JAKARTA: Consumer goods brands looking at Indonesia as the next big emerging market will need to establish category leadership among a newly developing middle class, two industry experts have said.
Nader Elkhweet, a partner at consultants Bain, told a consumer product conference in Jakarta, reported by the Jakarta Globe, that the country was growing rapidly and could become the ninth largest economy in the world within a decade. Retail sales rose 10.3% in March and 13.5% in February.
He advised brands to seek to capture the millions of consumers moving out of poverty by building "a category leadership, based on deep consumer, categories and retail landscape understanding".
Among the particular understandings that Elkhweet offered were that Indonesian consumers were characteristic in six areas. He said they were ready to pay more for brands, they were homogenous in what they bought, had strong brand loyalty, a high purchase frequency and were influenced by social media.
They also had a preference for small pack sizes, a possible reflection of the Indonesian retail landscape.
Elkhweet noted that 85% of consumer product purchases were made in traditional markets, where shelf space was limited and where brands would have to compete for a presence.
His colleague Vijay Vishwanat observed that in addition to the differences between emerging markets such as Indonesia and developed markets there was also an element of convergence, which included the rapid use of "premium" to drive sales.
Similarly, he pointed to the growing importance of point of sale since purchase was increasingly decided after customers had entered a store.
Separately, a recent McKinsey survey found that consumer buying habits vary greatly across Indonesia, meaning brands will have to consider localising products and value propositions down to the regional level.
Data sourced from Jakarta Globe, Economic Times; additional content by Warc staff