Warc Blog

Ramadan boosts Indonesian spending

7 August 2013
JAKARTA: Ramadan, the month of fasting observed by Muslims worldwide, has led to strong spending and consumption in Indonesia in a trend that is set to benefit both domestic and global brands.

While the 9th month of the Islamic calendar requires considerable discipline as Muslims refrain from all physical intake from dawn to dusk, Indonesian businesses – like their counterparts throughout the Muslim world – note a marked increase in trade, the Financial Times reports.

This is partly because the evening meal of Iftar, or breaking of the fast, is often a mini-celebration for family and guests requiring much preparation and shopping that begins several weeks before.

The holy month also ends with the Idul Fitri public holiday, scheduled this year for Thursday 8 August – a time for celebration and the giving of presents.

Nielsen, the market research firm, has estimated that food and beverage companies in Indonesia earn up to 45% of their annual sales during the three-month period that includes Ramadan.

Yongky Susilo, a retail analyst at Nielsen, said that spending is also boosted by a legal requirement for employers to give workers a bonus of one month's wages to mark the holiday.

"People tend to spend all of their Ramadan bonus as there's a belief that once the fasting is finished, you have to have a good time," he added.

Department stores, including franchises of major chains like Debenhams and Marks and Spencer, have seen booming sales.

The Debenhams store in Jakarta's Senayan City mall stayed open for 36 hours last week, offering a series of special Ramadan discounts and offers.

Meanwhile, Fetty Kwartati, head of investor relations at Mitra Adiperkasa, which operates the local Debenhams franchise as well as those of other international brands, said spending usually rises by 20% and she compared the period to Christmas or New Year.

Separately, JWT Intelligence, the marketing analysts, has released a comprehensive report about the economic effects of Ramadan.

Its survey of five countries in the Middle East advised marketers to put the Muslim consumer "at the forefront of every brand's planning".

The report explained that, with Ramadan being a time for charity and self-improvement, consumers tended to engage more with brands that are involved in charitable initiatives.

JWT also revealed that over two-thirds of consumers in the five nations surveyed said they would "definitely" prefer brands that are "sensitive" to their religious needs.


Data sourced from Financial Times, JWT Intelligence; additional content by Warc staff

 
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