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Jakarta Post

Sales of consumer goods slow as people reduce spending

The Jakarta Post
Jakarta   ●   Wed, October 21, 2015

The sales of fast-moving consumer goods (FMCG) in Indonesia have grown at a snail'€™s pace during the past several months as people have reduced their spending to cope with the impact of the country'€™s slowing economy.

A survey by consumers research firm Kantar Worldpanel Indonesia showed that the growth rate of the sales of consumer goods in the country during the period of July last year to June this year plummeted to 7.4 percent from 15.2 percent in the previous period.

The firm'€™s new business development director Fanny Murhayati told a press briefing in Central Jakarta on Tuesday that the lower growth was in line with the downward trend in Asia and the ASEAN FMCG market. '€œThis is a trend happening across the region,'€ she said.

The agency stated that Indonesia'€™s slowing economy had affected customers'€™ shopping behaviors, which resulted in the sluggish industry growth.

Indonesian customers on average shopped only 46 categories of consumer goods this year, compared to 48 last year. Their shopping frequency also declined to 358 times from 384 times in the previous year.

The firm had surveyed around 7,000 respondent households nationwide since July last year. Surveyors interviewed the same targets, including about scanned and recorded consumer goods consumed by the household, every week to find out their consumption habits. The respondents represented around 26.5 million urban and 22.5 million rural households whose consumption ranged from Rp 850,000 (US$62.30) to more than Rp 7 million per month.

'€œRising prices have pushed the households to carefully watch their consumption by only buying staple goods,'€ Fanny said.

Despite the fall in the growth rate, Indonesia fared better compared to other countries in Asia. According to the agency'€™s estimate, FMCG sales in Asia would likely grow only by 4.6 percent this year, slightly lower than the 5.1 percent recorded last year. In the Southeast Asia region, the market expanded by only 4.6 percent this year, less than the 6.4 percent in the previous year.

The latest Bank Indonesia (BI) consumer survey in September showed that consumer confidence was at 97.5, its lowest level in five years. A figure below 100 indicates pessimism and above it, optimism. The weakness in consumer sentiment is backed by people'€™s expectations that prices will continue to increase in the next three months.

Private consumption grew 4.99 percent in the second quarter this year, its slowest since 2011.

Indonesia'€™s economy, which is 55 percent driven by domestic consumption, is weakening this year, with a growth rate of only 4.67 percent in the second quarter and 4.7 percent in the first quarter '€” all the lowest levels since 2009.

Yongky Susilo, an expert with the Indonesian Retailers Association (Aprindo), said in a written statement to The Jakarta Post on Tuesday that FMCG retails grew 11.6 percent year to date. However, of that number, 9.7 percent was due to inflation, leaving narrow growth.

He urged the government to immediately create more jobs and disburse direct cash transfers to bolster customers'€™ purchasing power amid the soaring prices of goods.

'€œThe year-to-date FMCG growth currently stands at only a half of the usual average number,'€ he wrote, adding that modern retailers tried to survive by offering promotions.

The Kantar Worldpanel survey showed that customers were relatively attracted by promotions, as was indicated since 17 percent of their expenditures happened during promotional periods. The amount of bought goods during promotions increased by 30 percent compared to in 2013.

'€œHowever, Indonesia still experiences the highest growth among its regional peers,'€ Fanny said. (prm)