Consumer Insights Brochure-2016

Deloitte Consumer Insights
The evolution of the

Indonesian consumer
May 2016
Contents
Foreword 3
The evolution of the Indonesian consumer 4
Deloitte Consumer Insights 7
1. Overall consumer sentiment 11
2. Spending patterns 14
3. Buying behaviour and brand preferences 18
4. Communication channels 24
5. Buying channels 27
6. e-Commerce 32
7. Geographical differences 34
Looking ahead 37
Appendix 39
Contact us 42
Foreword
The Indonesian consumer has come a long way. Buoyed by rapid economic growth and the corresponding surge in
disposable household incomes, the Indonesian consumer is an optimistic and increasingly sophisticated one. Over the
last few years that we have conducted the Deloitte Consumer Insights survey, we have witnessed how the price-
sensitive Indonesian consumers focus has shifted from price-based purchasing decisions into a quest for value-for-
money propositions as they weigh price considerations against desirable product attributes.
In this third edition of the survey, we reveal some of the recent evolutions of the Indonesian consumer that have
emerged from the results of the third edition of the Deloitte Consumer Insights survey conducted in the first quarter
of 2016 across 2,000 households via face-to-face interviews in five major cities: Jakarta, Bandung, Makassar, Medan
and Surabaya.
We begin by exploring a number of developments in the overall Indonesian consumer sentiment, as well as in their
spending patterns, buying behaviours, brand preferences, communication channels, and buying channels. To account
for the increased consumption and expenditure of the Indonesian consumer, this edition of the report will feature
insights on a list of product categories that have been expanded from the previous two editions. Specifically, as
incomes increase, Indonesian consumers are purchasing greater quantities of electronics products and appliances as
these products typically perceived as non-essentials are increasingly becoming necessities for many.
Then, we take a look at some of the latest developments of the e-commerce landscape in Indonesia, which has
begun to offer a number of innovative solutions to previously unserved, or underserved, markets. At this point, it is
worth mentioning that the rise of online communication channels and e-commerce is fuelling a radical change in the
way Indonesian consumers make purchase decisions. As you will see later in this publication, the average Indonesian
consumer today often does his or her pre-purchase research online and, depending on the type of product in
question, adopts a myriad of different strategies to complete the purchase either online or offline.
Finally, we examine a few of the geographic differences between the key retail markets of Indonesia. It suffices to say
that Indonesia is a very vast and heterogeneous market. We hope that this publication, as a snapshot of the evolving
Indonesian consumer, provides a glimpse into the considerations that consumer and electronics products companies
as well as retailers will need to make when crafting their strategies to enter and grow in this diverse archipelago.
Eugene Ho
Southeast Asia Industry Leader
Consumer & Industrial Products
3
The evolution of the Indonesian
consumer
To say that Indonesia is a vast and geographically disparate country would be an understatement: with its 258 million
inhabitants spread across over 6,000 islands1, it is the worlds fifteenth largest economy and fourth most populous
country after India, China and the US. Driven by rapid urbanisation and a relatively youthful population, Indonesias
Gross Domestic Product (GDP) has been growing at an average rate of 6% throughout the last decade2, with private
consumption rates of up to 57% of GDP3 significantly higher than neighbouring commodity exporters Malaysia and
Thailand. For retail companies looking to invest in Southeast Asia, Indonesia represents a market that is brimming
with promise. But first, they will need to take stock of the dynamic and ever-changing Indonesian consumer.
Confident consumers
The profile of the Indonesian consumer has been steadily evolving along two key dimensions: the increase in
disposable household incomes, and the rise in urbanisation rates. Over the last decade, Indonesia has experienced a
steady growth trajectory in terms of GDP, and this has ultimately led to an increase in household disposable incomes.
Coupled with growth in its population size, this trend has given rise to a significant middle class with headroom to
increase discretionary spending (see Figure 1).
The number of households with high annual disposable incomes of over IDR 120 million (approximately US$10,000)
has doubled between 2006 and 2011, and has continued to increase ever since then (see Figure 2). According to
estimates, Indonesias middle class consisting of households with incomes between IDR 36-120 million will also
expand to include 32 million households by 20204, representing a solid foundation for growth in consumption.
1
Indonesia. The World Bank. http://data.worldbank.org/country/indonesia
2
Indonesia GDP Annual Growth Rate. Trading Economics. http://www.tradingeconomics.com/indonesia/gdp-growth-annual
3
Household final consumption expenditure, etc. (% of GDP). The World Bank. http://data.worldbank.org/indicator/NE.CON.PETC.ZS
4
Indonesias Rising Middle Class to Transform the Countrys Consumer Market. Euromonitor International. 3 July 2012. http://blog.
euromonitor.com/2012/07/indonesias-rising-middle-class-to-transform-the-countrys-consumer-market.html
4
Figure 1: Population demographics in Indonesia (2005-2015)
Million
300
258
250 234
211 20%
3% 17%
200 High income
12%
(More than IDR 120 million per annum)
150 25% Upper middle income
38% 40%
(IDR 60-120 million per annum)
Lower middle income
100 (IDR 36-59.9 million per annum)
60% 30% 29% Low income
50 (Less than IDR 36 million per annum)
15% 11%
0
2005 2010 2015
Source: The Economist Intelligence Unit (2016)
Figure 2: Number of households with annual income above IDR 120 million and real growth rate in
disposable household income (2006-2020)
Million
35 12%
30 10%
Number of households
25
8%
Real growth rate
20
6%
15
4%
10
2%
5
0 0%
2006 2008 2010 2012 2014 2016 2018 2020
Real growth rate in disposable household income

Household with annual incomes over IDR 120 million (US$ 10,000)
Source: Euromonitor (2015)
5
An uncertain economic environment
However, in the face of weaker international demand for commodities and slowing growth in investments, there is a
chance that Indonesias exponential growth rates in GDP and disposable household incomes may begin to taper off.
In fact, there are already signs of this happening: in 2015, consumer spending was evidently weaker than previous
years5.
The distribution of wealth, too, remains uneven. While the middle and higher income segments are enjoying rapid
improvements to their standards of living, the proportion of population living in absolute poverty remains at a
worrying 11%. In the low income segment, disposable household income growth is also significantly lower than that
of the other income segments (see Figure 3)6.
This growth in the middle class is extending well beyond the metropolitan area of Jakarta, with the retail markets
outside Java particularly those in eastern Indonesia, such as the cities in Sulawesi, Maluku and Papua rapidly rising
in importance7.
Figure 3: Percentage change in disposable household incomes in the low, middle and high income groups in
Indonesia
30% 29%
28%
Annual disposable household income
25% 25% Decile 1

Decile 5
20% Decile 10
15%
10%
8% 7% 7%
5%
3% 2% 2%
0%
2006 2011 2020
Source: OECD (2015)
Note: Decile 1 represents the lowest 10%, Decile 5 represents the middle and Decile 10 represents households with the top 10% of
disposable incomes.
5
Indonesia: Constraints Prompt Slower than Expected Growth. The World Bank. 8 July 2015. http://www.worldbank.org/en/news/
press-release/2015/07/08/constraints-prompt-slower-than-expected-growth
6
Indonesias Rising Middle Class to Transform the Countrys Consumer Market. Euromonitor International. 3 July 2012. http://blog.
euromonitor.com/2012/07/indonesias-rising-middle-class-to-transform-the-countrys-consumer-market.html
7
Construction Sector Growth Highest in East Indonesia. Katadata. 6 April 2016. http://en.katadata.co.id/news/2016/04/06/
construction-sector-growth-highest-in-east-indonesia
6
Deloitte Consumer Insights
This third edition of the Deloitte Consumer Insights survey explores a number of macroeconomic and technological
trends that are shaping the Indonesian consumers' behaviours. As with previous years, the report includes analyses
on the spending patterns and buying behaviours of the Indonesian consumer. It will, however, delve deeper into
the consumption patterns of key consumer product categories: in particular, electronics products and appliances
categories have been introduced in this edition to better reflect the increased interest and expenditure of Indonesian
consumers in this segment. In addition, the report will take a look at the growth of the promising e-commerce
industry in Indonesia, and explore the evolution of the information sources that Indonesian consumers rely on in their
consumption journeys.
Methodology
The survey was conducted in the first quarter of 2016 across 2,000 households via face-to-face interviews in five
major cities Jakarta, Bandung, Makassar, Medan and Surabaya with respondents selected from seven household
income levels across the low, middle and high income segments. The sample had been constructed as such in order
to be representative of Indonesias overall population in terms of geographic distribution, gender, and age.
Consumers were surveyed on their spending patterns, buying behaviours, brand preferences, communication
channels, buying channels, e-commerce activities, and geographic differences across eleven product categories:
Audio and Video Electronics Products

Beverages
Clothing and Footwear
Confectionery
Digital Cameras and Other Gadgets
Household Cleaning Products
Major Household Appliances (refers to non-portable appliances, such as refrigerators and washing machines)
Packaged Foods
Personal Hygiene Products
Small Household Appliances (refers to portable or semi-portable appliances that are usually placed on the counter
or other platforms, such as microwave ovens and rice cookers)
Tobacco
7
Demographics of survey respondents
Consumer Survey (n = 2,000 households)
Geographical distribution of survey respondents Gender distribution of consumer survey

respondents
10% Jakarta
Bandung
10% Makassar
Medan
10% Surabaya
60%
10%
50% 50%
Age distribution of survey respondents

Age group, years
15-24 20%
25-34 26%
35-49 40%
50-64 14%
Percentage of survey respondents
Monthly household income distribution of survey respondents vs. actual household income distribution
Monthly household
income, IDR million
Actual 7% 26% 42% 14% 11% Less than 3
3-4.99
Survey 5-9.99
26% 15% 26% 13% 20%
10-15
More than 15
Percentage of survey respondents
Monthly household income distribution by city
Income distribution
Monthly household
Jakarta 4% 7% 15% 13% 9% 52% income, IDR million
Bandung 5% 26% 19% 21% 23% 5% 1% Less than 1
1-1.99
Makassar 10% 22% 17% 12% 24% 10% 5% 2-2.99
3-4.99
Medan 6% 26% 15% 18% 20% 9% 6% 5-7.49
Surabaya 7.5-10
5% 29% 13% 17% 22% 11% 3%
More than 10
In order to accurately reflect the actual demographics of the Indonesian consumer market, quotas were set on
the survey samples to achieve the appropriate distribution of gender, age, and geographical location of the
respondents, and weights were applied to adjust for minor over-representations and under-representations
that occurred in the data set.
8
For this edition of the report, the Deloitte Retail Insights screening exercise was once again conducted to shed light
on some of the key aspects of Indonesias retail activities.
Methodology
200 retail outlets across the spectrum of Traditional and Modern Trade channels Wet Markets, Street Hawkers,
Minimarkets, Supermarkets and Hypermarkets were screened to gather information on their product availability,
shelf visibility, and promotions for 13 non-electronic, consumer product sub-categories:
Product category Sub-category

Beverages Fruit or Vegetable Juices
Ready to Drink Coffee
Ready to Drink Tea
Confectionery Chocolates
Household Cleaning Products Dishwashing Products
Laundry Products
Packaged Foods Breakfast Cereals
Instant Noodles
Personal Hygiene Products Baby Diapers
Bath and Shower Products
Hair Care Products
Sanitary Products
Tobacco Tobacco
Additionally, to account for the increasingly important electronics products and appliances segment, 48 electronics
products and appliance retailing outlets consisting of Traditional Electronic Stores, Modern Electronic Stores, and
Hypermarkets were screened for four electronics products and appliances categories:
Audio and Video Electronic Products

Digital Cameras and Other Gadgets
Major Household Appliances
Small Household Appliances
9
Overview of retail screening
Retail Screening (n = 248 retail outlets)
Geographical distribution of retail outlets
19% 24%
Jakarta
Bandung
Makassar
Medan
19% 19% Surabaya
19%
Types of retail outlets screened (n = 200) Types of retail outlets screened (n = 48)
(non-electronics products and appliances) (electronics products and appliances)
20% Wet Markets Traditional Electronic Stores

33%
20% Warungs
Modern Electronic Stores

20% Minimarkets 33%
20% Supermarkets
33% Hypermarkets
20% Hypermarkets
Type of retail outlets screened by city (non-electronics products and appliances)
Jarkata 20% 20% 20% 20% 20% Wet Markets

Warungs
Bandung 20% 20% 20% 20% 20% Minimarkets
Makassar 20% 20% 20% 20% 20% Supermarkets
Hypermarkets
Medan 20% 20% 20% 20% 20%
Surabaya 20% 20% 20% 20% 20%
Type of retail outlets screened by city (electronics products and appliances)
Jarkata 33% 33% 33% Traditional Electronic Stores

Modern Electronic Stores
Bandung 33% 33% 33%
Hypermarkets
Makassar 33% 33% 33%
Medan 33% 33% 33%
Surabaya 33% 33% 33%
10
1. Overall consumer sentiment
The paradox of dual consumer sentiments

Indonesias consumer sentiment remains generally high. As with last years survey, the respondents were positive
about the macroeconomic outlook, with 85% of households in the survey indicating strong or moderate optimism.
However, their plans for increased spending within the next year appear to be more conservative when compared to
the previous survey. In total, only 29% of respondents expect to increase their spending, with most of them planning
to increase spending by less than 10% and between 10-25% (see Figure 4).
Figure 4: Overall consumer sentiment and plans for increased spending in 2016
100% 100% 100%

9%
29% 14%
35%
Percentage of total population
80% 80% 80%
28%
60% 60% 60%
40% 50% 40% 40%

71%
49%
20% 20% 20%
15%
0% 0% 0%
Sentiment towards Plans to increase Overall intended
economic climate spending incease in spending
Optimistic Yes >50%
No 26-50%
Moderately optimistic
10-25%
Pessimistic
<10%
Source: Deloitte Consumer Insights survey (2016)
11
On closer inspection, low household income respondents seem to be more optimistic than their wealthier
counterparts, with 100% of households with monthly household incomes of less than IDR 1 million indicating
moderate or strong optimism. But herein lies the paradox: as household income levels increase, optimism and
pessimism levels both increase simultaneously. In the high income segment, 37% and 27% of the households express
optimism and pessimism respectively (see Figure 5).
Figure 5: Consumer sentiment in Indonesia and plans for increased spending in 2016
Less than 1 88% 12%

Monthly household income, IDR million
1-1.99 2% 72% 26%
2-2.99 11% 60% 29%
3-4.99 14% 52% 34%
5-7.49 13% 50% 37%
7.5-10 17% 43% 40%
More than 10 27% 36% 37%
Pessimistic Moderately optimistic Optimistic
12
The manifestation of such a dual consumer sentiment may be caused by the downward pressure of a slowing
economy on wages. Although the average Indonesian minimum wage is expected to rise by a considerable 10.5% in
2016, this growth rate is slower than those in 2015 (12.8%) and 2014 (19.1%)8. However, urban salary growth rates
especially in Jakarta, Surabaya and Bandung far exceed provincial and rural salary growth rates (see Figure 6).
Figure 6: Percentage of increase in minimum wages for five major cities in Indonesia
35%
32%
Jarkata
30%
30% Bandung
Makassar
26% Medan
25% Surabaya
23%
Minimum salary increase
20% Average minimum salary

increase in 2014:
16% 19.1%
15%
Average minimum salary
12%
11% 11% increase in 2015:
10%
10% 9% 12.8%
5%
0%
2014 2015
Source: Indonesia Investment Guide (2016), Indonesia Bureau of Statistic (2015)
The differences in the optimism levels between this survey and the previous survey could also be explained by the
fact that the previous survey was conducted immediately after Indonesias presidential election, in an environment of
reform and elevated optimism following President Joko Widodos victory. A year later, as the enthusiasm and jubilation
subsides, Indonesian consumers have become more cognisant that it will be some time before the full impacts of
the economic reforms can be felt. In the longer term, however, these stabilising changes are seen as more likely to
contribute to a positive growth in consumer optimism levels.
8
Berapa Upah Minimum di Indonesia di Tahun 2015? Indonesia Investments. 20 November 2014. http://www.indonesia-investments.com/id/
berita/berita-hari-ini/berapa-upah-minimum-di-indonesia-di-tahun-2015/item2633
13
2. Spending patterns
Heterogeneous spending patterns across monthly household income levels

While overall disposable household incomes have increased, it is worthwhile highlighting that this growth is not an
even one. As compared to last years survey, monthly household expenditures in this survey have increased by an
average of 2.5%. But while the high income segment and the upper middle income segment saw their expenditures
increase by up to 11%, the segment with monthly household income level of IDR 2-2.99 million experienced a
decrease in expenditures. For the low income segment, the survey also revealed that the level of their expenditures
exceeded their incomes (see Figure 7).
Figure 7: Monthly household incomes and expenditures (2015 and 2016)

Household expenditure
Monthly surplus / deficit index*
1,10 2015
Less than 1 1,14
+3% 640,000
2016
1,70
1-1.99 1,77
+4% 270,000
3,20
2-2.99 2,50 -22% Even
3,70 -13%
3-4.99 4,20 200,000
5-7.49 4,30 +11%

4,76 1,490,000
7.5-10 4,90 +1%

4,96 3,790,000
More than 10 5,90 +7%

6,30 3,700,000
0,0 0,5 1,0 1,5 2,0 2,5 3,0 3,5 4,0 4,5 5,0 5,5 6,0 6,5 * Index represents gap between median
incomes and expenditures per month
Expenditures on items in the Basic Necessities cluster have increased 6 percentage points from 27% to 33% as
compared to the previous survey (see Figure 9). This is in contrast to the expenditures in the Welfare and Leisure
cluster, which have decreased by 12 percentage points, from 27% to 15%. Meanwhile, expenditures on the Housing
and Transport cluster have held relatively constant.
Figure 8: Three main consumer product clusters
Basic Welfare and Housing and

Necessities Leisure Transport
Credit card
Beverages instalment Housing & Utilities
Leisure and
Food holiday Transportation
Welfare and
savings
Note : Nine product categories included in the study have been excluded from the three main clusters defined above
14
Figure 9: Overall expenditures across the three consumer product clusters (2015 and 2016)
Basic Necessities Welfare and Leisure Housing and Transport
33% 27% 22%
-2% 20%
+6% 6% 5%
27%
-12%
10%
5%
9%
8%
15%
3%
27%
22%
14% 9% 12%
11%
3%
2015 2016 2015 2016 2015 2016
Beverages Credit Card Welfare & Saving Transportation Housing & Utilities
Food Leisure & Holiday
Furthermore, an examination of the expenditures by monthly household income levels reveals three key insights.
Firstly, low income households (less than IDR 3 million) are allocating a higher share of their monthly household
incomes to Basic Necessities such as food and beverages, which hovers persistently at 27-42% of total household
income. The lowest income bracket (less than IDR 1 million) also reported an increase in expenditures on Housing
and Transport items as compared to the previous survey, from 12% to 16%. This implies an increased spending
on greater quantities and more varieties of Basic Necessities, driven by increasing household income levels and an
optimistic consumer sentiment amongst the low income segment. Another contributing factor could have been the
cut in fuel subsidies in 2015, which is likely to have caused a short-term negative effect on households in terms of
increased fuel costs, either directly or indirectly9. This is also reflected in the rising Consumer Price Index which have
increased by an average of 20 basis points every month for the past year10.
9
Indonesia's Fuel Subsidies: Action plan for reform. International Institute for Sustainable Development. May 2012. http://www.iisd.org/
library/indonesias-fuel-subsidies-action-plan-reform
10
Indeks Harga Konsumen dan Inflasi Bulanan Indonesia, 2005-2016. Badan Pusat Statistik. https://www.bps.go.id/linkTabelStatis/view/
id/907
15
Secondly, and perhaps unsurprisingly, the tendency to allocate expenditures to non-essential and premium products
such as leisure activities, holidays, or electronics products and appliances, is strongly correlated with household
income levels (see Figure 10). For instance, Basic Necessities account for 42% proportion of monthly expenditures
for the low household income segment and only 19% for the high household income segment, while Welfare and
Leisure accounted for 4% of monthly expenditures for the low household income segment and 19% for the high
household income segment.
The point of inflection, as observed in the previous two editions of the survey, appears to remain at the IDR 5
million household income level where households generally start to have a surplus in spending budget (see Figure
7). Generally, respondents who have reached this level of income increasingly allocate more of their expenditures
towards non-essentials, due to the increased income levels as well as access to financial products (i.e. Credit Card)
that can bolster spending. This year, however, the survey also revealed an increase in spending on Welfare and
Leisure items at the IDR 3-4.99 million monthly household income level.
Figure 10: Breakdown of monthly expenditures by household income levels
A B C
2015-2016
Less than 1 35% 7% 4% 7% 5% 5% 6% 7% 9% 2%2%1%3% 2% 5% Basic trend

Necessities
A spending
1-1.99 27% 5% 3% 8% 5% 5% 7% 8% 9% 5% 2% 3% 3% 3% 7%
categories
+5%
2-2.99 22% 5% 4% 9% 6% 5% 6% 7% 10% 8% 2% 4% 4% 3% 5%
Housing and -2%
Transport
3-4.99 20% 5% 3% 8% 5% 4% 6% 7% 10% 8% 2%2% 5% 4% 5% 6% B spending
categories
5-7.49 24% 5% 2% 7% 5% 3% 5% 7% 9% 9% 3% 4% 3% 4% 3% 7%
Welfare and -12%

7.5-10 19% 5% 2% 8% 5% 4% 6% 7% 7% 10% 4% 5% 3% 5% 4% 6%
C Leisure
spending
More than 10 13% 6% 2% 9% 5% 3% 5% 7% 10% 8% 4% 6% 5% 5% 5% 7% categories
Share of monthly expenditure (%)
Packaged foods Personal Hygiene Housing & utilities Small Household Appliances
Beverages Household Cleaning Leisure & Holiday Major Household Appliances
Tobacco Communication & Media Credit Card Instalment Digital Camera & Other Gadgets
Clothing & Footwear Transportation Welfare & Savings Audio Video Electronic Product
Thirdly, there are three classes of products that exhibit clear expenditure patterns across household income levels (see
Figure 11):
Expenditure Pattern 1: Proportion of expenditures relatively constant at all household income levels
Examples of products in this category include Beverages, Personal Hygiene Products, and Transportation.
Assuming that, on a per capita basis, the quantities required for these products do not vary significantly, this
finding suggests that consumers with higher household incomes tend to consume more expensive or premium
products in these categories. Specifically, they may consume more affordable treats as their incomes rise: for
instance, they may choose packaged specialty / health drink over bottled mineral water, or premium cosmetics over
mass market ones.
For consumer product companies, this represents a latent opportunity to differentiate market offerings with
different price levels to target consumers at various household income levels.
16
Expenditure Pattern 2: Proportion of expenditures decreases as household income levels increase
Examples of products in this category include Household Cleaning Products, Packaged Foods, and Tobacco.
As the per capita quantities of these products do not change with household income, they tend to account for
a lower proportion of expenditure as income levels increase. Products in this category generally offer limited
opportunities for luxury pricing.
Expenditure Pattern 3: Proportion of expenditures increases as household income levels increase

Examples of products in this category include premium or luxury items such as Leisure and Holiday, Digital Cameras
and Other Gadgets, as well as Credit Card Instalments.
While the low household income segment may not opt to spend on these items, there are opportunities for
consumer product companies to offer premium value propositions to the higher household income segments and
to target the emerging middle household income segment, who are beginning to increase their expenditures in
these categories.
Figure 11: Three classes of products that exhibit clear expenditure patterns across household income levels
Pattern 1:
Constant
%Share of Expenditure
across
income level
Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More

than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than
1 10 1 10 1 10
Beverages Personal Hygiene Transportation
Pattern 2:
Decreases as
income
increases
Less More Less 1-

Less 1- 2- 3- 5- More
than 1- 2- 3- 5- 7.5- than 2- 3- 5- 7.5- More
than 1.99 2.99 4.99 7.49 7.5- than than than
1 10 10 1 1.99 2.99 4.99 7.49 10 10 1 1.99 2.99 4.99 7.49 10 10
Household Cleaning Packaged Foods Tobacco

Pattern 3:
Increases as
income
increases
(Luxury
groups)
Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More Less 1- 2- 3- 5- 7.5- More
than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than than 1.99 2.99 4.99 7.49 10 than
1 10 1 10 1 10 1 10
Leisure & Holiday Credit Card Instalment Electronics Products & Appliances Welfare & Savings
17
3. Buying behaviour and brand
preferences
Price is king, but other attributes matter too

The Indonesian consumer is a price-sensitive one. As the two previous editions of the survey have shown, they desire
promotions and strongly prefer Local brands, especially for Basic Necessities. At the same time, they are beginning
to place greater emphasis on other product attributes such as Health and Overall Quality. With better access to
information, they are more empowered than ever to make informed purchasing decisions that take into account
available promotions and price comparisons. They are, in effect, on a hunt for value-for-money propositions.
Across all product categories, Price and specific category drivers such as Comfort for Clothing and Footwear and
Taste for Packaged Foods remain the top two attributes influencing purchasing decisions. But, as compared to last
years survey, Price has increased in importance for Indonesian consumers (see Figure 12), likely due to the lower
overall consumer sentiment and an increased focus on value-for-money when making purchases.
Figure 12: Ranking of product attributes by importance for six product categories
Clothing & Footwear % Change Consumer Electronics & Appliances

from 2015
Comfortability 23% +5.0% Price 22%
Price 19% +4.0% Trusted Brand 20%
Appearance 17% +3.0% Technology 17%
Size Fit 17% +4.0% Overall Quality 14%
Durability 9% -1.0% Design 9%
Overall Quality 4% -0.8% Innovation 6%
Recognisable 4% -4.0% Promotion 6%
Promotion 3% - Availability 6%
Secure 2% - After Sales Services 2%
Availability 2% +2.0%
Packaging 1%
Household Cleaning % Change Packaged Foods % Change

from 2015 from 2015
Price 22% +5.0% Taste 25% -0.3%
Health 13% - Price 20% +5.0%
Trust 11% -6.0% Health 13% -
Safety 11% -4.0% Trust 9% -5.3%
Smell 11% +1.0% Smell 8% +2.3%
Overall Quality 10% -3.0% Safety 7% +0.3%
Availability 9% +3.0% Overall Quality 6% -5.3%
Promotion 6% +1.0% Availability 5% -0.7%
Packaging 4% +3.0% Promotion 3% +0.7%
Innovation 3% +1.0% Packaging 3% +0.3%
Innovation 2% -0.3%
Personal Hygiene % Change Tobacco % Change

from 2015 from 2015
Price 22% +0.8% Overall Quality 30% +20%
Health 15% - Price 17% +2.0%
Overall Quality 11% -5.0% Smell 14% +4.0%
Smell 11% -1.0% Taste 13% -4.0%
Trust 10% -5.0% Availability 8% +3.0%
Safety 10% -1.0% Trust 6% -10%
Availability 9% +3.0% Packaging 4% +3.0%
Promotion 5% +1.0% Safety 3% -10%
Packaging 4% +1.0% Promotion 2% -
Innovation 4% - Health 2% -7.0%
Innovation 1% -0.3%
18
Specific category drivers
Audio and Video Electronic Products, Digital Cameras and Other Gadgets, Major Household Appliances,
and Small Household Appliances: In contrast to their preferences in other product categories, Indonesian
consumers across all household income levels prefer Foreign brands over Local ones in this category (see Figure
13). But this preference exhibits slight variations by geographical locations: in Surabaya, for instance, Local brands
dominate the Small Household Appliances market (see Figure 14). This could be due to the fact that Surabaya is the
home base of two local electronic manufacturers, Maspion and Polytron.
Figure 13: Brand preferences by household income level

Audio Digital
and Video Camera Major Small
Clothing & Household Packaged Personal Electronic and Other Household Household
Beverages Footwear Confectionery Cleaning Foods Hygiene Tobacco Products Gadgets Appliances Appliances
Less than 1 8%
92% 7% 92% 6% 94% 6% 94% 1% 98% 8% 92% 23% 77% 72% 28% 89% 11% 89% 11% 84% 16% Foreign
Local
1-1.99 10% 90% 10% 89% 9% 91% 7% 93% 2% 97% 11% 89% 18% 82% 76% 24% 81% 19% 90% 10% 65% 35%
2-2.99 13% 87% 21% 77% 14% 86% 7% 93% 3% 94% 19% 81% 19% 81% 75% 25% 87% 13% 79% 21% 66% 34%
3-4.99 13% 87% 32% 65% 14% 86% 13% 87% 7% 93% 28% 72% 17% 83% 83% 17% 89% 11% 87% 13% 74% 26%
5-7.49 13% 87% 34% 62% 13% 87% 10% 90% 4% 96% 24% 76% 16% 84% 83% 17% 90% 10% 86% 14% 69% 31%
7.5-10 19% 81% 40% 56% 24% 75% 15% 85% 6% 94% 37% 63% 15% 85% 80% 20% 90% 10% 86% 14% 71% 29%
More than 10 20% 80% 53% 42% 25% 75% 20% 80% 8% 92% 45% 55% 16% 84% 87% 13% 91% 9% 87% 13% 77% 23%
Figure 14: Brand preferences by city

Audio and Video Digital Camera and Major Household Small Household
Electronic Products Other Gadgets Appliances Appliances
Jakarta 88% 9% 92% 7% 1% 89% 8% 3% 74% 23% 3% Foreign

3% Local
Bandung 89% 9% 93% 6% 1% 90% 8% 90% 8% 2% Private
2% Label
Surabaya 37% 63% 63% 37% 57% 43% 15% 85%
Medan 76% 24% 91% 9% 97% 3% 76% 24%
Makassar 90% 8% 94% 5% 1% 91% 7% 2% 91% 8% 1%
2%
19
Figure 15: Brand preferences for electronics products and appliances categories by household income level
Less than 1 15% 38% 2% 20% 20% 22% 39% 2% 27% 10% 18% 46% 9% 19% 9% 34% 37% 15% 14%
5%
1-1.99 16% 37% 8% 17% 18% 20% 33% 8% 23% 14% 14% 44% 12% 20% 7% 19% 36% 4% 9% 31%
3% 2% 2% 1% 1% 1%
2-2.99 12% 42% 7% 14% 21% 13% 39% 11% 24% 11% 8% 49% 6% 16% 20% 12% 36% 6% 12% 33%
3% 2% 1% 2%
3-4.99 6% 39% 15% 23% 13% 8% 32% 15% 32% 10% 5% 52% 16%1 4% 11% 10% 35% 13% 16% 23%
3% 1% 2% 3%
5-7.49 6% 42% 16% 19% 15% 9% 35% 18% 29% 9% 7% 47% 16% 17% 12% 12% 30% 11% 17% 29%
1% 1% 1% 1% 1%
7.5-10 5% 39% 17% 20% 16% 6% 29% 16% 40% 8% 5% 45% 14% 23% 12% 13% 24% 10% 24% 28%
2% 1% 1% 1%
More than 10 3% 44% 21% 21% 9% 6% 24% 22% 40% 5% 4% 46% 19% 20% 9% 5% 37% 14% 20% 20%
2% 3% 2% 2% 1%
Chinese Korean Western Local Brand
Japanese Private label Local Non-Brand
The most preferred Foreign brands tend to be Chinese, Japanese or Western, with Japanese brands dominating
across all household income groups and Chinese brands doing better with the low household income segment.
Western brands, on the other hand, have gained favour with consumers in the high income segment (see Figure
15).
Price, Trusted Brand, Technology and Overall Quality emerged as the top four attributes influencing the purchase
decision in this product category. Although key features such as Trusted Brand, Technology, and Overall Quality
become increasingly significant as household income levels increase, Price remains important across all income
levels, even for those with household income levels of above IDR 10 million. But competitive pricing does not
always means cheap prices, especially for consumers who are willing to pay more for the offerings of their choice.
What is worth noting here is that After Sales Service an attribute often considered important by manufacturers
was ranked as the least important across all household income groups in the survey (see Figure 16).
Beverages and Packaged Foods: Taste remains the major attribute for the choice of Beverages and Packaged
Foods, although Health is steadily emerging as an important consideration. Brands competing in this category
will need to find the sweet spot with the right combination of flavour and taste, as well as offer products at an
appropriate price point and distribute them through the right channels.
Clothing and Footwear: Comfort and Price are the key drivers of purchasing decisions in this product category,
indicating an overall commoditised attitude. Appearance, as well as Size and Fit, are gaining in importance,
although this trend has different connotations for the low and high income segments. Regarding Size and Fit,
the considerations are more about the aesthetics and style of the product. For example, high household income
consumers purchasing slim fit designs are usually concerned with Size and Fit especially due to the tight fit
fashion preference. Older consumers aged 65 and onwards are also demanding more in terms of Appearance and
Comfort in this category.
20
Figure 16: Ranking of product attributes by importance for electronics products and appliances categories by household income level
(Monthly household income, IDR million)
Audio and Video Electronic Products

Less than 1 1-1.99 2-2.99 3-4.99 5-7.49 7.5-10 More than 10
Trusted Brand 25% 23% 19% 22% 22% 21% 19%
Price 13% 23% 24% 18% 17% 20% 17%
Technology 22% 16% 17% 17% 22% 15% 19%
Overall Quality 7% 15% 13% 16% 12% 14% 12%
Design 20% 9% 10% 8% 11% 11% 12%
Innovation 3% 4% 5% 7% 6% 7% 8%
Promo 5% 3% 6% 4% 4% 4% 5%
Availability 4% 5% 3% 5% 4% 6% 6%
After Sales 1% 2% 2% 3% 1% 1% 3%
Service
Digital Camera and Other Gadgets

Price 22% 22% 20% 19% 16% 18% 17%
Technology 18% 18% 17% 20% 21% 20% 22%
Trusted Brand 15% 15% 18% 19% 20% 20% 18%
Design 14% 14% 13% 10% 11% 11% 9%
Overall quality 12% 12% 13% 12% 14% 12% 11%
Innovation 8% 8% 7% 9% 6% 9% 10%
Promo 4% 4% 7% 5% 4% 2% 5%
Availability 5% 5% 3% 5% 5% 7% 6%
After Sales 1% 1% 3% 2% 2% 2% 2%
Service
Major Household Appliances

Trusted Brand 21% 21% 19% 24% 21% 23% 21%
Price 18% 18% 23% 19% 19% 20% 16%
Technology 9% 9% 15% 17% 19% 18% 20%
Overall Quality 11% 11% 14% 12% 14% 10% 12%
Design 13% 13% 7% 9% 4% 7% 9%
Innovation 15% 15% 4% 7% 6% 7% 6%
Promo 8% 8% 10% 7% 10% 6% 7%
Availability 3% 3% 6% 3% 5% 7% 5%
After Sales 2% 2% 2% 1% 2% 2% 3%
Service
Small Household Appliances

Price 22% 22% 24% 18% 17% 19% 16%
Trusted Brand 21% 21% 21% 21% 18% 20% 20%
Technology 17% 17% 16% 19% 19% 14% 21%
Overall quality 14% 14% 13% 12% 17% 12% 10%
Promo 11% 11% 7% 7% 5% 7% 6%
Design 5% 5% 10% 6% 10% 8% 8%
Availability 5% 5% 3% 7% 7% 9% 7%
Innovation 3% 3% 4% 9% 6% 10% 10%

After Sales 1% 1% 2% 1% 1% 1% 2%
Service
21
Household Cleaning and Personal Hygiene Products: Price remains the most important consideration, but the
Health attribute has gained ground in this edition of the survey.
Tobacco: Attributes such as Overall Quality and Price are the most important attributes in this category, with Trust,
Safety and Health taking a backseat. This is partly due to the fact that many well-established and long-standing
brands are already present in the market.
Indonesia has one of the highest prevalence of male smokers at nearly 65%, and although the proportion of
female smokers have traditionally been extremely low, they are also gradually increasing and stood at nearly 7% in
201311. At the same time, smokers in Indonesia are also heavily influenced by advertising, which usually features
pop stars and celebrities on billboards, print media, online video commercials, and TV enticing new and
ex-smokers to pick up the habit12.
Opportunity for higher price brand

Approximately 8-17% of respondents said that they chose more expensive products among the options that they
were considering for purchase (see Figure 17). For Beverages, Confectionery, Packaged Foods and Personal Hygiene
Products, the Health attribute appears to become a relatively more important consideration for consumers who chose
a higher priced product. For Clothing and Footwear, Size and Fit attribute becomes more important especially to
enable comfort with style. Meanwhile for Audio Video and Digital Electronic Products, Technology and Trusted Brand
stand out as having relative importance (see Figure 18).
Figure 17: Price choices of consumers by household income level
Monthly household
income, IDR million
Less than 1 18% 74% 8%
1-1.99 18% 70% 12%
Between 2-2.99 23% 66% 11% Between

18-24% across 8-17% across
all income all income
3-4.99 24% 66% 10%
segment segment
prefers prefers product
product / 5-7.49 23% 66% 11% / brand that
brand that are are with higher
lower priced priced
7.5-10 19% 67% 14%
More than 10 20% 63% 17%
Low price Same price Higher price
11
Menkes Luncurkan Iklan Layanan Masyarakat (ILM) Korban Rokok. Kementerian Kesehatan Republik Indonesia. 10 October 2014. http://
www.depkes.go.id/article/print/201410130001/menkes-luncurkan-iklan-layanan-masyarakat-ilm-korban-rokok.html
12
Indonesia's smoking epidemic an old problem getting younger. The Guardian. 22 March 2012. http://www.theguardian.com/
world/2012/mar/22/indonesias-smoking-epidemic
22
Figure 18: Product attributes ranked by importance among consumers purchasing different price options
Brand driver Lower price Same price Higher price
Beverages
Taste 27% 26% 26%
Price 20% 21% 25%
Health 23% 20% 15%
Trust 11% 12% 12%
Overall Quality 10% 11% 13%
Safety 9% 10% 9%
Confectionery
Taste 32% 32% 31%
Price 24% 22% 17%
Health 19% 17% 18%
Health is a
Trust 9% 10% 12%
relatively
Overall Quality 8% 9% 12% more
Safety 7% 10% 10% important
attribute for
Packaged Foods consumers
choosing
Taste 27% 29% 24%
items that
Price 23% 21% 15% are higher
Health 18% 16% 20% priced
Trust 12% 13% 15%
Safety 9% 10% 11%
Personal Hygiene
Taste 23% 22% 18%
Price 22% 20% 24%
Health 15% 16% 15%
Trust 15% 14% 15%
Safety 12% 13% 13%
Clothing and Footwear

Comfortability 24% 26% 25%
Size and Fit is
Appearance a relatively
20% 20% 20%
more
Size Fit 16% 17% 21%
important
Price 20% 17% 16% attribute for
Durability 9% 10% 9% consumers
Overall Quality 7% 6% 3% choosing
Renowned Brand 4% 4% 5% items that are
higher priced
Audio Video Electronic Product

Trusted Brand 21% 24% 25%
Technology 22% 22% 24%
Price 26% 20% 18% Technology
Overall Quality 15% 15% 13% and Trusted
Design 10% 12% 12% Brand are
Innovation relatively
5% 8% 7%
more
Digital Camera and Other Gadgets important
attributes for
Trusted Brand 22% 22% 23% consumers
Technology 24% 23% 27% choosing
Price 25% 20% 16% items that
are higher
priced
Design 9% 12% 12%
Innovation 6% 9% 9%
23
4. Communication channels
Getting social
Traditional media such as the TV remains the most trusted source of information in Indonesia, followed by word of
mouth channels. For many Indonesian consumers, their purchasing decisions were highly influenced by Relatives,
as well as Friends and Colleagues (see Figure 19). They are also increasingly adopting new sources of information
and socialising through online and social media: the average Indonesian spends nearly three hours on social media
everyday13 and this figure may be even higher in Jakarta, the social media capital. E-commerce, though still nascent
at this point in time, is also growing, with multiple innovative start-ups, both local and foreign, competing in the
market across multiple product categories.
Figure 19: Preferred sources of information
Preferred sources
of information (%)
TV 21%
Relatives 20%
Friends and Colleagues 19%
In Store Promotion 18%
Digital Media 7%
Outdoor Ads 6%
Print Ads 6%
Expert 2%
Radio 1%
Indonesian consumers also appear to be gradually changing their behaviours in their search for information and
engagement with brands. As compared to the previous survey, the importance of traditional media such as TV, Print
Advertisements, or Outdoor Advertisements has declined across all household income segments, as consumers
begin to embrace digital channels instead (see Figure 20). The exceptions to this are the households with monthly
incomes of less than IDR 1 million, as well as certain fashion-related product categories in of Jakarta. Online channels
are undoubtedly growing in importance: even when watching TV, 90% of Indonesians reportedly look at a second
screen, that is, their mobile phones14.
13
Digital in numbers Indonesia. Seno Pramuadji. 17 February 2014. http://www.slideshare.net/senopramuadji/digital-in-numbers-
indonesia-compilation/
14
Indonesia Market Report - Q4 2015. GlobalWebIndex.
24
Figure 20: Sources of information by product category and brand type
Percentage change in
digital media share
(2015 vs 2016)
Local Brand 19% 19% 2% 22% 2% 6% 6% 6% 18% +4%

Beverages
Foreign Brand 18% 19% 3% 19% 1% 7% 9% 8% 16% +7%
Local Brand 19% 19% 3% 22% 2% 6% 6% 6% 17% +1%

Clothing &
Footwear Foreign Brand 18% 19% 3% 18% 1% 7% 9% 9% 16% -3%-
Local Brand 19% 19% 2% 22% 2% 6% 6% 6% 18% +4%

Confectionery
Foreign Brand 18% 19% 4% 17% 1% 7% 9% 8% 17% +5%
Household Local Brand 19% 19% 2% 23% 1% 6% 6% 6% 18% +5%

Cleaning
Foreign Brand 18% 19% 3% 18% 1% 7% 9% 8% 17% +7%
Local Brand 19% 19% 2% 22% 1% 6% 7% 6% 18% +5%

Packaged
Foods
Foreign Brand 18% 19% 2% 18% 3% 7% 9% 8% 16% +4%
Local Brand 20% 20% 2% 22% 1% 6% 5% 5% 19% +3%

Personal
Hygiene Foreign Brand 18% 19% 3% 19% 1% 7% 9% 8% 16% +6%
Local Brand 20% 20% 1% 22% 2% 6% 6% 5% 18% +5%

Tobacco
Foreign Brand 17% 18% 3% 19% 3% 8% 9% 8% 15% +7%
Relative Friends and Colleague Expert TV Radio Print Ad Digital Media Outdoor Ads In Store Promotion
25
Going online
Indonesia is characterised by its huge population size and this population is going online. In 2015, there were 73
million Internet users in Indonesia, representing about 28% of its total population. By 2018, this number is expected
to swell to 123 million Internet users, making Indonesia one of the worlds largest online markets15. The bulk of these
users (57%) are concentrated in Java (out of which 21.5% are in Jakarta), with the other provinces likely to see higher
growth rates16.
Mobile phone and Internet usage rates are also higher, with 325 million mobile subscribers and 50 million Internet
users in 201517. On average, Indonesians spend about 3.5 hours a day on their phones18. 98% of Internet users in
Indonesia have social media accounts19 and online channels are used throughout the entire purchasing journey, from
research to purchase and feedback.
This edition of the survey revealed that Indonesian consumers are especially reliant on word of mouth
recommendations from Relatives, Friends and Colleagues, Experts, Salespersons, and advertisements from trusted
brands. Leading companies have already begun to use digital channels to proactively engage consumers and to
create buzz online. These companies, in turn, enjoy increases in traffic, number of fans and, ultimately, better sales
(see Share a coke! campaign celebrates Indonesias 70th Independence Day).
Share a Coke! campaign celebrates Indonesias 70th Independence Day20

In conjunction with Indonesias 70th Independence Day, Coca-Cola launched a special version of its 250 ml and
425 ml bottle cans that consumers can customise with their own names. It also launched a series of bottle cans
printed with 70 of the most popular Indonesian names.
Primarily targeted at Millennials and teens, Coca-Cola utilised social media channels such as Facebook, Line,
Instagram and Twitter to encourage consumers to search for and share their friends names digitally. Celebrities
began posting selfie photos showcasing bottle cans printed with their names, and the campaign went viral.
In total, this campaign increased Coca-Colas sales by up to 7%, Facebook traffic by up to 870%, and number of
Facebook fans by 39%.
15
Number of internet users in Indonesia from 2014 to 2019 (in millions). Statistica. http://www.statista.com/statistics/254456/
number-of-internet-users-in-indonesia/
16
17
Indonesias dynamic Internet market. Redwing. http://redwing-asia.com/market-data/market-data-internet /
18
Digital, Social & Mobile in APAC in 2015. We Are Social. 11 March 2015. http://wearesocial.sg/blog/2015/03/
digital-social-mobile-in-apac-in-2015/
19
20
Share A Coke, Tetap Memikat Meski Bukan Yang Pertama. PRide. 25 August 2015. http://pride.co.id/2015/08/
share-a-coke-tetap-memikat-meski-bukan-yang-pertama/
26
5. Buying channels
Modern Trade gains an edge

In the two previous editions of the survey, Warungs and Minimarkets emerged as the preferred buying channels
even as Modern Trade channels such as Supermarkets, Hypermarkets, and Brand Stores grow increasingly popular,
especially among the high income segment. The same preference was evident in this years survey (see Figure 21),
as Warungs and Minimarkets tend to be located conveniently in residential areas and can be accessed on foot a
critical advantage in Indonesias notoriously traffic-choked cities.
Figure 21: Popular shopping channels among survey respondents overall, 2016
Popular shopping channels (%)
Minimarkets 27%
Warungs 25%
Supermarkets 18%
Hypermarkets 14%
Brand Stores 9%
Wet Markets 5%
Street Hawkers 2%
The overall preference is also continuing its shift in favour of the Modern Trade channels, which are proliferating
across Indonesia (see Figure 22). This trend is especially pronounced in cities outside Jakarta where, as compared to
the previous survey, respondents indicating a preference for Modern Trade over Traditional Trade have increased by
2-7%. Nevertheless, at this point in time, Traditional Trade outlets remain popular, particularly for the purchase of
Beverages and Tobacco, and in the smaller cities.
Modern Trade outlets are also the dominant channels for the purchase of electronics products and appliances, with
the exception of Makassar and Medan where 25-61% of consumers still prefer the use of Traditional Trade outlets for
this product category (see Figure 23).
As household income levels increase, the preference for Modern Trade outlets becomes starker. In the purchase of
electronics products and appliances, for instance, specialty electronic stores are the most popular channel overall. But
low income consumers tend to prefer Individual Non-Chain Stores while high household income consumers prefer
Branded Chain Stores (see Figure 24).
27
Figure 22: Preference for Traditional and Modern channels by product category and city
2015 Clothing & Household Packaged Personal

Beverages Footwear Confectionery Cleaning Foods Hygiene Tobacco
Jakarta 24% 76% 6% 94% 15% 85% 8%% % 17% 83% 6% 94% 58% 42%
Bandung
2015 Clothing & Household Packaged Personal
63%
Beverages 37% 40% 60%%
Footwear 52% 48%
Confectionery 48Cleaning52% 53% 47% 45%
Hygiene 55% 67%
Tobacco33%
Foods
Makassar
Jakarta 4% 96% 24% 76
24% 76% 6% 94% 15%51% 85%49% 8%%
29%% %71% 17%53% 83%47% 6%39% 94%
61% 82%
58% 18%
42%
Medan
Bandung 62% 38% 51% 49% 55% 45% 39% 61% 65% 35% 42% 58% 87% 13%
63% 37% 40% 60%% 52% 48% 48 52% 53% 47% 45% 55% 67% 33%
Surabaya
Makassar 4% 60%96% 40% 24%
26% 74%
76 51%
51% 49%
49% 33%
29%% 67%
71% 53%
53% 47%
47% 35%
39% 65%
61% 91%
82% 9%
18%
Medan 62% 38% 51% 49% 55% 45% 39% 61% 65% 35% 42% 58% 87% 13%
Surabaya 60% 40% 26%Clothing

74%& 51% 49% Household
33% 67% Packaged47%
53% 35%Personal
65% 91% 9%
2016 Beverages Footwear Confectionery Cleaning Foods Hygiene Tobacco
Jakarta 26% 74% 13% 87% 19% 81% 15% 85% 17% 83% 11% 89% 62% 38%
Bandung Clothing & Household Packaged Personal

2016 49%
Beverages 51% 20% Footwear
80% 41% 59%
Confectionery 33%Cleaning
67% 48% 52% 32%Hygiene68% 70%
Tobacco30%
Foods
Makassar
Jakarta 60% 74%40% 13%50% 87%50% 51% 81% 35%
49% 15% 65%
26% 19% 85% 17%54% 83%46% 11%
37% 63%
89% 62%98% 38%
2%
Medan
Bandung 56%
49% 51% 53% 80%
44% 20% 47% 59%
41% 41%
59% 47%
33% 53%
67% 61%
48% 39%
52% 50%
32% 50%
68% 95% 30%
70% 5%
Surabaya
Makassar 55%
60% 40% 24%
45% 50% 76%
50% 50%
51% 50%
49% 34%
35% 66%
65% 57%
54% 43%
46% 33%
37% 67%
63% 83%
98% 1%7
2%
Medan 56% 44% 53% 47% 59% 41% 47% 53% 61% 39% 50% 50% 95% 5%
Traditional Modern
Surabaya 55% 45% 24% 76% 50% 50% 34% 66% 57% 43% 33% 67% 83% 1%7
Source: Deloitte Consumer Insights survey (2015 and 2016)
Traditional Modern
2016 Audio and Video Digital Camera and Major Household Small Household
Figure 23: Preference for Traditional
Electronic Products
and Modern channels for electronics
Other Gadgets Appliances
products and appliances categories
Appliances
Jakarta 33% 67% 31% 69% 32% 68% 33% 67% Traditional
Modern
Bandung Audio and
2016 19% Video
81% Digital Camera
87% and 19%
Major Household
81% Small Household
22% 78%
13%
Makassar
Jakarta 55%
33% 67% 54%
45% 31% 46%
69% 55%
32% 45%
68% 51%
33% 49%
67% Traditional
Modern
Medan 19%61% 81%39% 25%
Bandung 75%
87% 49%
19% 51%
81% 44%
22% 56%
78%
13%
Surabaya
Makassar 34%
55% 66%
45% 35%
54% 65%
46% 28%
55% 72%
45% 40%
51% 60%
49%
Medan 61% 39% 25% 75% 49% 51% 44% 56%
Surabaya 34% 66% 35% 65% 28% 72% 40% 60%
28
Figure 24: Buying channel preferences by product category and household income level
Clothing & Household Packaged Personal

Less than 1
14% 74% 4% 16% 22% 15% 44% 13% 24% 52% 4% 20% 45% 16% 12% 68% 4% 13% 24% 39% 16% 8% 83%
4% 4% 3% 4% 4% 3% 12% 4% 3% 11% 3% 3% 4% 8%
1-1.99 16% 75% 3% 16% 9% 56% 5% 17% 64% 7% 16% 22% 49% 11% 16% 53% 17% 3%17% 22% 48% 12% 4% 85% 8%
3% 2% 10% 1% 3% 9% 2% 1% 1% 1% 10% 1% 1% 2% 1%
2-2.99 6% 30% 57% 2% 26% 18% 36% 4%10% 28% 53% 3% 18% 33% 35% 7% 13% 25% 47% 8% 16% 33% 38% 7% 11% 76% 5%
3% 2% 13% 2% 2% 4% 2% 0% 6% 0% 4% 2% 0% 6% 0%1% 1% 5%
3-4.99 9% 34% 50% 3% 32% 20% 28% 5%11% 37% 43% 5%7% 26% 35% 23% 14% 27% 47% 8% 24% 34% 28% 5% 18% 73% 2%
1% 1% 2% 11% 3% 2% 2% 0% 6% 2% 0% 1% 2% 0% 6% 2% 1% 2% 3% 2%
5-7.49 13% 30% 47% 3% 36% 21% 18% 19% 15% 35% 39% 4%7% 27% 36% 24% 19% 25% 40% 7% 8% 26% 30% 28% 6%15% 73% 6%
1% 3% 3% 2% 2% 2% 0% 5% 1% 1% 4% 1% 1% 6% 2% 2% 2% 1% 1% 2%
7.5-10 13% 38% 38% 3% 40% 19% 21% 15% 18% 35% 32% 5% 14% 30% 38% 17% 19% 32% 34% 6% 15% 27% 34% 21% 21% 66% 7%
6% 2% 2% 3%1% 8% 2% 1% 0% 9% 1% 3% 1% 0% 2% 4%
More than 10 18% 20% 36% 21% 68% 15% 24% 23% 35% 15% 0% 34% 34% 22% 9% 28% 28% 23% 17% 6% 31% 31% 22% 8% 28% 53% 6%
3% 0% 1% 11% 1% 0% 4% 1% 0% 1% 1% 1% 1% 2% 2% 9% 1% 3% 2% 1%
Clothing & Household Packaged Personal

Less than 1 5%22% 60% 6% 26% 11% 48% 4% 4%25% 16% 34% 36% 3% 21% 51% 19% 16% 48% 25% 5%4%
55% 9% 88% 8%
2% 5% 9% 2% 1% 4% 2% 3% 5% 1% 1% 6% 7%
1-1.99 7% 24% 54% 8% 33% 12% 42% 6%9% 26% 49% 10% 11% 26% 37% 18% 2% 8% 22% 44% 18% 8% 25% 41% 15% 8% 79% 5%
1% 6% 5% 2% 2% 4% 0% 5% 0% 3% 4% 4% 5% 2% 3% 4%
2-2.99 9% 33% 39% 7% 37% 13% 36% 5% 10% 33% 36% 12% 18% 34% 25% 12% 12% 27% 32% 16% 12% 33% 27% 11% 11% 71% 6%
7% 6% 8% 1% 0% 6% 3% 10% 1% 0% 9% 3% 5% 11% 0% 1% 2% 4% 6%
3-4.99 15% 32% 34% 7% 43% 17% 22% 5% 18% 36% 26% 8% 16% 27% 31% 14% 9% 20% 28% 24% 14% 14% 22% 32% 12% 13% 61% 10%
0% 6% 4% 9% 3% 1% 7% 4% 1% 9% 3% 5% 9% 8% 2% 1% 3% 7% 5%
5-7.49 16% 37% 28% 4% 50% 21%6% 17% 13% 20% 37% 22% 6% 22% 32% 28% 8% 15% 23% 30% 18% 8% 21% 26% 28% 9% 14% 63% 8%
1%12% 3% 3% 0% 3% 3% 0% 9% 1% 0% 10% 3% 8% 1% 1% 1% 7% 6%
7.5-10 14% 40% 29% 6% 50% 27% 9% 9% 15% 19% 44% 16% 29% 34% 28% 6% 17% 21% 34% 18% 13% 30% 27% 21% 6% 14% 63% 10%
10% 2% 3% 1% 4% 3% 3% 2% 6% 4% 2% 2% 1% 11% 1%
More than 10 11% 24% 43% 15% 65% 13% 11% 30% 42% 10% 24% 44% 22% 6% 13% 38% 34% 6% 25% 18% 35% 17% 15% 24% 38% 14%
0% 3% 4% 11% 4% 1% 5% 1% 0% 4% 2% 1% 3% 0% 1% 6% 3% 2% 3% 1% 1% 4% 4%
Electronics Products and Appliances (new)

Less than 1 8% 32% 48% 22% 30% 44% 20% 70% 11% 42% 37% Brand Stores
8% 4% 4% 10% 5% 5% Hypermarkets
1-1.99 13% 33% 39% 20% 34% 34% 11% 33% 41% 12% 28% 42% Supermarkets
10% 3% 1% 2% 8% 2% 1% 1% 11% 2% 2% 12% 2% 4%
Minimarkets
2-2.99 12% 34% 38% 15% 35% 34% 15% 32% 38% 12%17% 28% 41%
Warungs
11% 3% 1% 2% 13% 2% 1% 1% 11% 2% 1% 1% 2% 1% 1%
Wet Markets
3-4.99 16% 34% 26% 20% 12% 36% 25% 15%16% 37% 25% 16% 14% 34% 27%
13% 6% 1% 2% 1% 3% 1% 2% 3% 1% 2% 6% 1% 2% Street Hawkers
5-7.49 13% 55% 16%13% 55% 16% 13% 58% 16% 16% 53% 17% Electronic Store Chain
9% 4% 1% 2% 1% 11% 3% 0% 2% 0% 9% 2% 2% 1% 8% 3% 1% 2% 0% Non-Chain Individual Electronic Store
7.5-10 14% 54% 15% 14% 55% 14% 16% 53% 17% 20% 49% 18%
8% 5% 2% 1% 1% 11% 4% 2% 1% 8% 3% 1% 1% 1% 6% 3% 1% 1% 1%
More than 10 17% 53% 6% 18% 56% 7% 17% 55% 8% 15% 52% 9%
14% 6% 1% 0% 3% 0% 12% 4% 0% 0% 3% 0% 13% 4% 0% 0% 2% 0% 14% 6% 1% 0% 2% 0%
Source: Deloitte Consumer Insights surve (2015 and 2016)
29
Ultimately, consumers choose their buying channels based on a multitude of factors. Traditional Trade channels such
as Warungs offer convenient locations, longer opening hours and competitive prices. Modern Trade channels such as
Minimarkets and Supermarkets offer a greater variety of products, particularly for Packaged Foods, as well as fresher
and higher quality produce (see Figure 25). For many families in Indonesia, particularly the middle class, shopping
is also increasingly becoming a recreational activity. Many consumers are accustomed to visiting Supermarkets and
Hypermarkets during weekends, mixing shopping with family recreation and entertainment21.
Shrinking shopping carts

As compared to the previous survey, there has been a reduction in the size of shopping baskets and an increase in the
frequency of visits to Modern Trade channels. This could be attributed to the increasing familiarity with Modern Trade
channels such as Minimarkets and the larger variety that they offer in categories such as Beverages, Confectionery,
and Packaged Food (see Figure 26).
Figure 25: Reasons for choosing Traditional Trade and Modern Trade
Traditional Trade 8% 8% 3% 31% 13% 31% 2% 4%
Modern Trade 16% 18% 16% 7% 5% 7% 19% 12%
Assortment Convenience Opening Hours Promotion

Availability Location Price Service
Profiting From Consumer Mega-Trends in Asia Pacific: Convenience. Datamonitor. 2009.

21
30
Figure 26: Changes in average size of shopping baskets and frequency of visits
Average basket size are decreasing
Traditional Retail Modern Retail
Average basket size/visit (IDR) Average basket size/visit (IDR)

36,981 116,035
27,090 74,985
Packaged Foods
2015 2016 2015 2016

27,818 82,278
24,361
55,133 Trends in major
Beverages product
categories show
that average
2015 2016 2015 2016
basket size for
Average basket size/visit (IDR) Average basket size/visit (IDR) both traditional
39,125 125,929 and modern
34,043 105,795
retails are
Personal Hygiene decreasing
2015 2016 2015 2016

39,668 113,356
33,234 81,314
Household Cleaning
2015 2016 2015 2016
Consumers make smaller purchases in Modern Trade outlets, but visit more often
to buy Package Foods, Beverages and Confectionery
Basket size in Modern Trade Top 3 product categories with highest purchasing frequencies
More than IDR 200,000

12% Daily and Weekly Purchase
IDR 100,001-200,000
47%
30%
Packaged Foods 35% IDR 50,001-100,000
17%
IDR 25,001-50,000
2015 2016
Less than IDR 25,000
16%
25% Daily and Weekly Purchase
61%
54%
Beverages
22%
17% 2015 2016
Daily and Weekly Purchase

15% 57%
Confectionery 46%
33%
14%
2015 2016
2015 2016
31
6. e-Commerce
Virtually virtual
Despite the nascence of Indonesias e-commerce industry, consumers are rapidly adopting online channels in their
purchasing journeys. Although estimates vary, some sources have suggested that up to 60% of consumers with
Internet access engage in e-commerce22. In fact, as Indonesias middle class continues to grow, the number of online
shoppers could reach 10 million this year, raking in IDR 20 trillion for the e-commerce business about double that
of the IDR 10 trillion figure from last year23.
Indonesian consumers typically shop online because of Practically reasons (63%), wider Product Range (15%), or
better Promotions (12%) (see Figure 27). In Indonesias context, Practicality includes factors such as the availability of
products, delivery arrangements, and the availability of information. Consumers typically value features such as free
delivery, click-and-collect facilities, easy returns and the availability of payment methods such as bank transfers and
cash on delivery. In terms of Promotions, they favour the use of reward and loyalty points and access to exclusive
content. Finally, the word of mouth effect is also crucial for e-commerce.
While the average Indonesian consumer typically does the pre-purchase research online, the other behaviours he or
she engages in vary with the product category in question. They may, for instance, choose the webrooming strategy
for big purchases, researching and choosing the product online but making the final purchase in a physical store.
Alternatively, for the purchase of fashion items, gadgets or appliances, they may employ a showrooming strategy
instead, browsing or trying on the item in-store, but making the final purchase online in order to enjoy the best
available prices. These behaviours underscore the interdependencies between brick-and-mortar stores and online
shopping channels.
Figure 27: Top reasons and deterrents for online shopping in Indonesia
Reasons for shopping online Reasons for not shopping online
Practicality 63% Not secure 34%
Price 5% Dont know how 40%
Product range 15% More expensive price 15%
Promotion 12% No credit card 7%
Reliable review 5% Limited product range 5%
In terms of product categories, the most significant growth can be seen in the Clothing and Footwear category, with
an influx of innovative new entrants entering the online space (see Berrybanka gets bankrolled). Indeed, Clothing
and Footwear is the category with the highest growth rate between 2014 and 2019 at 57.7%, followed by Food and
Beverages (38.6%) and Home Care (including Household Cleaning) (30.2%)24.
22
Indonesian consumers flock online to purchase products and services. 3 September 2014. Nielsen. http://www.nielsen.com/id/en/press-
room/2014/indonesian-consumers-flock-online-to-purchase-products-and-services.html
23
Indonesia's E-commerce Industry to Double Its Earnings Next Year: idEA. Jakarta Globe. 28 December 2015. http://jakartaglobe.beritasatu.
com/business/indonesias-e-commerce-industry-double-earnings-next-year-idea/
32
With its rapid growth, Indonesias e-commerce scene is attracting not only digital start-ups like BliBli, Billna, Lazada,
or Zalora, but also well-established retail players such as Alfamart and Matahari. These two players, having launched
Alfaonline and MatahariMall respectively, introduced the online-to-offline concept to the Indonesian market in a bid
to draw potential customers from its online channels to its physical, offline stores, and to extend the strong foothold
that they have in the offline market to the online business. There are also other variations of the e-commerce
business model in Indonesia, with players such as GoMart and HappyFresh rolling out offline store pick-up and
delivery services to enable customers to avoid Indonesias notorious traffic jams. There are also attempts to tap into
previously inaccessible or underserved markets, such as the low income segment (see Kudos to Kudo).
Berrybenka gets bankrolled25

Berrybenka operates an online shopping portal in Indonesia, storing, selling and shipping a range of women and
childrens apparel and accessory products. In 2015, they expanded their range to include mens apparel.
Targeted at middle income consumers, Berrybenka endeavours to offer stylish products at affordable prices, and
provides cash on delivery services to more than 2,400 points of sales in Indonesia. For customers in the Greater
Jakarta area, product returns can be made within 30 days of purchase without incurring additional shipping
charges. To provide customer service around the clock, Berrybenka also set up a 24-hour call centre.
Having implemented a word of mouth strategy through the use of social media channels such as Facebook,
Instagram and Twitter, it plans to roll out an online-to-offline strategy in 2016 that will include the use of pop-up
stores and online bazaars.
Currently, Berrybenka is one of the largest local fashion e-commerce company in Indonesia, achieving growth
rates in sales of up to 250% and a growth rate in its product portfolio of 200% in 2014. It is also one of the
best funded fashion e-commerce company, having secured a US$ 5 million investment from East Ventures, GREE
Ventures and Transcosmos.
Kudos to Kudo26
Launched in July 2014, Kudo is a start-up company in Indonesia that cooperates with e-commerce merchants to
bring online shopping to the millions of low and middle income consumers who do not have Internet access. It
uses an agent-led process where the agent can be either an individual or shop owner to facilitate the online
shopping process. By facilitating cash payments from these customers to a Kudo agent, who then in turn makes
the payments on behalf of the customer to the online merchant, Kudo enables them to shop at sites that do not
accept cash payments.
In doing so, it is bringing e-commerce to many consumers who would otherwise be out of reach: only 28%
of Indonesias population uses mobile Internet, and a significant 81.4% of the population remain unbanked.
Furthermore, Kudo is helping to solve the issue of trust, as the agents help to ensure that consumers are able to
avoid fake products and online fraud.
24
In Indonesia, Online Sales Of Apparel, Home Products And Media Surge Euromonitor. Forbes. 23 September 2015.
http://www.forbes.com/sites/susancunningham/2015/09/23/online-sales-of-apparel-home-products-and-media-surging-in-indonesia-
euromonitor/#53e37616c89e
25
Gaya Jason Lamuda Melejitkan Berrybenka. Majalah SWA Online. 20 January 2016. http://swa.co.id/entrepreneur/gaya-jason-lamuda-
melejitkan-berrybenka
26
Membantu Masyarakat Gaptek Berbelanja Online, Kudo Mendapatkan Pendanaan dari GREE Ventures & East Ventures. StartupBisnis.com.
4 May 2015. http://startupbisnis.com/membantu-masyarakat-gaptek-berbelanja-online-kudo-mendapatkan-pendanaan-dari-gree-ventures-
east-ventures
33
7. Geographical differences
Outwards and onwards

Jakarta and Surabaya remain Indonesias key retail markets, but other cities outside Jakarta also present opportunities
for growth. With high urbanisation rates and the rise of sprawling new economic centres, relatively unknown cities
such as Bandung, Pekanbaru, Makassar, and Samarinda are increasingly encroaching onto the radar of consumer
products and retail players in the region (see Figure 28).
Figure 28: Gross Domestic Regional Product (GPRP) and contribution to Gross Domestic Product (GDP) by region
18.5%
21.8% GRDP
CAGR
14.3% 14.2%
GRDP (2009-2013)
CAGR
(2009-2013) Samarinda
Bandar % of IGDP 0.5%
Pekanbaru Lampung Palembang 17.1%
% of IGDP 0.9% 0.4% 1.0% GRDP
CAGR
(2009-2013)
Makassar
% of IGDP 0.8%
Sulawesi
(5%)
Kalimantan
Sumatera (9%)
(24%)
Other islands
Jakarta
(4%)
Java (58%)
16.7%
14.4% 13.8% 13.4% 13.3%
GRDP
CAGR
(2009-2013)
Bandung Surubaya South Depok Jakarta

Tanggerang
% of IGDP 1.7% 4.0% 0.2% 0.3% 16.5%
Source: Indonesia Bureau of Statistics (2015)
34
In Bandung, the optimism is palpable (see Figure 29) against the backdrop of a number of upcoming developments
that promise to further propel its growth. These include, for example, plans to invest in a bullet train network
connecting Jakarta and Bandung that is scheduled for completion in 2019. This high-speed train is expected to cut
the commuting time between the two cities from the current 2.5 hours to less than 40 minutes, create 39,000 new
jobs, and stimulate the growth of three new economic centres Karawang, Tegalluar, and Wallini in West Java27.
Figure 29: Consumer sentiment by region
How confident are you that the Indonesian economy will improve in the future?
Jakarta 26% 38% 36%
Bandung 48% 52%
Surabaya 65% 35%
Medan 89% 11%
Makasar 70% 30%
Pessimistic Moderately optimistic Optimistic
Membedah Kereta Cepat Jakarta-Bandung. Republika. 17 February 2016. http://www.republika.co.id/berita/koran/teraju/16/02/19/

27
o2sh4819-membedah-kereta-cepat-jakartabandung
35
Even in the e-commerce arena, the various cities are exhibiting different online purchasing behaviours. In Jakarta,
Makassar and Surabaya, Practicality is the dominant driver for online purchases, with 63%, 52% and 62% of
respondents citing it as a factor respectively. The other cities, however, have different nuances: in Bandung,
consumers prefer to purchase items online for its better Product Range, whereas in Medan, they prefer to do so to
take advantage of online Promotions. On the other hand, Jakarta and Makassar respondents cited security concerns
as the main impediments of online purchases, while Bandung, Medan, and Surabaya respondents cited a lack of
understanding as the main barrier (see Figure 30).
Figure 30: Online shopping behaviour by city
Are you shopping online?

100%
12% 11% 8% Yes
20%
Online shopping behaviour
80% No
55%
60%
88% 89% 92%

40% 80%
20% 45%
0%
Jakarta Bandung Surabaya Medan Makassar
Why are you shopping online?
Jakarta 63% 8% 13% 11% 5% Practicality
Price
Bandung 32% 9% 9% 36% 14%
Product appeal
Product range
Surabaya 52% 8% 24% 8% 8%
Promotion
Medan 40% 17% 7% 3% 30% 3% Reliable review
Makasar 62% 10% 10% 4% 14%
Why are you not shopping online?
Jakarta 47% 17% 3% 13% 8% 12% Not secure
Dont know how

Bandung 19% 37% 24% 3% 10% 7%
Expensive
No credit card
Surabaya 30% 38% 20% 4% 4% 4%
Limited range
Medan 31% 30% 18% 5% 4% 12% Other
Makasar 47% 33% 6% 8% 4% 2%
36
Looking ahead
Since the first edition of the Deloitte Consumer Insights survey, we have witnessed the evolution of the Indonesian
consumer in more ways than one. We have seen, for instance, the increased role of non-price attributes in
influencing the product purchase decision, the rapid rise of online communications channels and e-commerce, and
the emergence of smaller cities as retail markets to be reckoned with. Yet, other observations have remained fairly
constant: for example, the strong preference for brands which are perceived to be Local remains.
This edition of the report reveals four key insights. Firstly, even as Indonesian consumers are expected to become
more affluent and to possess higher levels of disposable incomes, they are also showing prudence in their
expenditures. But it is not just about price: Indonesian consumers are searching for value-for-money propositions,
that is, an appropriate trade-off between price considerations and product attributes. This behaviour is particularly
pronounced in this survey in the face of global economic uncertainty and the slower than expected rates of growth.
However, consumer optimism levels are expected to go on an uptick as a result of the stabilising macroeconomic
policies.
Secondly, there appear to be indications of the emergence of an urbane yet underserved segment of Indonesian
consumers, who may be willing to purchase premium offerings in selected product categories to satisfy their
discerning demands for quality. This survey has identified a group of consumers who has expressed a preference for
higher priced alternatives among groups of products that they would consider purchasing. In the purchase of more
expensive electronics products and appliances for instance, consumers are looking for factors such as perceived
product innovativeness and technology sophistication. Consumer product and retail companies who wish to tap into
this market will need to re-examine their product portfolios, as well as re-calibrate their prices, offerings and value
propositions, to win them over.
37
Thirdly, changes have been observed in the behaviour of consumers across existing buying channels. Although
Warungs still claim the position as the most popular buying channel among Indonesian consumers, Modern Trade
channels are continuing their rise on the back of consumers who are enticed by the larger variety of products
typically sold in large volumes through these outlets. Companies will need to keep an eye out for this constantly
shifting dynamic, adapting and changing their channel portfolio strategies in tandem, while also integrating their
e-commerce, mobile and digital operations with their offline channels.
Finally, given the breadth and depth of the archipelago region of Indonesia, consumer and electronics products
companies as well as retailers will need to take into account the importance of a customised and prioritised
geographical approach for the market. With Indonesias numerous islands and vast land area, companies must set
up efficient and effective distribution networks while taking into account the multitude of regional variations in
consumer preferences.
Despite the many challenges posed by its heterogeneity, Indonesia presents a promising market with diverse
opportunities. The Indonesian consumer with increasing spending power, varied product preferences, and an
aptitude for e-commerce is swiftly evolving, and in order to keep up, so must industry players.
38
Appendix
Appendix 1: Projected demographic changes in Indonesias provinces

Urbanisation is taking place all over Indonesia and the rate is increasing more rapidly in the next five years, which
indicates that the middle income class is growing.
Percentage point Population

change (2010-2020) (million)
DKI Jakarta 100% - 10.645
East Java 55% 45% +3.6% 40.646
West Java 79% 21% +5.8% 49.935
Java
Central Java 51% 49% +2.9% 34.940

Banten 70% 30% +2.2% 13.160
DI Yogyakarta 75% 25% +4.1% 3.882
Riau 40% +0.5% 7.128
North Sumatra 56% 44% +3.7% 3.678
South Sumatra 37% 63% +0.8% 14.703
Lampung 31% 69% +3.0% 8.568
Sumatra
West Sumatra 50% 50% +5.4% 8.521

Aceh 33% 67% +2.7% 5.460
Riau Islands +0.5% 7.128
Descending island GDRP
40% 60%
Jambi 33% 67% +1.3% 3.678
Bangka Belitung Islands 56% 44% +3.5% 1.517
Bengkulu 33% 67% +0.9% 2.020
Kalimantan
East Kalimantan 69% +2.9% 4.562

West Kalimantan 36% 64% +3.1% 5.135
South Kalimantan 48% 52% +3.3% 4.304
Central Kalimantan 40% 60% +3.6% 2.769
South Sulawesi 45% +4.4% 8.928
Central Sulawesi 31% 70% +3.3% 3.097
Sulawesi
North Sulawesi 55% 45% +4.9% 2.528

Southeast Sulawesi 35% 65% +3.8% 2.756
West Sulawesi 23% 77% +0.1% 1.405
Gorontalo 44% 56% +5.0% 1.220
Bali 70% +4.7% 4.381
Papua 31% 69% +2.8% 3.435
West Nusa Tenggara +4.0% 5.126
Others
49% 51%
West Papua 35% 65% +2.6% 0.982
East Nusa Tenggara 24% 76% +2.7% 5.541
Maluku 39% 61% +0.9% 1.832
North Maluku 29% 72% +0.7% 1.279
Urban Rural
Note: Provinces in bold have higher than average urbanisation growth rates (2.84%)
Source: Indonesian Statistics Bureau (2015)
39
Appendix 2: Planned increase in expenditures by household income level
Consumers are becoming more conservative in their spending.
Do you plan to increase your If yes, how much do you plan to

spending in the next 2 years? increase your spending?
Yes 95%
16%
Less than 1
million No
3% 2%
84%
Less than 10% 10-25% More than 25%
Yes 91%
17%
1-1.99 million
No
6% 3%
83%
Yes 86%
26%
2-2.99 million No
8% 6%
74%
Yes 84%
29%
3-4.99 million No 10% 6%
71%
Yes 83%
29%
5-7.49 million No
11% 6%
71%
Yes 78%
No 32%
7.5-10 million
11% 11%
68%
Yes 73%
More than 34%

No
10 million 66% 14% 12%
40
Appendix 3:
Percentage of people planning to increase spend by product category
Product categories 2015-2016 trend
44%
Beverages -12%
32%
45%
Clothing & Footwear -17%
28%
37% 2015
Confectionery -9%
29%
2016
34%
Household Cleaning -8%
26%
43%
Packaged Foods -10%
33%
41%
Personal Hygiene -9%
32%
12%
Tobacco -5%
7%
Planned spend distribution by category for 2016
Monthly household Clothing & Household Packaged Personal Consumption

income, IDR million Beverages Footwear Confectionery Cleaning Foods Hygiene Tobacco increase
Yes
Less than 1 20% 80% 22% 78% 13% 87% 20% 80% 35% 65% 24% 76% 27% 73%
No
1-1.99 25% 75% 20% 80% 28% 72% 17% 83% 26% 74% 21% 79% 12% 88%
2-2.99 36% 64% 27% 73% 33% 67% 30% 70% 37% 63% 35% 65% 14% 86%
3-4.99 37% 63% 35% 65% 30% 70% 30% 70% 32% 68% 38% 62% 20% 80%
5-7.49 35% 65% 36% 64% 39% 61% 30% 70% 34% 66% 40% 60% 13% 87%
7.5-10 39% 61% 44% 56% 31% 69% 27% 73% 34% 66% 42% 58% 12% 88%
More than 10 32% 68% 47% 53% 27% 73% 30% 70% 25% 75% 42% 58% 10% 90%
41
Contact us
For more information on this insights:
Eugene Ho
Executive Director
Consulting
+65 6232 7133
eugeneho@deloitte.com
Stanley Song
Director
Consulting
+62 21 2992 3100 ext. 30307
stansong@deloitte.com
Apung Sumengkar
Manager
Consulting
+62 21 2992 3100 ext. 30300
asumengkar@deloitte.com
42
Southeast Asia Consumer & Industrial Products Practice
Southeast Asia and Singapore Industry Leader
Eugene Ho
Executive Director
+65 6232 7133
eugeneho@deloitte.com
Guam Audit
Mike Johnson Richard Loi
Partner Partner
+1 671 646 3884 +65 6530 5591
mikjohnson@deloitte.com rloi@deloitte.com
Indonesia Consulting
Xenia Ubhakti Eugene Ho
Partner Executive Director
+62 21 2992 3100 ext. 1792 +65 6232 7133
xubhakti@deloitte.com eugeneho@deloitte.com
Malaysia Enterprise Risk Services

Kavita Rekhraj Siah Weng Yew
Executive Director Executive Director
+60 3 7610 9006 +65 6216 3112
krekhraj@deloitte.com wysiah@deloitte.com
Philippines Financial Advisory

Melissa Delgado Ng Jiak See
Partner Executive Director
+63 2 581 9000 ext. 019 +65 6531 5088
medelgado@deloitte.com jsng@deloitte.com
Thailand Tax
Manoon Manusook Robert Tsang
Partner Partner
+66 2034 0000 ext. 5101 +65 6530 5523
mmanusook@deloitte.com robtsang@deloitte.com
Vietnam
Nguyen Vu Duc
Partner
+84 462 883 568
nguyenvu@deloitte.com
43
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Deloitte Consumer Insights

The evolution of the

The evolution of the Indonesian consumer 4

Deloitte Consumer Insights 7

1. Overall consumer sentiment 11

3. Buying behaviour and brand preferences 18

Source: The Economist Intelligence Unit (2016)

Real growth rate in disposable household income

Source: Euromonitor (2015)

25% 25% Decile 1

Audio and Video Electronics Products

Geographical distribution of survey respondents Gender distribution of consumer survey

Age distribution of survey respondents

Monthly household income distribution by city

Product category Sub-category

Audio and Video Electronic Products

Geographical distribution of retail outlets

20% Wet Markets Traditional Electronic Stores

Modern Electronic Stores

Type of retail outlets screened by city (non-electronics products and appliances)

Jarkata 20% 20% 20% 20% 20% Wet Markets

Surabaya 20% 20% 20% 20% 20%

Type of retail outlets screened by city (electronics products and appliances)

Jarkata 33% 33% 33% Traditional Electronic Stores

Medan 33% 33% 33%

Surabaya 33% 33% 33%

The paradox of dual consumer sentiments

100% 100% 100%

Percentage of total population

Percentage of total population

80% 80% 80%

40% 50% 40% 40%

Optimistic Yes >50%

Source: Deloitte Consumer Insights survey (2016)

Less than 1 88% 12%

1-1.99 2% 72% 26%

2-2.99 11% 60% 29%

3-4.99 14% 52% 34%

5-7.49 13% 50% 37%

7.5-10 17% 43% 40%

More than 10 27% 36% 37%

Pessimistic Moderately optimistic Optimistic

Source: Deloitte Consumer Insights survey (2016)

20% Average minimum salary

Source: Indonesia Investment Guide (2016), Indonesia Bureau of Statistic (2015)

Heterogeneous spending patterns across monthly household income levels

Figure 7: Monthly household incomes and expenditures (2015 and 2016)

5-7.49 4,30 +11%

7.5-10 4,90 +1%

More than 10 5,90 +7%

Source: Deloitte Consumer Insights survey (2016)

Figure 8: Three main consumer product clusters

Basic Welfare and Housing and

Basic Necessities Welfare and Leisure Housing and Transport

33% 27% 22%

2015 2016 2015 2016 2015 2016

Food Leisure & Holiday

Source: Deloitte Consumer Insights survey (2016)

Figure 10: Breakdown of monthly expenditures by household income levels

Less than 1 35% 7% 4% 7% 5% 5% 6% 7% 9% 2%2%1%3% 2% 5% Basic trend

Welfare and -12%

Share of monthly expenditure (%)

Source: Deloitte Consumer Insights survey (2016)

Expenditure Pattern 3: Proportion of expenditures increases as household income levels increase