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Retail sales to expand by 12% in 2017
Buoyed by a positive economic outlook, the domestic retail sector expects sales to increase at a double-digit rate next year
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Buoyed by a positive economic outlook, the domestic retail sector expects sales to increase at a double-digit rate next year.
Retail sales will likely hit around Rp 224 trillion (US$16.58 billion) next year, up by 12 percent from the figure estimated for this year, primarily on the back of sales of food and beverage and fashion items, according to Association of Indonesian Retailers (Aprindo).
Faster economic growth, coupled with moderate inflation rates and a higher consumer confidence index would boost the revenue of the industry, Aprindo chairman Roy Mandey said.
The business group expects the country’s economy to expand by 5.4 percent, which would be an optimistic scenario, in order to jack up domestic retail sales.
“If our inflation rate remains low, our purchasing power will also be affected as prices of goods will be more affordable,” Roy told a press conference Wednesday.
The government has targeted inflation to stay at about 4 percent in 2017, while Bank Indonesia (BI) has set a range of between 3 percent and 5 percent.
Citing a recent consumer confidence index (CCI), Roy said that people would still feel upbeat to spend their money in the domestic market amid persisting uncertainty in the global economy, a trend that might continue
in the future.
The latest BI consumer survey revealed that CCI stayed at the optimistic level at 115.9 in November, despite a slight drop from 116.8 in October.
Another survey, Nielsen’s Global Survey of Consumer Confidence and Spending Intentions, shows that Indonesia’s CCI rose 3 percentage points in the third quarter of this year to 122 from the previous quarter.
This places Indonesia as the home to the world’s third most confident consumer market after India and the Philippines.
Aprindo, which has 600 members nationwide, also hopes to secure revenue of Rp 200 trillion this year, a 10.5 percent surge from the past year.
The group attributed the anticipated rise to sales of food and beverage as well as fashion items.
Roy said that the increase of sales may stand at 9 percent to 10 percent thanks to the fasting month and Idul Fitri festivity that followed, as well as Christmas and New Year, which offset moderate gain previously.
Indonesia, home to the world’s largest Muslim population, usually sees consumption peak during the month of Ramadhan and other annual festivities.
A change from earlier years, retailers in the eastern part of the archipelago have begun to give a higher contribution to domestic sales, ranging from 25 percent to 30 percent, according to the group. Formerly their share stood between 5 percent and 10 percent.
Aprindo vice chairman Yudhi Komarudin said the majority of retail firms survived this year even though the country’s economic performance was not at its best. He added that failing retailers remained a minority despite challenges brought by the economic slowdown.
Southeast Asia’s biggest economy, in which more than half of its population accounts for the surging middle class, is on the way to recovery from six years of low growth.
AT Kearney’s 2016 Global Retail Development Index (GRDI) has ranked Indonesia fifth, out of 30 emerging economies, for investment destinations in the retail sector, up from 12th place last year. (wnd)
