Variety Stores in Indonesia

PROSPECTS

A positive performance due to foreign brands

Variety stores recorded very healthy growth in 2018, thanks to the performance of foreign brands. A factor pertaining to this trend was changes in shopping behaviour, as consumers are moving more towards leisure, cooking and travel.

Government regulation plays an important role

The imposition of a number of regulations related to modern retailing were allegedly the reason for the stronger development of foreign brands in variety stores than those owned by local entrepreneurs. There were many regulations that caused the existing retailers to stumble.

Foreign brand expansion promises a good outlook

Since the easing of the Negative Investment List (DNI) in Indonesia in mid-2016, foreign retailers have flooded the country, including in variety stores. This has led the channel to improve and grow very quickly, and consumer trust in these brands is expected to remain high.

COMPETITIVE LANDSCAPE

Players expand towards second- or third-tier cities

Despite the withdrawal of some brands, there are others which are still putting their trust in expansion and are adding outlets in the country. In fact, some of them are new brands that are enlivening the channel nationwide.

New foreign brands are expanding

Attracted by the strong growth of the category and seeing the success of recent new entrant Miniso in Indonesia, more foreign brands entered variety stores in Indonesia, such as Latt Liv from Pakistan and Minigood from Korea. Foreign players have the luxury of offering product variety and having a lower COGS.

Venturing into e-commerce by partnering with marketplaces

The development of the digital world in Indonesia is very rapid, especially with the emergence of various e-commerce players both locally and globally. This is an opportunity for offline retailers to increase their sales through online sales.

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