Department Stores in Indonesia

PROSPECTS

Department stores is recovering

Department stores showed an improvement in its current value growth rate in 2018, mainly thanks to department stores targeting upper-middle-income consumers. Many big department stores players, such as Matahari Department Store, Sogo and Metro, improved their sales performances in 2018 by adjusting to changing consumer behaviour, such as utilising promotions and discounts and identifying consumers’ needs.

Shopping centres have a very close relationship with department stores

The growth in the number of department stores is reflective of the growth in shopping centres in Indonesia. This is because in every shopping centre in Indonesia, there is usually at least one department store to act as a crowd-puller.

Department stores is expected to see growth in the forecast period

Although there were declines in outlet numbers during the review period, in the forecast period there are expected to be new department stores opened every year. In 2019, at least four new shopping centres are expected in Jakarta alone.

COMPETITIVE LANDSCAPE

Innovation and continuous adaptation is key

Matahari Department Store is trying to gain a more competitive edge through increasing the average sales per store, or same store sales growth. Outlets located in the Jabodetabek area and outside Java are contributing strongly to growth in same store sales.

Discounts and promotions are welcomed by Indonesians

After the weak retail conditions for department stores in 2017, players are concerned about this being repeated; therefore, many have changed their strategies to adapt. Although recovery is partly being supported by increasing incomes, Sogo, for example, is also utilising the momentum of holiday periods to encourage people to shop more often.

Understanding what consumers need

Focusing on the consumer needs to be a strategy to maintain competitiveness in department stores. Metro still faces challenges due to changes in consumer behaviour, such as the preference for experiences such as traveling instead of shopping, which made Metro’s sales stall.

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