Warc Blog

Retailers aim for Indonesia

1 May 2012
JAKARTA: Starbucks, Nestlé and Ikea are among the firms targeting Indonesia's growing middle class via a range of marketing and business initiatives.

Bloomberg reports that positive economic conditions are attracting a variety of foreign players to the emerging Asian nation, with competition for the disposable income of a rapidly-growing middle class set to increase markedly over the next few years.

Indonesia's GDP growth hit +6.5% in 2011, outpacing other fast-growth Asian economies such as Malaysia and Vietnam. The expansion rate is forecast by the International Monetary Fund to moderate slightly in 2012 to +6.1%.

Figures from Media Partners Asia released in April also showed that Indonesian adspend was set to rise by 15% in 2012. This was the highest growth rate recorded on the survey, beating larger rivals China (+14%) and India (+12%). 

Some foreign-owned firms have struck deals with domestic retailers as a way of entering the Indonesian market. These include Ikea, the furniture retailer, which is planning an Indonesian launch in 2014 following a deal with the HERO supermarket chain, and Samsonite, the luggage manufacturer, which has a long-term partnership with Mitra Adiperkasa.

Speaking to the news source, Tim Parker, CEO of Samsonite, indicated that the firm was targeting double-digit sales growth in Indonesia in 2012.

John Culver, manager for Starbucks' Asia-Pacific operations, added that the coffee chain would also raise its investments, as Indonesia represented "a big growth opportunity for the company".

Turning to the FMCG sector, Nestlé also said last month that it was pursuing an "end-to-end" marketing strategy as it targeted both the middle class and bottom-of-pyramid buyers via new products developed especially for Indonesia.

The global firms are being attracted by a range of positive economic indicators that suggest the Indonesian public will increase its spending on consumer goods for the long term.

Dian Haryokusumo, an analyst at Credit Suisse, told Bloomberg that many shoppers are "becoming more impulsive", with a recent Nielsen report indicating that the proportion of Indonesian consumers who "never planned" what goods they bought doubled between 2003 and 2011.

Much of the extra spending is being fuelled by expanding credit, with official data showing an expansion in the value of credit card purchases of 34% between 2009 and 2011, and a rise in new consumer loans of 24% between 2009 and 2010.


Data sourced from Bloomberg; additional content by Warc staff

 
Envelope
EMAIL UPDATES

Sign up to Warc News – free daily bulletins on brand and market strategy, digital media and innovation


 

News content feedPrint