Indonesian Economy to Rely on its Solid Consumer Base

18 Aug 2021   |  Indonesia

As Southeast Asia's most densely populated nation, Indonesia experiences one of the most problematic effects of the COVID-19 pandemic. The mobility restrictions did prevent COVID-19 from spreading forced companies to pivot their strategies to survive the volatile times and stay relevant as consumer behavior shifts permanently.

Hygiene and Health

The COVID-19 impact on Indonesian consumers has emphasized the urgency of elevating hygiene and health, bringing forth the country's interest in vitamins and supplements. Even as the cases slow down at the end of 2021's first quarter, the demand for hygiene and health products is still growing at significant rates.

A report conducted by DBS has shown that 54 percent of Indonesian respondents stated their willingness to consume more vitamins regardless of the presence of the COVID-19 pandemic, and 87 percent of the respondents would pay more attention to their cleanliness.

E-Commerce

Indonesia Ecommerce

In addition to the rise of hygiene and health products, e-commerce also permanently changed how Indonesians live in the post-pandemic era. As the country experienced back-to-back mobility restrictions, consumers are adapting to online shopping for their daily needs.

The rising e-commerce adoption is supported by Indonesian citizens' demographic conditions, who are already one of the world's most active social media users and are mainly tech-savvy middle-class workers gathering in the capital city, Jakarta.

Before the pandemic, the Indonesian e-commerce adoption level stood at a mere 24 percent. However, 66 percent of Indonesian consumers prefer ordering through e-commerce instead of conventional shopping after the pandemic.

The peak in e-commerce has caused a 700 percent increase in online grocery app download activities during the pandemic, especially by users living in the most populous island of the country, Java.

The trend has proven the urgency for consumer-end businesses to adapt to the growing needs for digitalization, ranging from establishing an online presence for seamless consumer interactions to leveraging the vast internet adoption for an agile supply chain throughout respective industries.

Digital Entertainment

The increase of e-commerce provided accessibility to digital home entertainment and food delivery services, the country's two most bought e-commerce subsegments. With the strict mobility restrictions, Indonesian consumers are shopping for entertainment products that would increase the comfort level of their homes as a replacement for spending leisure time in public spaces.

The increasing interest in entertainment services can be seen through the growth of online mobile gaming platforms, a few industries that recorded positive change during 2020.

Even though the COVID-19 pandemic has made Indonesia consumer behavior reduce their spendings due to the year-and-a-half reduction in household income across the country, Indonesian consumers have shown remarkable optimism towards the economy rebound. A survey from Mckinsey resulted in 49 percent of Indonesian having faith in the vast recovery of the economy.

With a solid and dynamic consumer base, the Indonesian consumer market is the backbone of the economic condition. With companies racing to digitalize their operations and optimistic public sentiment towards the COVID-19 recovery, Indonesia's path to surviving the pandemic lies in catering to the people's shift in preference and gradually adapting to the new methods of navigating through society.

Read Other Insights
Indonesia Telemedicine
Indonesia: The Rise of Telemedicine

Despite being crowded with mature players, Indonesia’s healthcare industry holds sizable opportunities for digitalization.

Indonesia Consumer
Indonesian Economy to Rely on its Solid Consumer Base

The COVID-19 pandemic had forced Indonesian companies to pivot their strategies in order to stay relevant as consumer behavior shifts permanently.

Covid in Indonesia
Indonesia Faces the Risk of Healthcare Collapse Due to the COVID-19 Delta Variant

Indonesia could potentially face a much worse crisis than it had faced in 2020 if the government remains idle in handling the healthcare overcapacity.

Indonesia’s Energy Sector
Indonesia’s Energy Sector to Increase Productivity and Restructure Regulations

A decrease in the international trade traffic during 2020 has resulted in Indonesia's coal production to exceed the level set of 550 Million tons.