Indonesia market has been in a stagnant growth over the past two years. This stagnancy is reflecting Household Consumption that is stably in 5.06% growth, while it actually accounts for 56% of Indonesia’s GDP in Q3 2017. Investments, as the second biggest component of Indonesia’s GDP, as well as Government Spending, have been in the recovery mode, but both are unable to boost the total GDP growth.
Looking closer at Indonesian households, they heavily rely on unplanned shopping, which means that they go shopping for either today’s meal preparation or immediate consumption. Planned shopping, on the other hand, is not very popular in Indonesia, as it accounts for only 18% of households’ yearly shopping occasion. However, although the frequency of planned shopping is not as many as the unplanned shopping, it happens to be relatively more important in terms of value and volume unit. Value-wise, planned shopping is able to generate 34% of the total households’ spending on FMCG, while volume unit-wise, it generates 26% of total volume unit purchased
In Q3 2017 planned shopping keeps losing its relevance to households. Its occurrence is even declining by 7%, while unplanned shopping remains stable at 1%. What should we worry about this eradicating relevance of planned shopping? Firstly, households’ value growth is slower than expected from unplanned shopping. Unplanned shopping is actually able to show 9% growth, however as the value from planned shopping is only stabilizing, the total value growth is dragged down to only 5%. It may happen because the value spent during unplanned shopping is actually 41% lower than the spent during planned shopping.
Secondly, unit growth is also growing slower than expected. Similarly to value growth, unplanned shopping is actually growing by 6%, however the total unit growth is only growing by 3% as the unit purchased during planned shopping is declining.
What’s the impact on The Growth of Consumer Products?
This eradicating relevance of planned shopping is even more threatening because households tend to take up to 4 categories during unplanned shopping, while in fact they can get up to 7 categories during planned shopping, and this is happening across Upper, Middle, and Lower Social Economic Class. The categories that are being impacted the most are the non-basic ones, such as pharmaceutical, RTD (Ready-to-Drink) Beverages and non RTD Beverages, in which these three categories are non-basic categories that are used to be purchased during planned shopping.
Then how about the basic categories which supposed to be purchased during planned shopping? Basic categories, such as cooking aid and homecare, are getting more purchased during unplanned shopping. How does it affect manufacturers? Looking at one of the categories in cooking aid, which is Cooking Oil, the purchase occasion of this category is increasing during unplanned shopping, while it is declining during planned shopping. As the occasion during unplanned shopping is increasing, the possibility for households to take more brands are getting bigger, where in Q3 2016 there are only 20% of households purchase six brands of Cooking Oil, but the number increases to 60% in Q3 2017.
Therefore, it is clear now that the competition among brands is getting even tougher as households are going to unplanned shopping. So, is your brand ready to compete and remain as the Indonesian households' choice?
Read Indonesia Version
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About Nielsen Home Panel
Nielsen Home Panel conducts survey of 10,500 household samples in Indonesia, with a composition of 98% in urban and rural areas. The survey is conducted by recording actual shopping behaviors using a diary / journal methodology that includes every shopping activities. The panel used as sample is a continuous panel, i.e. the same panel is continuously measured with a retention rate of 97%.
Nielsen N.V. (NYSE: NLSN) is a global performance management company that provides a comprehensive understanding of what consumers Watch and Buy. Nielsen’s Watch segment provides media and advertising clients with Total Audience measurement services across all devices where content — video, audio and text — is consumed. The Buy segment offers consumer packaged goods manufacturers and retailers the industry’s only global view of retail performance measurement. By integrating information from its Watch and Buy segments and other data sources, Nielsen provides its clients with both world-class measurement as well as analytics that help improve performance. Nielsen, an S&P 500 company, has operations in over 100 countries that cover more than 90 percent of the world’s population. For more information, visit www.nielsen.com.