New Market Study Published: Indonesia Retail Report Q1 2014

Indonesia's retail sector will continue to expand vigorously over the next few years, with an enormous and expanding population (the world's fourth largest, after China, India and the US), rising per capita incomes and the continued development of organised retail infrastructure resulting in a strong rise in household spending across all retail subsectors. We are particularly positive about the future growth prospects for clothing & footwear; however, we expect the highest proportion of the household budget to be spent on food and drink throughout our forecast period.

The new Indonesia retail report provides an extensive and comprehensive forecast of various retail indicators including household spending and headline total spending across each retail subsector, household income and employment forecasts, demographic forecasts and a detailed breakdown of household and per capita spending across a large number of retail areas including food & drink, clothing & footwear, household goods and a number of other subsectors.

Full Report Details at
- http://www.fastmr.com/prod/752032_indonesia_retail_report_q1_2014.aspx?afid=301

Although the majority of Indonesians, especially those living in rural areas, still shop at traditional retail outlets such as street markets and kiosks (BMI estimates that traditional retail still accounts for 78% of total grocery sales in Indonesia, with this figure far higher in lower-income rural areas and far lower in the major urban centres), the modern retail sector continues to erode the market share of traditional retail as Indonesia's consumer base becomes more affluent. By 2018, the traditional retail sector is likely to contribute only 57% to the country's overall grocery retail sales.

We see long-term potential in the Indonesian consumer market, particularly for non-essential items and aspirational purchasing by a growing, affluent middle class. We forecast the average net household income will be US$12,870 in 2013, with the majority (81.0%) of households falling into the bottom wage bracket of US$5,000+. However, by 2018, more than 69% of households fall into the US$10,000+ income bracket, which represents the key demographic for increased household spending on luxury items beyond necessities such as food, utilities and transport. We expect this number to grow, resulting in a corresponding increase in household spending on clothing & footwear, education and health. Meanwhile, expenditure on recreation & culture will also continue to rise as consumers with rising levels of disposable income choose to spend more of it on entertainment.

However, we note downside risks to our forecasts such as short-term concerns about poor trade performance. Moreover, we note additional downside risks to the Indonesian consumer and the ability of producers and exporters to realise returns in the short term from the possibility of large-scale portfolio outflows (should the global economy underperform BMI's already bearish expectations for 2013).

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