Indonesians are expected to spend 15 percent more on consumer goods this year

A Nielsen survey says spending in a range of 56 different products is expected to rise by 15 percent this year. (JG Photo)
Eager Indonesian Shoppers To Lift Sales 15% This Year

Indonesians are expected to spend 15 percent more on consumer goods this year, with hypermarkets still facing stiff competition from convenience stores as traditional markets, according to a Nielsen Indonesia survey released on Wednesday.

The Shopper Trends Survey forecast that the public will spend Rp 115 trillion ($12.65 billion) on “fast-moving consumer goods” this year.

Spending in the first five months of the year was Rp 44 trillion, up 9 percent over the year-earlier period. Spending in 2009 rose 4.7 percent to Rp 99.65 trillion.

Nielsen Indonesia director of retail services Yongky Susilo said spending would soar 15 percent even after factoring in inflation and rising power rates.

“The increase in electricity tariffs won’t have an adverse effect on consumer spending as consumers are accustomed to hikes in the tariff,” Yongky said. “However, the government needs to ensure the supply of electricity to meet growing demand from producers.”

Yongky said he was optimistic Indonesia could achieve 6 percent economic growth this year on the back of the increased spending.

Inflation rose to an annualized 5.05 percent in June from 4.39 percent in May, driven by food and spice prices, the Central Statistics Agency (BPS) reported last week. The government is targeting 4 to 6 percent inflation this year.

Last month, Nielsen released a survey showing that Indonesian consumers were the second-most confident in the world, with 46 percent saying now is a good time to buy the things they want.

In the most-recent survey, Nielsen looked at spending on 56 items, including food and personal care products but not rice or cigarettes.

Another trend the survey reveals is that hypermarkets and supermarkets are having to compete with convenience stores, while traditional markets remain popular.

“This is mainly driven by the function of traditional stores that supply basic needs like commodities,” Yongky said. Traditional markets and smaller stores could usually be reached on foot, making them more convenient.

Consumers visit smaller stores and traditional markets as many as 25 times a month, compared with two or three visits to hypermarkets and supermarkets, the survey reveals.

However, Yongky said this did not necessarily translate into more revenue for smaller retailers as their number continued to grow.

“It’s time for big retailers to come to the customers,” Yongky said. “More and more customers are more exposed to Internet penetration and advertising in print media is no longer effective, while telecommunication firms are spending a lot of on advertising.”

According to data from the Electronic Marketer Club cited by Nielsen, electronics sales jumped 32 percent in the first quarter to Rp 5.81 trillion. The International Data Corporation estimated computer sales in Indonesia this year would top 3.6 million, compared with 2.8 million last year.

The survey also shows retailers are upbeat, with 59 percent expecting revenue to grow 12-30 percent this year.

More generally, the survey finds the business community’s main concern is the exchange rate, with 62 percent saying they are worried about it. The cost of goods was the second-biggest concern at 53 percent.

The annual Shopper Trends Survey questioned 1,781 households in Jakarta, Bandung, Surabaya, Makassar and Medan. It also surveyed 188 businesses in the five cities.

http://www.thejakartaglobe.com/business/eager-indonesian-shoppers-to-lift-sales-15-this-year/384716