With the channel’s key consumers coming from the lower to middle income community, which has seen its spending power severely affected by measures introduced to contain COVID-19, traditional grocery retailers sales have been adversely affected by the health crisis in 2020 and 2021. Although products sold through this channel are affordable, consumers have become more conservative in their spending, especially with regard to impulse purchases.
Many players within the traditional grocery retailers channel have been forced to close their outlets during the period of limited mobility and as consumers have stayed at home more. Business owners are also more cautious and have remained home during the period of social distancing, with some of them becoming sellers through e-commerce for income instead.
Bakery specialist stores, such as Holland Bakery, BreadTalk and Buana Bakery, have faced a particularly challenging time during the COVID-19 crisis. These retailers have suffered severely as it is significantly harder to shift sales of fresh products to e-commerce than those of packaged products.
The traditional grocery retailers channel is not expected to recover to the level of sales seen before the outbreak of COVID-19 during the forecast period. The largest challenge will be the enduring economic impact of measures imposed to limit the spread of COVID-19, with levels of consumer confidence and spending power set to remain low for some time, especially in the lower income segment.
Whilst grocery stores and warungs might struggle to compete with the switch to e-commerce and modern grocery retailers, which offer advantages like quality assurance, cleanliness and hygiene, and delivery services, bakery specialists will likely have no direct replacement besides foodservice operations. Bakery specialist retailers will also benefit from appealing to middle to upper income consumers, who have seen their finances less severely impacted by efforts to contain COVID-19 than those of the lower income segment, and will be more likely to spend in the forecast period.
The number of stalls and traditional grocery stores is expected to continue to decline during the forecast period. This will result primarily from the ongoing intensification of competition from the modern grocery retailing channel, and particularly convenience stores.
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Understand the latest market trends and future growth opportunities for the Traditional Grocery Retailers industry in Indonesia with research from Euromonitor International's team of in-country analysts – experts by industry and geographic specialisation.
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Traditional grocery retailing is the aggregation of those channels that are invariably non-chained and are, therefore, owned by families and/or run on an individual basis. For Euromonitor traditional grocery retailing is the aggregation of three channels: Independent Small Grocers, Food/Drink/Tobacco Specialists and Other Grocery Retailers. While there can be modern (i.e. chained) food/drink/tobacco specialists or other grocery retailers, due to the store's presence in the channel, these stores are still considered as traditional for Euromonitor International.See All of Our Definitions
This report originates from Passport, our Traditional Grocery Retailers research and analysis database.
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