Convenience Stores in Indonesia

PROSPECTS

Shift towards smaller packaging formats boosts convenience store sales

Convenience stores continue to post healthy growth in Indonesia, despite the challenging retailing environment. This is partly due to the contribution of the top two players, Alfamart and Indomaret.

Stricter regulatory enforcement to slow expansion

Although convenience stores are currently seeing healthy growth, growth is expected to slow over the coming years. In Indonesia, laws and regulations related to grocery retailers have long been present, such as location limitations on convenience stores with respect to traditional markets, minimum distances between stores, limiting of construction of stores to roads that are less than 8m wide, etc.

Rising demand for convenience to continue fuelling strong growth

Among modern grocery retailers, convenience stores continue to see the strongest growth in Indonesia. Indeed, annual growth can reach double digit territory, with up to a thousand new outlets being built each year.

COMPETITIVE LANDSCAPE

Stores tailoring service concept towards preferences and needs of clientele

With the healthy growth of convenience stores, there is also aggressive competition between players in the country. Leading companies have to seek new innovative ways in order to maintain and grow their sales shares.

Shift towards more convenient ready-to-eat and online offerings

Convenience stores are mushrooming nationwide, especially those which use franchising for expansion. In such an environment, innovation may be key to success.

Growing focus on Muslim consumers via Sharia concept

Due to the growth of convenience stores, in addition to existing players competing for share, new companies are also entering the channel. Indonesia has a very large number of Muslims, with some players seeing an opportunity to create Sharia concept businesses.

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