the future of malls in indonesia, jeffrey bahar, spire research and consulting

The future of malls in Indonesia: Where the shoppers will be?

By Jeffrey Bahar, Deputy CEO Spire Research and Consulting

COMPETITOR ANALYSIS

BUSINESS PARTNER

SELECTION

CORPORATE SOCIAL

RESPONSIBILITY CONSULTING

CHANNEL HEALTH

MANAGEMENT

KNOWLEDGE PROCESS

OUTSOURCING

GEO-MARKETING

DECISION ANALYTICS

CUSTOMER VALUE

CO-CREATION CONSULTING

MARKET ENVIRONMENT

RESEARCH

MARKET SIZING AND

FEASIBILITY

VALUE CHAIN ANALYSIS

PRICE

RESEARCH

SUPPLY CHAIN MANAGEMENT CONSULTING

CUSTOMER DECISION

DYNAMICS ANALYSIS

COUNTRY RESEARCH

CONSUMER RESEARCH

CROSS-BORDER CONSULTING

THOUGHT LEADERSHIP

CONSULTING

ANTI-COUNTERFEIT CONSULTING

HOLISTIC MARKET ENVIRONMENT RESEARCH

We are…

Table of contents:

ASEAN macro economic situation and retail growth

The development of modern retail in Indonesia

The incoming era of e-commerce

Case study: Online shoppers in Indonesia

Conclusion

ASEAN Macro Economic Situation and Retail Growth


Source: Worldbank, Bank of Indonesia, Indonesia Bureau of Statistics, Euromonitor

ASEAN Macro Economic Situation

5.0

0.7

6.0

6.0

2.9

6.1

Middle Class Income Growth 2012 - 2020

Malaysia Indonesia

Thailand Singapore

Philippines

18% 174%

72%

39% 10%

Source: CEICdata, Bank of Indonesia, Economist Intelligence Unit

82,554

87,939

93,295

106,831

123,451

336,557

335,024

328,268

376,877

468,809

117,445

118,471

114,692

119,811

129,414

39,385

40,760

43,573

46,443

49,769

60,525

66,452

75,606

85,371

96,909

110,918

118,608

124,748

138,803

151,781

2012

2013

2014*

2015*

2016*

Retail sales in several countries in ASEAN (US$ million)

Philippines

Vietnam

Singapore

Thailand

Indonesia

Malaysia

ASEAN Macro Economic Situation: Retail Sales

Source: Economist Intelligence Unit, Indonesian Retail Merchants Association (APRINDO), Indonesia Bureau of Statistics

3.5 4.3 4.3 4.3 4.8 4.7

2011 2012 2013 2014 2015 2016

Food, Beverage &

Tobacco

Indonesia Modern Retail Revenue Growth and Retail Sales Based on Type of Product

6.16.7 6.8

7.2 7.2 7.2

2011 2012 2013 2014 2015 2016

Fashion & Apparel

7.8 8.4 9.3 9.6 9.6 10

2011 2012 2013 2014 2015 2016

Consumer Goods

7.911.3 9.3 9.7 9.8 9.7

2011 2012 2013 2014 2015 2016

Electrical Appliances &

Housewares

9.513.7

11.3 11.2 10.7 10.2

2011 2012 2013 2014 2015 2016

Household Audio & Video

Equipment 6.2 6 5.6 5 4.8

20

12.5

10 9.58

2011 2012 2013 2014 2015*

Indonesia GDP and Modern Retail

Revenue Growth

GDP Growth (%) Modern Retail Revenue Growth (%)

The Development of Modern Retail in Indonesia


20

5

75

22

10

65

22 22

56

Hyper/Supermarket Minimarket Traditional Grocery

Retail Trade Share (%)

2002 2007 2012

Source: Indonesian Commercial Newsletter

Spread of Modern Retail in Indonesia 2010 (%)

DKI Jakarta

38.1%

Sumatera8.2%

West Java14.08%

Central Java10.2%

East Java12.12%

Modern Retail Development and Spread

Jakarta: The City of Malls

21.7

11.3

20

21.5

17.5

8.1

Jakarta Retail Supply by District 1Q 2015

CBD

Central

North

South

West

East

Source: Cushman & Wakefield, Lamudi

3,505 3,5603,824 3,984 4,015 3,985

2,790 2,884 3,113 3,327 3,424 3,406

2010 2011 2012 2013 2014 Q1 2015

Retail Space Supply and Demand in Jakarta

Cumulative Supply ('000 sqm) Cumulative Demand ('000 sqm)

4 million m²

retail space = 6x

Singapore

173 Malls

(World’s most malls per city*)

Mall Kelapa Gading147,000 m²

North Jakarta

2.9 million visitor per month

Grand Indonesia130,000 m²

Central Jakarta


Kota Kasablanka195,000 m²

South Jakarta

2 million visitor per month

Gandaria City93,840 m²

South Jakarta


Central Park125,626 m²

West Jakarta


P

o

p

u

l

a

r

M

a

l

l

s

i

n

J

a

k

a

r

t

a

Aeon Mall185,000 m²

Tangerang, West Java


S

o

u

r

c

e

:

m

a

r

k

e

t

i

n

g

.

c

o

.

i

d

What are their

secrets?

“Good access

and location”

“Size does

matter”

“Well-

matched

anchor client

& targeted

visitor”

“Bring up new and

fresh ideas”

The Incoming Era of e-Commerce


42.2

55.261.1

74.6

83.6

93.4

102.8

8 13.8 24.2 31.7 37.62 45.36 53.66

18.9824.99

39.62 42.49 45.1548.56

52.2

2010 2011 2012 2013 2014 2015 2016

Indonesia Internet User & Growth

Internet User (million) Netizens (in million)

Netizens Proportion (%)

Source: Tech in Asia, eMarketer, Spire Analysis

The Growth of Internet in South East Asia

20.1 74.6 17.6 9.1 32.4 34.8

67

29.826.4

104.2

36 34.8

Malaysia Indonesia Thailand Singapore Vietnam Philippines

Internet Users in South East Asia (2013)

Internet Users (in million) Internet Penetration (%)

20%Conventional online shopping sites

26.4%

Social media platform

26.6%

Online forums or classified sites

27%Messenger groups

2013335

1.8

2014328

2.6

2015377

3.56

2016469

4.49

2015

2014 2

016

20134.6

million

5.9 million

7.4 million

8.7 million

Growth of Online Shoppers in Indonesia (million users)

E-commerce Development in Indonesia

Preferred e-commerce Channel for Online Shopping

Source: Tech in Asia, Statista, Economist Intelligence Unit

Online Sales vs Retail Sales in Indonesia (billion US$)

Percentage of online sales in total retail sales Retail Sales Online sales

0.6% 0.8% 0.9% 1%

Case Study: Online shoppers in Indonesia


Who Shops Online?

99%Have shops online before

vs

80%

Who shops more often?Slightly

often

Very

often

Shops more efficiently? 7/10 4/10

Source: Spire Online Survey

11.36%

6.82%

29.55%

51.14%

1.14%

0.10%

41-50 years old

35-40 years old

28-34 years old

21-27 years old

16-20 years old

< 15 years old

Shoppers Age Breakdown

15%18%

20.5%22%

Things people buy online


Beauty

Products 12%

Sports

Equipment 4%

Automotive

Accessories 4%

Health

Supplement 4%

Books

Fashion Products

Electronics &

Gadget

Gaming Products

Free shipping

Exclusive items / deals

Product warranty

Safe and simple payment methods

Turn on vs Turn off While Shopping Online


Trust issue on product quality

No hands on experience before buying

High shipping cost and slow delivery time

Unreliable payment method

Mostly expressed by female shopper

Solution

Combine the best of online and

offline world

Increase the profit in both world


User Offline

Business

Link the online and offline

Demand Value

Offline Online Ultimate

The O2O Cycle

Create the ultimate hands on experience

Improve quality and monitor your online

reviews

Support “buy online and pick up at a store”

or vice versa

Conclusion


Retailers are challenged by the growth of e-commerce

Solution: Create a mutualism with e-commerce in form of O2O model, utilizing

both channels in order to maximize profit.

Urbanite lifestyle changing people’s purpose in going to malls

Solution: Urbanite the malls. Mold the malls into a place that can be

appreciated by the time-poor, city-proud, media-literate, brand-centric,

trend-sensitive, culturally-aware people of Jakarta.

High market saturation (173 malls)

Solution: Need to find a sustainable “wow” factor that could be used for a long

run.

Tel: (62) 5794 5800

Fax: (62) 5794 5808

Wisma 46, Kota BNI 25th Floor,

Unit #08-10

Jakarta 10220

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