Retailing in Indonesia: A Deeper Look Into the World's Growing Market

Retailing in Indonesia: A Deeper Look Into the World's Growing Market

Adilla Anggraeni (Binus Business School, Bina Nusantara University, Indonesia) and Ayuphita Tiara Silalahi (Binus Business School, Bina Nusantara University, Indonesia)
DOI: 10.4018/978-1-7998-4787-8.ch013

Abstract

The chapter discusses Indonesia's retailing landscape. The retail sector itself can be considered to be one of the most promising in Asia due to the high populations, growing middle class, higher purchasing power, and shifting spending habits. The discussion revolves along the state of online and offline retailing in Indonesia, including the current trends and discussion of luxury retailing. The technological advancement was proven to have shifted how people do retailing activities. The chapter discusses the trends in luxury retail as well as the challenges facing luxury retailers doing business in Indonesia, which may include counterfeiting. Counterfeiting is one of the prevailing issues in Indonesian retailing behaviours, targeting consumers who are aware that they have indeed purchased counterfeited items.
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Introduction

Retailing in Indonesia has been a subject of many studies, as the retail sector itself is projected to have a compound annual growth rate (CAGR) of 13.8% by 2024. In terms of segmentation, Indonesian’s retail market can be segmented by product category, distribution channel, and market dynamics.

The retail sector itself can be considered to be one of the most promising in Asia due to the high number of populations, growing middle class, higher purchasing power and shifting spending habits.

In 2017, Asia’s private consumption was affected by higher prices for food, electricity, and fees for vehicle registration. In 2018, the condition was better as the private consumption was fueled by lower credit cost, increasing employment, and an expansion of social welfare.

However, it should be noted that household consumption in Indonesia has slowed down in recent years, which is regrettable since this sector has been one of the main driving factors for the economy, and is considered to be more important than investment, exports, and government spending. Indonesia’s food and beverage market plays a crucial role.However, its position in the global F&B market is uncertain, as Indonesia relies on imported products for its F&B retail market such as wheat, dairy, or processed food products (mordorintelligence.com, 2019).

Retailing trends vary over the years. Some may be impacted by the advancement of technology, some are influenced by the shifting of consumer behaviours, as well as the economic conditions of the country. Despite the changes and the relatively turbulent environment, retailers have thrived by adapting their strategies and making some changes to fit the environment.

This chapter will discuss the retailing landscape in Indonesia, covering topics such as offline retailing, online retailing and luxury retailing.

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