The distribution network in Indonesia

Evolution of the Sector: The retail sector in Indonesia remains one of the most attractive markets among Asian countries, thanks to its large population and growing middle class, with higher household purchasing power and increasingly modern spending habits.
Following a 11.7% contraction in 2020 in the context of the Covid-19 pandemic, retail sales grew by 0.8% in 2021 (Fitch Ratings). The Indonesian retail sector is projected to witness a CAGR of 4.6% by 2026 (Technavio). The market is segmented by product category, distribution channel, and market dynamics. While traditional markets still account for the majority of retail food sales in Indonesia, modern retail holds a significant share and is growing. The organized retail market in Indonesia is growing significantly across the country with companies expanding stores and considering the business potential in new areas. Most of the unorganized retail outlets are increasingly being replaced with big retail hypermarkets, supermarkets, and other retail chains.

Convenience stores are expanding rapidly in Indonesia and differ from Indonesian minimarkets in that they offer fewer SKUs than minimarkets while offering ready-to-eat foods and a dining area. Minimarkets are in direct competition with traditional independent small grocers (warungs) on the basis of price, cleanliness, food safety, and comfort.

Hypermarkets and supermarkets offer a wide range of food and beverage products and are generally located as anchor stores in shopping centres. Indonesian middle and upper income level consumers are increasingly shopping at these stores. Hypermarket and supermarket retailers usually contain in-store bakeries, cafés and restaurants, and prepared meals, with grocery products typically contributing about 65% of total sales (USDA).

Minimarkets, convenience stores, and other shops carry a wide range of convenience food items such as readymade meals, bakery products, processed foods, ice cream, and beverages. They sometimes carry a limited offering of fresh fruits and are open 24 hours. These stores are found throughout Indonesia's major urban centres and are also co-located with gasoline stations. The number of minimarkets and other small stores will continue to grow.
Market share: The Food and Beverage (F&B) sector plays a vital role in the Indonesian economy. In the primary sector, production of raw material for the F&B industry by plantation, agriculture, and fisheries accounted for around 13.7% of Indonesian GDP, as of 2020 (World Bank, latest data available). In the secondary sector, manufacturing of F&B accounted for 6.7% of GDP and 38.4% of all manufacturing output in Q2 2021 (Ministry of Industry).
According to USDA Foreign Agricultural Service, Indonesian grocery retail sales reached $97 billion in 2020 (traditional grocery retailers held 79% share). In 2020, the major players of the Indonesian retail market are:
•    Convenience stores with 36,146 outlets. Major Convenience stores include Indomaret and Alfamart.
•    Hypermarkets with 337 outlets. There are four players in the hypermarket group: Carrefour/ PT Trans Retail Indonesia, Giant/ Hero Supermarket Group, Hypermart/ PT Matahari Putra Prima Tbk, and Lotte Mart/ Lotte Mart Indonesia PT.
•    Supermarkets with 1,457 outlets. There are six in the supermarket segment Alfa Midi/ Midi Utama Indonesia Tbk PT, Hero, Superindo, Ranch Market & Farmers Market/ Supra Boga Lestari Tbk PT, Food Mart, The Food Hall
•    Traditional grocery stores with 4,474,316 outlets (a decrease if compared to 2019).
Retail Sector Organisations: Indonesian Direct Selling Association (IDSA)

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