At present, Indonesia has more than 45 million people who are classified as middle class group. Previously, both McKinsey and Roy Morgan Research had conducted yearly research where in 2008, number of middle group consumers were only 28% of the population. This 45 million people are surprisingly surpassed Indonesia's neighboring countries such as Singapore, Malaysia, Vietnam and other South East Asian Countries.
Source: www.medianesia, processed by www.invisindo.com
Indonesia's economy growth was 6.2% back in the last quarter of 2012 and slightly stable to 6% in the first quarter of 2013, whilst World Bank and IMF has predicted that Indonesia's economy may slightly down to 5.9% at the end of 2013. Both Bank of Indonesia, Ministry of Trade and Ministry of Finance remains optimistic that the target of 6.2% of economy growth is likely possible to achieve.
The growth of middle class consumer group is predicted to hit 80 million people within 10 years from now. Market size of retail industry in 2012 was predicted approximately USD 134 billion and would hit to USD 223 billion in 2015. Numbers of blue chip stock sought in Indonesia Stock Exchange shows that Retail King Companies such as MAP (Mitra Adi Perkasa), Hero Supermarket, Ramayana, Matahari have enjoyed 15% of income growth from their business line.
Number of foreign retailers have successfully penetrated into the market has shown how attractive retail market is for both domestic and foreign retailers. Number of Conveniences stores spread at big cities in Indonesia has also indicated the key growth of retail industry. With total supply of 2.8 million m2 and occupancy hits more than 87%, Jakarta has become a bulls' eye target for domestic and foreign retailers, while Bodetabek (Bogor, Depok, Tangerang and Bekasi) have no less interesting with total supply of 1.2 million m2 and occupancy rate hits 83% have caused the Greater's Jakarta as a promising retail market for local and foreign companies.
Average rental price and service charge in Jakarta is around USD 46/month and USD 8.8/month. While Bodetabek has slightly lower price about USD 28.2/month and USD 6.3/month for both rental price and service charge. With the hike of fuel price, parking and electricity fee have caused number of retailers especially shopping mall increased the service charge up to 28% in the first half of 2013. Yet, this middle class group has not yet much affected.
Foreign retailers focus with convenience store business has also become a trend in retail business. Circle-K, 7 Eleven, Lawson and Family Mart have become the trend setter of convenience store as a hangout community for young generation. This step has somehow forced the incumbent mini market such as Indo Maret and Alfa Midi to launch local concept of convenience store known as Indo Maret Point and Alfa Express. Both are offering ready to consume meal, means no cooking only heating.
Supermarket's business has also become a prominent sector in retail industry. Players such as Hero Supermarket, Diamond, Kemchick, Farmers Market, Ranch Market and Food Hall brought by MAP have shown that despite of the price competitiveness offered by these companies, supermarket's business remains promising for both local and foreign company.
Source: Kompas.com
Hero was the champ in supermarket's business before large hypermarket companies such as Carrefour, Lotte Mart and Hypermart started dominating the market and drove the people to visit larger areas of supermarket which selling food and non-food product (fashion, electronic and others). In the midst of this fierce competition, Hero launched another business to develop its product by cooperate with IKEA, a Swedish foreign retailer in furniture to operate an outlet in Indonesia. First target would be Alam Sutera on more than 40,000m2 spacious area.
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Yes....Indonesia is the emerging nation and particularly enjoys rapid growth in retail industry. Yet, the inflation will take 3-4 months before the domino's effect take place.
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