015 vs 2016)
Relative Friends and Colleague Expert TV Radio Print Ad Digital Media Outdoor Ads In Store Promotion
25
Going online
Indonesia is characterised by its huge population size – and this population is going online. In 2015, there were 73
million Internet users in Indonesia, representing about 28% of its total population. By 2018, this number is expected
to swell to 123 million Internet users, making Indonesia one of the world’s largest online markets15. The bulk of these
users (57%) are concentrated in Java (out of which 21.5% are in Jakarta), with the other provinces likely to see higher
growth rates16.
Mobile phone and Internet usage rates are also higher, with 325 million mobile subscribers and 50 million Internet
users in 201517. On average, Indonesians spend about 3.5 hours a day on their phones18. 98% of Internet users in
Indonesia have social media accounts19 and online channels are used throughout the entire purchasing journey, from
research to purchase and feedback.
This edition of the survey revealed that Indonesian consumers are especially reliant on word of mouth
recommendations from Relatives, Friends and Colleagues, Experts, Salespersons, and advertisements from trusted
brands. Leading companies have already begun to use digital channels to proactively engage consumers and to
create buzz online. These companies, in turn, enjoy increases in traffic, number of fans and, ultimately, better sales
(see “Share a coke! campaign celebrates Indonesia’s 70th Independence Day”).
Primarily targeted at Millennials and teens, Coca-Cola utilised social media channels such as Facebook, Line,
Instagram and Twitter to encourage consumers to search for and share their friends’ names digitally. Celebrities
began posting ‘selfie’ photos showcasing bottle cans printed with their names, and the campaign went viral.
In total, this campaign increased Coca-Cola’s sales by up to 7%, Facebook traffic by up to 870%, and number of
Facebook fans by 39%.
15
Number of internet users in Indonesia from 2014 to 2019 (in millions). Statistica. http://www.statista.com/statistics/254456/
number-of-internet-users-in-indonesia/
16
Indonesia Market Report - Q4 2015. GlobalWebIndex.
17
Indonesia’s dynamic Internet market. Redwing. http://redwing-asia.com/market-data/market-data-internet /
18
Digital, Social & Mobile in APAC in 2015. We Are Social. 11 March 2015. http://wearesocial.sg/blog/2015/03/
digital-social-mobile-in-apac-in-2015/
19
Indonesia Market Report - Q4 2015. GlobalWebIndex.
20
Share A Coke, Tetap Memikat Meski Bukan Yang Pertama. PRide. 25 August 2015. http://pride.co.id/2015/08/
share-a-coke-tetap-memikat-meski-bukan-yang-pertama/
26
5. Buying channels
Figure 21: Popular shopping channels among survey respondents overall, 2016
Minimarkets 27%
Warungs 25%
Supermarkets 18%
Hypermarkets 14%
Brand Stores 9%
Wet Markets 5%
Street Hawkers 2%
The overall preference is also continuing its shift in favour of the Modern Trade channels, which are proliferating
across Indonesia (see Figure 22). This trend is especially pronounced in cities outside Jakarta where, as compared to
the previous survey, respondents indicating a preference for Modern Trade over Traditional Trade have increased by
2-7%. Nevertheless, at this point in time, Traditional Trade outlets remain popular, particularly for the purchase of
Beverages and Tobacco, and in the smaller cities.
Modern Trade outlets are also the dominant channels for the purchase of electronics products and appliances, with
the exception of Makassar and Medan where 25-61% of consumers still prefer the use of Traditional Trade outlets for
this product category (see Figure 23).
As household income levels increase, the preference for Modern Trade outlets becomes starker. In the purchase of
electronics products and appliances, for instance, specialty electronic stores are the most popular channel overall. But
low income consumers tend to prefer Individual Non-Chain Stores while high household income consumers prefer
Branded Chain Stores (see Figure 24).
27
Figure 22: Preference for Traditional and Modern channels by product category and city
Medan
Bandung 56%
49% 51% 53% 80%
44% 20% 47% 59%
41% 41%
59% 47%
33% 53%
67% 61%
48% 39%
52% 50%
32% 50%
68% 95% 30%
70% 5%
Surabaya
Makassar 55%
60% 40% 24%
45% 50% 76%
50% 50%
51% 50%
49% 34%
35% 66%
65% 57%
54% 43%
46% 33%
37% 67%
63% 83%
98% 1%7
2%
Medan 56% 44% 53% 47% 59% 41% 47% 53% 61% 39% 50% 50% 95% 5%
Traditional Modern
Surabaya 55% 45% 24% 76% 50% 50% 34% 66% 57% 43% 33% 67% 83% 1%7
Source: Deloitte Consumer Insights survey (2015 and 2016)
Traditional Modern
2016 Audio and Video Digital Camera and Major Household Small Household
Figure 23: Preference for Traditional
Electronic Products
and Modern channels for electronics
Other Gadgets Appliances
products and appliances categories
Appliances
Jakarta 33% 67% 31% 69% 32% 68% 33% 67% Traditional
Modern
Bandung Audio and
2016 19% 81%Video Digital Camera
87% and Major Household
19% 81% Small Household
22% 78%
13%
Electronic Products Other Gadgets Appliances Appliances
Makassar
Jakarta 55%
33% 67% 54%
45% 31% 46%
69% 55%
32% 45%
68% 51%
33% 49%
67% Traditional
Modern
Medan 19%61% 81%39% 25%
Bandung 75%
87% 49%
19% 51%
81% 44%
22% 56%
78%
13%
Surabaya
Makassar 34%
55% 66%
45% 35%
54% 65%
46% 28%
55% 72%
45% 40%
51% 60%
49%
28
Figure 24: Buying channel preferences by product category and household income level
Less than 1
Monthly household income, IDR million
14% 74% 4% 16% 22% 15% 44% 13% 24% 52% 4% 20% 45% 16% 12% 68% 4% 13% 24% 39% 16% 8% 83%
4% 4% 3% 4% 4% 3% 12% 4% 3% 11% 3% 3% 4% 8%
1-1.99 16% 75% 3% 16% 9% 56% 5% 17% 64% 7% 16% 22% 49% 11% 16% 53% 17% 3%17% 22% 48% 12% 4% 85% 8%
3% 2% 10% 1% 3% 9% 2% 1% 1% 1% 10% 1% 1% 2% 1%
2-2.99 6% 30% 57% 2% 26% 18% 36% 4%10% 28% 53% 3% 18% 33% 35% 7% 13% 25% 47% 8% 16% 33% 38% 7% 11% 76% 5%
3% 2% 13% 2% 2% 4% 2% 0% 6% 0% 4% 2% 0% 6% 0%1% 1% 5%
3-4.99 9% 34% 50% 3% 32% 20% 28% 5%11% 37% 43% 5%7% 26% 35% 23% 14% 27% 47% 8% 24% 34% 28% 5% 18% 73% 2%
1% 1% 2% 11% 3% 2% 2% 0% 6% 2% 0% 1% 2% 0% 6% 2% 1% 2% 3% 2%
5-7.49 13% 30% 47% 3% 36% 21% 18% 19% 15% 35% 39% 4%7% 27% 36% 24% 19% 25% 40% 7% 8% 26% 30% 28% 6%15% 73% 6%
1% 3% 3% 2% 2% 2% 0% 5% 1% 1% 4% 1% 1% 6% 2% 2% 2% 1% 1% 2%
7.5-10 13% 38% 38% 3% 40% 19% 21% 15% 18% 35% 32% 5% 14% 30% 38% 17% 19% 32% 34% 6% 15% 27% 34% 21% 21% 66% 7%
6% 2% 2% 3%1% 8% 2% 1% 0% 9% 1% 3% 1% 0% 2% 4%
More than 10 18% 20% 36% 21% 68% 15% 24% 23% 35% 15% 0% 34% 34% 22% 9% 28% 28% 23% 17% 6% 31% 31% 22% 8% 28% 53% 6%
3% 0% 1% 11% 1% 0% 4% 1% 0% 1% 1% 1% 1% 2% 2% 9% 1% 3% 2% 1%
Less than 1 5%22% 60% 6% 26% 11% 48% 4% 4%25% 16% 34% 36% 3% 21% 51% 19% 16% 48% 25% 5%4%
Monthly household income, IDR million
55% 9% 88% 8%
2% 5% 9% 2% 1% 4% 2% 3% 5% 1% 1% 6% 7%
1-1.99 7% 24% 54% 8% 33% 12% 42% 6%9% 26% 49% 10% 11% 26% 37% 18% 2% 8% 22% 44% 18% 8% 25% 41% 15% 8% 79% 5%
1% 6% 5% 2% 2% 4% 0% 5% 0% 3% 4% 4% 5% 2% 3% 4%
2-2.99 9% 33% 39% 7% 37% 13% 36% 5% 10% 33% 36% 12% 18% 34% 25% 12% 12% 27% 32% 16% 12% 33% 27% 11% 11% 71% 6%
7% 6% 8% 1% 0% 6% 3% 10% 1% 0% 9% 3% 5% 11% 0% 1% 2% 4% 6%
3-4.99 15% 32% 34% 7% 43% 17% 22% 5% 18% 36% 26% 8% 16% 27% 31% 14% 9% 20% 28% 24% 14% 14% 22% 32% 12% 13% 61% 10%
0% 6% 4% 9% 3% 1% 7% 4% 1% 9% 3% 5% 9% 8% 2% 1% 3% 7% 5%
5-7.49 16% 37% 28% 4% 50% 21%6% 17% 13% 20% 37% 22% 6% 22% 32% 28% 8% 15% 23% 30% 18% 8% 21% 26% 28% 9% 14% 63% 8%
1%12% 3% 3% 0% 3% 3% 0% 9% 1% 0% 10% 3% 8% 1% 1% 1% 7% 6%
7.5-10 14% 40% 29% 6% 50% 27% 9% 9% 15% 19% 44% 16% 29% 34% 28% 6% 17% 21% 34% 18% 13% 30% 27% 21% 6% 14% 63% 10%
10% 2% 3% 1% 4% 3% 3% 2% 6% 4% 2% 2% 1% 11% 1%
More than 10 11% 24% 43% 15% 65% 13% 11% 30% 42% 10% 24% 44% 22% 6% 13% 38% 34% 6% 25% 18% 35% 17% 15% 24% 38% 14%
0% 3% 4% 11% 4% 1% 5% 1% 0% 4% 2% 1% 3% 0% 1% 6% 3% 2% 3% 1% 1% 4% 4%
Less than 1 8% 32% 48% 22% 30% 44% 20% 70% 11% 42% 37% Brand Stores
Monthly household income, IDR million
8% 4% 4% 10% 5% 5% Hypermarkets
1-1.99 13% 33% 39% 20% 34% 34% 11% 33% 41% 12% 28% 42% Supermarkets
10% 3% 1% 2% 8% 2% 1% 1% 11% 2% 2% 12% 2% 4%
Minimarkets
2-2.99 12% 34% 38% 15% 35% 34% 15% 32% 38% 12%17% 28% 41%
Warungs
11% 3% 1% 2% 13% 2% 1% 1% 11% 2% 1% 1% 2% 1% 1%
Wet Markets
3-4.99 16% 34% 26% 20% 12% 36% 25% 15%16% 37% 25% 16% 14% 34% 27%
13% 6% 1% 2% 1% 3% 1% 2% 3% 1% 2% 6% 1% 2% Street Hawkers
5-7.49 13% 55% 16%13% 55% 16% 13% 58% 16% 16% 53% 17% Electronic Store Chain
9% 4% 1% 2% 1% 11% 3% 0% 2% 0% 9% 2% 2% 1% 8% 3% 1% 2% 0% Non-Chain Individual Electronic Store
7.5-10 14% 54% 15% 14% 55% 14% 16% 53% 17% 20% 49% 18%
8% 5% 2% 1% 1% 11% 4% 2% 1% 8% 3% 1% 1% 1% 6% 3% 1% 1% 1%
More than 10 17% 53% 6% 18% 56% 7% 17% 55% 8% 15% 52% 9%
14% 6% 1% 0% 3% 0% 12% 4% 0% 0% 3% 0% 13% 4% 0% 0% 2% 0% 14% 6% 1% 0% 2% 0%
29
Ultimately, consumers choose their buying channels based on a multitude of factors. Traditional Trade channels such
as Warungs offer convenient locations, longer opening hours and competitive prices. Modern Trade channels such as
Minimarkets and Supermarkets offer a greater variety of products, particularly for Packaged Foods, as well as fresher
and higher quality produce (see Figure 25). For many families in Indonesia, particularly the middle class, shopping
is also increasingly becoming a recreational activity. Many consumers are accustomed to visiting Supermarkets and
Hypermarkets during weekends, mixing shopping with family recreation and entertainment21.
Figure 25: Reasons for choosing Traditional Trade and Modern Trade
21
Profiting From Consumer Mega-Trends in Asia Pacific: Convenience. Datamonitor. 2009.
30
Figure 26: Changes in average size of shopping baskets and frequency of visits
Household Cleaning
Consumers make smaller purchases in Modern Trade outlets, but visit more often
to buy Package Foods, Beverages and Confectionery
Basket size in Modern Trade Top 3 product categories with highest purchasing frequencies
14%
2015 2016
2015 2016
Source: Deloitte Consumer Insights survey (2015 and 2016)
31
6. e-Commerce
Virtually virtual
Despite the nascence of Indonesia’s e-commerce industry, consumers are rapidly adopting online channels in their
purchasing journeys. Although estimates vary, some sources have suggested that up to 60% of consumers with
Internet access engage in e-commerce22. In fact, as Indonesia’s middle class continues to grow, the number of online
shoppers could reach 10 million this year, raking in IDR 20 trillion for the e-commerce business – about double that
of the IDR 10 trillion figure from last year23.
Indonesian consumers typically shop online because of Practically reasons (63%), wider Product Range (15%), or
better Promotions (12%) (see Figure 27). In Indonesia’s context, Practicality includes factors such as the availability of
products, delivery arrangements, and the availability of information. Consumers typically value features such as free
delivery, click-and-collect facilities, easy returns and the availability of payment methods such as bank transfers and
cash on delivery. In terms of Promotions, they favour the use of reward and loyalty points and access to exclusive
content. Finally, the word of mouth effect is also crucial for e-commerce.
While the average Indonesian consumer typically does the pre-purchase research online, the other behaviours he or
she engages in vary with the product category in question. They may, for instance, choose the ‘webrooming’ strategy
for big purchases, researching and choosing the product online but making the final purchase in a physical store.
Alternatively, for the purchase of fashion items, gadgets or appliances, they may employ a ‘showrooming’ strategy
instead, browsing or trying on the item in-store, but making the final purchase online in order to enjoy the best
available prices. These behaviours underscore the interdependencies between brick-and-mortar stores and online
shopping channels.
Figure 27: Top reasons and deterrents for online shopping in Indonesia
In terms of product categories, the most significant growth can be seen in the Clothing and Footwear category, with
an influx of innovative new entrants entering the online space (see “Berrybanka gets bankrolled”). Indeed, Clothing
and Footwear is the category with the highest growth rate between 2014 and 2019 at 57.7%, followed by Food and
Beverages (38.6%) and Home Care (including Household Cleaning) (30.2%)24.
22
Indonesian consumers flock online to purchase products and services. 3 September 2014. Nielsen. http://www.nielsen.com/id/en/press-
room/2014/indonesian-consumers-flock-online-to-purchase-products-and-services.html
23
Indonesia's E-commerce Industry to Double Its Earnings Next Year: idEA. Jakarta Globe. 28 December 2015. http://jakartaglobe.beritasatu.
com/business/indonesias-e-commerce-industry-double-earnings-next-year-idea/
32
With its rapid growth, Indonesia’s e-commerce scene is attracting not only digital start-ups like BliBli, Billna, Lazada,
or Zalora, but also well-established retail players such as Alfamart and Matahari. These two players, having launched
Alfaonline and MatahariMall respectively, introduced the online-to-offline concept to the Indonesian market in a bid
to draw potential customers from its online channels to its physical, offline stores, and to extend the strong foothold
that they have in the offline market to the online business. There are also other variations of the e-commerce
business model in Indonesia, with players such as GoMart and HappyFresh rolling out offline store pick-up and
delivery services to enable customers to avoid Indonesia’s notorious traffic jams. There are also attempts to tap into
previously inaccessible or underserved markets, such as the low income segment (see “Kudos to Kudo”).
Targeted at middle income consumers, Berrybenka endeavours to offer stylish products at affordable prices, and
provides cash on delivery services to more than 2,400 points of sales in Indonesia. For customers in the Greater
Jakarta area, product returns can be made within 30 days of purchase without incurring additional shipping
charges. To provide customer service around the clock, Berrybenka also set up a 24-hour call centre.
Having implemented a word of mouth strategy through the use of social media channels such as Facebook,
Instagram and Twitter, it plans to roll out an online-to-offline strategy in 2016 that will include the use of pop-up
stores and online bazaars.
Currently, Berrybenka is one of the largest local fashion e-commerce company in Indonesia, achieving growth
rates in sales of up to 250% and a growth rate in its product portfolio of 200% in 2014. It is also one of the
best funded fashion e-commerce company, having secured a US$ 5 million investment from East Ventures, GREE
Ventures and Transcosmos.
Kudos to Kudo26
Launched in July 2014, Kudo is a start-up company in Indonesia that cooperates with e-commerce merchants to
bring online shopping to the millions of low and middle income consumers who do not have Internet access. It
uses an agent-led process – where the agent can be either an individual or shop owner – to facilitate the online
shopping process. By facilitating cash payments from these customers to a Kudo agent, who then in turn makes
the payments on behalf of the customer to the online merchant, Kudo enables them to shop at sites that do not
accept cash payments.
In doing so, it is bringing e-commerce to many consumers who would otherwise be out of reach: only 28%
of Indonesia’s population uses mobile Internet, and a significant 81.4% of the population remain unbanked.
Furthermore, Kudo is helping to solve the issue of trust, as the agents help to ensure that consumers are able to
avoid fake products and online fraud.
24
In Indonesia, Online Sales Of Apparel, Home Products And Media Surge – Euromonitor. Forbes. 23 September 2015.
http://www.forbes.com/sites/susancunningham/2015/09/23/online-sales-of-apparel-home-products-and-media-surging-in-indonesia-
euromonitor/#53e37616c89e
25
Gaya Jason Lamuda Melejitkan Berrybenka. Majalah SWA Online. 20 January 2016. http://swa.co.id/entrepreneur/gaya-jason-lamuda-
melejitkan-berrybenka
26
Membantu Masyarakat ‘Gaptek’ Berbelanja Online, Kudo Mendapatkan Pendanaan dari GREE Ventures & East Ventures. StartupBisnis.com.
4 May 2015. http://startupbisnis.com/membantu-masyarakat-gaptek-berbelanja-online-kudo-mendapatkan-pendanaan-dari-gree-ventures-
east-ventures
33
7. Geographical differences
Figure 28: Gross Domestic Regional Product (GDRP) and contribution to Gross Domestic Product (GDP) by region
18.5%
21.8% GRDP
CAGR
14.3% 14.2%
GRDP (2009-2013)
CAGR
(2009-2013) Samarinda
Bandar % of IGDP 0.5%
Pekanbaru Lampung Palembang 17.1%
% of IGDP 0.9% 0.4% 1.0% GRDP
CAGR
(2009-2013)
Makassar
% of IGDP 0.8%
Sulawesi
(5%)
Kalimantan
Sumatera (9%)
(24%)
Other islands
Jakarta
(4%)
Java (58%)
16.7%
14.4% 13.8% 13.4% 13.3%
GRDP
CAGR
(2009-2013)
34
In Bandung, the optimism is palpable (see Figure 29) against the backdrop of a number of upcoming developments
that promise to further propel its growth. These include, for example, plans to invest in a bullet train network
connecting Jakarta and Bandung that is scheduled for completion in 2019. This high-speed train is expected to cut
the commuting time between the two cities from the current 2.5 hours to less than 40 minutes, create 39,000 new
jobs, and stimulate the growth of three new economic centres – Karawang, Tegalluar, and Wallini – in West Java27.
How confident are you that the Indonesian economy will improve in the future?
27
Membedah Kereta Cepat Jakarta-Bandung. Republika. 17 February 2016. http://www.republika.co.id/berita/koran/teraju/16/02/19/
o2sh4819-membedah-kereta-cepat-jakartabandung
35
Even in the e-commerce arena, the various cities are exhibiting different online purchasing behaviours. In Jakarta,
Makassar and Surabaya, Practicality is the dominant driver for online purchases, with 63%, 52% and 62% of
respondents citing it as a factor respectively. The other cities, however, have different nuances: in Bandung,
consumers prefer to purchase items online for its better Product Range, whereas in Medan, they prefer to do so to
take advantage of online Promotions. On the other hand, Jakarta and Makassar respondents cited security concerns
as the main impediments of online purchases, while Bandung, Medan, and Surabaya respondents cited a lack of
understanding as the main barrier (see Figure 30).
80% No
55%
60%
20% 45%
0%
Jakarta Bandung Surabaya Medan Makassar
Price
Bandung 32% 9% 9% 36% 14%
Product appeal
Product range
Surabaya 52% 8% 24% 8% 8%
Promotion
No credit card
Surabaya 30% 38% 20% 4% 4% 4%
Limited range
36
Looking ahead
Since the first edition of the Deloitte Consumer Insights survey, we have witnessed the evolution of the Indonesian
consumer in more ways than one. We have seen, for instance, the increased role of non-price attributes in
influencing the product purchase decision, the rapid rise of online communications channels and e-commerce, and
the emergence of smaller cities as retail markets to be reckoned with. Yet, other observations have remained fairly
constant: for example, the strong preference for brands which are perceived to be Local remains.
This edition of the report reveals four key insights. Firstly, even as Indonesian consumers are expected to become
more affluent and to possess higher levels of disposable incomes, they are also showing prudence in their
expenditures. But it is not just about price: Indonesian consumers are searching for value-for-money propositions,
that is, an appropriate trade-off between price considerations and product attributes. This behaviour is particularly
pronounced in this survey in the face of global economic uncertainty and the slower than expected rates of growth.
However, consumer optimism levels are expected to go on an uptick as a result of the stabilising macroeconomic
policies.
Secondly, there appear to be indications of the emergence of an urbane – yet underserved – segment of Indonesian
consumers, who may be willing to purchase premium offerings in selected product categories to satisfy their
discerning demands for quality. This survey has identified a group of consumers who has expressed a preference for
higher priced alternatives among groups of products that they would consider purchasing. In the purchase of more
expensive electronics products and appliances for instance, consumers are looking for factors such as perceived
product innovativeness and technology sophistication. Consumer product and retail companies who wish to tap into
this market will need to re-examine their product portfolios, as well as re-calibrate their prices, offerings and value
propositions, to win them over.
37
Thirdly, changes have been observed in the behaviour of consumers across existing buying channels. Although
Warungs still claim the position as the most popular buying channel among Indonesian consumers, Modern Trade
channels are continuing their rise on the back of consumers who are enticed by the larger variety of products
typically sold in large volumes through these outlets. Companies will need to keep an eye out for this constantly
shifting dynamic, adapting and changing their channel portfolio strategies in tandem, while also integrating their
e-commerce, mobile and digital operations with their offline channels.
Finally, given the breadth and depth of the archipelago region of Indonesia, consumer and electronics products
companies as well as retailers will need to take into account the importance of a customised and prioritised
geographical approach for the market. With Indonesia’s numerous islands and vast land area, companies must set
up efficient and effective distribution networks while taking into account the multitude of regional variations in
consumer preferences.
Despite the many challenges posed by its heterogeneity, Indonesia presents a promising market with diverse
opportunities. The Indonesian consumer – with increasing spending power, varied product preferences, and an
aptitude for e-commerce – is swiftly evolving, and in order to keep up, so must industry players.
38
Appendix
40% 60%
Jambi 33% 67% +1.3% 3.678
Bangka Belitung Islands 56% 44% +3.5% 1.517
Bengkulu 33% 67% +0.9% 2.020
Kalimantan
49% 51%
West Papua 35% 65% +2.6% 0.982
East Nusa Tenggara 24% 76% +2.7% 5.541
Maluku 39% 61% +0.9% 1.832
North Maluku 29% 72% +0.7% 1.279
Urban Rural
Note: Provinces in bold have higher than average urbanisation growth rates (2.84%)
39
Appendix 2: Planned increase in expenditures by household income level
Yes 95%
16%
Less than 1
million No
3% 2%
84%
Less than 10% 10-25% More than 25%
Yes 91%
17%
1-1.99 million
No
6% 3%
83%
Less than 10% 10-25% More than 25%
Yes 86%
26%
2-2.99 million No
8% 6%
74%
Less than 10% 10-25% More than 25%
Yes 84%
29%
3-4.99 million No 10% 6%
71%
Less than 10% 10-25% More than 25%
Yes 83%
29%
5-7.49 million No
11% 6%
71%
Yes 78%
No 32%
7.5-10 million
11% 11%
68%
Yes 73%
40
Appendix 3:
Percentage of people planning to increase spend by product category
44%
Beverages -12%
32%
45%
Clothing & Footwear -17%
28%
37% 2015
Confectionery -9%
29%
2016
34%
Household Cleaning -8%
26%
43%
Packaged Foods -10%
33%
41%
Personal Hygiene -9%
32%
12%
Tobacco -5%
7%
2-2.99 36% 64% 27% 73% 33% 67% 30% 70% 37% 63% 35% 65% 14% 86%
3-4.99 37% 63% 35% 65% 30% 70% 30% 70% 32% 68% 38% 62% 20% 80%
5-7.49 35% 65% 36% 64% 39% 61% 30% 70% 34% 66% 40% 60% 13% 87%
7.5-10 39% 61% 44% 56% 31% 69% 27% 73% 34% 66% 42% 58% 12% 88%
More than 10 32% 68% 47% 53% 27% 73% 30% 70% 25% 75% 42% 58% 10% 90%
41
Contact us
Eugene Ho
Executive Director
Consulting
+65 6232 7133
eugeneho@deloitte.com
Stanley Song
Director
Consulting
+62 21 2992 3100 ext. 30307
stansong@deloitte.com
Apung Sumengkar
Manager
Consulting
+62 21 2992 3100 ext. 30300
asumengkar@deloitte.com
42
Southeast Asia Consumer & Industrial Products Practice
Eugene Ho
Executive Director
+65 6232 7133
eugeneho@deloitte.com
Guam Audit
Mike Johnson Richard Loi
Partner Partner
+1 671 646 3884 +65 6530 5591
mikjohnson@deloitte.com rloi@deloitte.com
Indonesia Consulting
Xenia Ubhakti Eugene Ho
Partner Executive Director
+62 21 2992 3100 ext. 1792 +65 6232 7133
xubhakti@deloitte.com eugeneho@deloitte.com
Thailand Tax
Manoon Manusook Robert Tsang
Partner Partner
+66 2034 0000 ext. 5101 +65 6530 5523
mmanusook@deloitte.com robtsang@deloitte.com
Vietnam
Nguyen Vu Duc
Partner
+84 462 883 568
nguyenvu@deloitte.com
43
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of
member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred
to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and
its member firms.
Deloitte provides audit, consulting, financial advisory, risk management, tax and related services to public and private clients spanning multiple
industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-
quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte’s more than 225,000
professionals are committed to making an impact that matters. Deloitte serves 4 out of 5 Fortune Global 500® companies.
Comprising 270 partners and over 7,300 professionals in 25 office locations, the subsidiaries and affiliates of Deloitte Southeast Asia Ltd
combine their technical expertise and deep industry knowledge to deliver consistent high quality services to companies in the region.
All services are provided through the individual country practices, their subsidiaries and affiliates which are separate and independent legal
entities.