The consumer market in Indonesia is evolving quickly. With almost 270 million people and a GDP that places Indonesia inside the biggest 20 economies globally, it is no surprise that growth is taking place, but consumer behavior is changing at the same time.
An interesting trend identified by McKinsey shows that even if consumption is increasing, Indonesian consumers are becoming more cost-conscious. They are seeking bargains more often. By 2030, the McKinsey data suggests that there will be 163 consuming households in Indonesia with rising incomes and a large proportion of younger people. 43% of consumers feel confident about the future of their country, although over 60% have some concerns about the security of their own jobs. So consumers are increasing, but they are not ready to spend without caution.
Digital technologies and social media are playing an important role in
shaping how consumers in Indonesia make their purchasing decisions today.
However, there is a clear trend from spending on products to services.
Travel was the fastest growing individual sector in Indonesia in the
last year, now accounting for 14% of spending in Indonesia. Food services was
the second fastest growing sector, now at 19%, demonstrating that the areas
where consumers are starting to spend more are services such as travel and
Indonesia has over 60 million millennial consumers, so it is no surprise that these sectors are growing so fast. It’s also important to note that social media is often feeding into decisions such as where to travel and how. Networks such as Instagram are not just platforms for Indonesians to share their own experience; they actively seek out ideas for travel using these networks and can often book directly from the profile of an airline or hotel.
Cashless payments are also growing fast in Indonesia. In fact, over 75% of all online food service purchases were paid for using a mobile device, demonstrating a convergence between the type of purchases being made and the preferred convenience of a mobile payment system. Euro monitor research shows that the current 58% of Indonesians with smartphones will grow to 78% by 2020. This rapid growth will naturally lead to more demand for cashless services and app-based services, such as food delivery and ride sharing.
Indonesia is changing rapidly. A combination of a young digitally literate population with a preference to spend on experiences and the rapidly increasing penetration of mobile devices means that growth will continue to be strong in services that can deliver a great customer experience from an app.
Let me know what you think about these changes in the Indonesian consumer by leaving a comment here or get in touch via my LinkedIn.