Indonesia’s retail stores feel the void as online shopping takes off

After years of impressive growth in wages and consumer spending, sales at retail outlets and malls in Indonesia are at the crossroads, while, at the same time, online shopping gets ever more popular. The sales growth rate for retail stores is now at single-digit levels, falling from above ten per cent annually in recent years, fastest in department stores and malls.

Retailers blame the rise of online shopping, but analysts also say that in overall consumer spending is declining due to sluggish wage growth. The minimum wage growth rate will slow to 8.71 per cent in 2018, the lowest in recent years, according to the government. As recently as 2013, minimum wages had soared more than 40 per cent, fueling the country’s spending frenzies. Now, consumers are being forced to cut back their buying or look for cheaper online options.

Since the busy Ramadan shopping season ended in summer, retail store sales in October grew by a meager 1.3 per cent from a year earlier, according to preliminary data released by Bank Indonesia, the country’s central bank. The results were store closures across the country, where the modern retail business model had entrenched itself over the years.

At the end of June this year, all Indonesian 7-Eleven convenience stores closed their doors. In September, Matahari Department Store, the nation’s largest department store chain, shuttered two southern Jakarta stores.

At the same time, online sales surged 22 per cent in 2017 from the previous year to around $7 billion and are projected to keep climbing at a brisk annual rate of around 20 per cent for the foreseeable future.

Large e-commerce sites, including Tokopedia, one of Indonesia’s largest online marketplaces, and Lazada, a brand of China’s Alibaba, are siphoning shoppers away from stores, a trend that shows no sign of abating.

With a population of over 250 million people, Indonesia is the largest consumer market in Southeast Asia.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid

After years of impressive growth in wages and consumer spending, sales at retail outlets and malls in Indonesia are at the crossroads, while, at the same time, online shopping gets ever more popular. The sales growth rate for retail stores is now at single-digit levels, falling from above ten per cent annually in recent years, fastest in department stores and malls.

After years of impressive growth in wages and consumer spending, sales at retail outlets and malls in Indonesia are at the crossroads, while, at the same time, online shopping gets ever more popular. The sales growth rate for retail stores is now at single-digit levels, falling from above ten per cent annually in recent years, fastest in department stores and malls.

Retailers blame the rise of online shopping, but analysts also say that in overall consumer spending is declining due to sluggish wage growth. The minimum wage growth rate will slow to 8.71 per cent in 2018, the lowest in recent years, according to the government. As recently as 2013, minimum wages had soared more than 40 per cent, fueling the country’s spending frenzies. Now, consumers are being forced to cut back their buying or look for cheaper online options.

Since the busy Ramadan shopping season ended in summer, retail store sales in October grew by a meager 1.3 per cent from a year earlier, according to preliminary data released by Bank Indonesia, the country’s central bank. The results were store closures across the country, where the modern retail business model had entrenched itself over the years.

At the end of June this year, all Indonesian 7-Eleven convenience stores closed their doors. In September, Matahari Department Store, the nation’s largest department store chain, shuttered two southern Jakarta stores.

At the same time, online sales surged 22 per cent in 2017 from the previous year to around $7 billion and are projected to keep climbing at a brisk annual rate of around 20 per cent for the foreseeable future.

Large e-commerce sites, including Tokopedia, one of Indonesia’s largest online marketplaces, and Lazada, a brand of China’s Alibaba, are siphoning shoppers away from stores, a trend that shows no sign of abating.

With a population of over 250 million people, Indonesia is the largest consumer market in Southeast Asia.

Do you like this post?
  • Fascinated
  • Happy
  • Sad
  • Angry
  • Bored
  • Afraid