Indonesia Market Research: Key Consumer Trends You Must Know.

Indonesia, the world’s fourth most populous country, boasts the largest economy among the 10 ASEAN nations. With a population of 280 million, it presents a vast and rapidly expanding market for consumer products. Favourable demographics suggest Indonesia’s consumer market will continue to experience robust growth. It is projected to surpass $1 trillion in 2024, making it one of the most promising emerging markets globally. 

With a young, digitally savvy population and a rapidly expanding middle class, Indonesia provides numerous opportunities for brands seeking to increase their presence in Southeast Asia. Understanding the intricacies of consumer trends in this diverse market is essential for business leaders and corporations looking to take advantage of its potential.

Key facets of Indonesia’s market at a glance

• Population: Over 275 million people, making it the fourth most populous country in the world.
• GDP Growth: Consistent annual GDP growth rate of around 5% over the past decade (World Bank, 2023).
• Digital Economy: Expected to reach $146 billion by 2025, driven by e-commerce, fintech, and digital services (Google, Temasek, Bain & Company, 2023).

Despite these promising figures, Indonesia’s market is characterised by unique challenges and opportunities that require a deep understanding of consumer behaviour and preferences. 

The key consumer trends shaping Indonesia’s market landscape provide insights on how brands can effectively navigate and leverage these trends for sustainable growth.

Demographic Shifts

Population Growth and Urbanisation

Indonesia’s population is growing rapidly, with a significant shift towards urbanisation. Since the 1960s, Indonesia has seen a consistent increase in urbanisation, fueled by the movement of people from rural to urban areas. Today, over half of the Indonesian population lives in urban centres. This shift has played a crucial role in the nation’s economic stability, with poverty rates in Indonesia decreasing by 50% in the last twenty years.

Key Statistics:

• Urban Population Growth: Projected to reach 208 million by 2030 (United Nations, 2023).
• Major Urban Centers: Jakarta, Surabaya, Bandung, and Medan.

Urbanisation has led to mega-cities’ development with increased demand for housing, transportation, and consumer goods. Brands must adapt to the needs of urban consumers who prioritise convenience and accessibility. For example, the rise in apartment living has boosted the demand for compact furniture and smart home devices.

Opportunities:

• Real Estate: Development of affordable housing and smart living solutions.
• Retail: Expansion of urban retail spaces, including malls and convenience stores.

Strategies:

• Localised Market Research: Conduct detailed market research to understand the specific needs and preferences of urban consumers in different cities.
• Partnerships with Local Developers: Collaborate with real estate developers to create integrated retail and residential solutions.
• Smart City Initiatives: Invest in technologies contributing to smart city developments, such as IoT and smart infrastructure.

Indonesia is at the threshold of an Aging Population

While Indonesia’s population is predominantly young, with a median age of 30.2, the proportion of elderly citizens is increasing. 

By 2045, it is estimated that 15% of the population will be aged 60 and above, compared to just 9% in 2020 

-Statistics Indonesia, 2023 

This demographic shift presents opportunities in the healthcare, wellness, and retirement sectors.

Key Statistics:

• Elderly Population Growth: The elderly population (age 60+) will grow from 10.1% in 2020 to 18.0% in 2040, with the female proportion higher than the male proportion. 
• Healthcare Spending: Projected to grow at an annual rate of 10% (Deloitte, 2023).

The ageing population will demand more healthcare services, from primary care to specialised geriatric care. There is also a growing market for wellness products for seniors, such as nutritional supplements and fitness programs designed for older adults.

Opportunities:

• Healthcare Services: Expansion of healthcare facilities and services for the elderly.
• Wellness Products: Growing demand for health supplements, fitness programs, and wellness retreats.

Strategies:

• Healthcare Innovation: Develop innovative healthcare solutions, such as telemedicine services, to cater to the elderly.
• Product Customisation: Customise products to meet the specific health and wellness needs of the elderly population.
• Community Engagement: Engage with elderly communities through workshops and wellness programs to build brand loyalty.

Digital Transformation

Internet Penetration and Mobile Usage

Indonesia has one of the fastest-growing internet user bases in the world. As of 2023, there are over 205 million internet users, with mobile devices being the primary mode of access (Hootsuite, We Are Social, 2023). This high mobile penetration rate reshapes how Indonesians shop, communicate and consume content.

Key Statistics:

• Internet Users: With more than 210 million internet users, Indonesia is one of the countries with the highest number of internet users in the world. As of January 2023, the country ranked fourth after China, India, and the United States. (Statista)
• Mobile Penetration Rate: 77% of the population (Statista, 2023).
• Average Daily Internet Usage: 8 hours (Hootsuite, We Are Social, 2023).

Mobile internet usage is driven by affordable smartphones and competitive data plans. As a result, brands must prioritise mobile-friendly websites and applications to reach Indonesian consumers effectively.

Trends:

• Mobile Commerce (M-commerce): 73% of e-commerce transactions are made via mobile devices (Statista, 2023).
• Social Commerce: Growing trend of shopping directly through social media platforms.

Strategies:

• Mobile Optimisation: Ensure websites and apps are optimised for mobile use, with fast loading times and easy navigation.
• Social Media Integration: Integrate e-commerce platforms with social media for seamless shopping experiences.
• Mobile Marketing: Utilise SMS marketing, push notifications, and mobile ads to engage consumers.

E-commerce Boom

Indonesia’s e-commerce market is experiencing exponential growth, driven by increasing internet penetration and a growing middle class. 

E-commerce sales are expected to reach $82 billion by 2025 (Google, Temasek, Bain & Company, 2023), making it a critical channel for retailers and brands.

Popular E-commerce Platforms:

• Tokopedia: Leading local marketplace.
• Shopee: Dominant player with a strong regional presence.
• Bukalapak: Focus on underserved markets and smaller cities.

Changing Consumer Behavior: The Quest for Value in Indonesia

Rise of the Middle Class

Indonesia’s expanding middle class is driving significant changes in consumer behaviour. With increased disposable income, this demographic is spending more on lifestyle and aspirational products.

Key Statistics:

• Middle-Class Population: Expected to reach 141 million by 2030 (World Bank, 2023).
• Spending Power: Annual household consumption expenditure to exceed $2.5 trillion by 2030 (McKinsey & Company, 2023).

Consumer Preferences:

• Premium Products: Higher demand for branded and premium products.
• Experiential Purchases: Increased spending on travel, dining, and entertainment.

The growing middle class is also more conscious of quality and brand reputation. Brands should focus on building strong brand identities and offering high-quality products to capture this segment.

Indonesian Consumer Behaviors:

• Preference for Mobile Shopping: 73% of e-commerce transactions are made via mobile devices (Statista, 2023).
• Top Product Categories: Electronics, fashion, beauty products, and groceries.

Opportunities:

• Retail Expansion: Development of premium retail outlets and lifestyle centres.
• Luxury Goods: Increased demand for luxury brands and high-end products.

The Quest for Value Deepens

Since 2022, persistent inflation has led Indonesian consumers to hunt for cheaper alternatives. However, the response in actual purchase volumes varies. Consumers have maintained their purchasing volumes in Indonesia, demonstrating resilience and continued demand despite economic pressures.

Key Trends:

• Value Seeking: Increased focus on finding value for money and affordable alternatives without compromising quality.
• Brand Loyalty: Despite the search for value, strong brand loyalty persists among Indonesian consumers, particularly for trusted and well-established brands.

Consumer Behaviors:

• Price Sensitivity: Growing sensitivity to price changes, consumers actively seeking promotions and discounts.
• Bulk Buying: A trend towards bulk buying to take advantage of lower per-unit costs.

Strategies:

• Brand Positioning: Position your brand as a premium choice through strategic marketing and quality assurance.
• Customer Experience: Enhance customer experience through personalised services and loyalty programs.
• Product Differentiation: Differentiate your products by emphasising unique features and superior quality.
• Promotional Campaigns: Develop targeted promotional campaigns to attract value-seeking consumers. Utilise discounts, bundle offers, and loyalty rewards to retain customer interest.
• Affordable Alternatives: Introduce more affordable product lines or value packs to cater to price-sensitive segments while maintaining brand quality.
• Transparency in Pricing: Ensure transparent pricing strategies to build trust and maintain consumer confidence during economic fluctuations.
• Omni-channel Approach: Integrate online and offline channels for seamless customer experiences.
• Logistics and Delivery: Invest in efficient logistics to meet fast delivery expectations.
• Data Analytics: Use data analytics to personalise marketing and improve inventory management.

E-commerce in Indonesia is characterised by intense competition among local and international players. Brands must leverage data analytics to understand consumer preferences and offer personalised shopping experiences.

According to a 2023 McKinsey report, the vast majority—an estimated 85% of merchants in Indonesia’s flourishing digital economy are resellers or distributors, while only 15 % of merchants sell their own products.

These micro, small, and medium-size enterprises (MSMEs) occupy a large share of Indonesia’s e-commerce marketplace. The country’s overall e-commerce adoption spiked during the pandemic and is expected to continue its rapid expansion, with 60 to 90% of consumers intending to continue shopping online (McKinsey & Company, 2023).

Opportunities:

• MSME Engagement: Support and engage MSMEs to expand product offerings and enhance customer reach.
• Reseller Programs: Develop reseller support programs to address their needs and challenges.

By addressing these unmet needs, brands and e-commerce platforms can tap into the significant growth potential within Indonesia’s reseller segment, driving both economic development and market expansion.

Social Media Influence

Social media is a powerful tool in Indonesia, with platforms like Instagram, Facebook, and TikTok shaping consumer preferences and driving purchasing decisions. Influencer marketing is particularly effective, with 78% of consumers indicating they trust recommendations from social media influencers (Edelman, 2023).

Popular Social Media Platforms:

• Instagram: Widely used for product discovery and influencer marketing.
• Facebook: Popular among older demographics.
• TikTok: Rapidly growing platform, especially among younger users.

Influencer Marketing:

• Micro-Influencers: Increasing the effectiveness of influencers with smaller, highly engaged audiences.
• User-Generated Content: Leveraging consumer content for authentic brand promotion.

Brands can harness the power of social media by collaborating with influencers and creating engaging content that resonates with Indonesian consumers. Monitoring social media trends and consumer feedback is essential for staying relevant.

Strategies:

• Content Marketing: Create valuable and shareable content that aligns with consumer interests.
• Social Listening: Analyze social media conversations to understand consumer sentiment and trends.
• Influencer Partnerships: Collaborate with influencers to reach targeted demographics and build trust.

Health and Wellness Focus

There is a growing emphasis on health and wellness among Indonesian consumers. This trend is reflected in the rising popularity of organic foods, fitness regimes, and wellness products.

Trends:

• Organic and Natural Foods: Increasing demand for organic fruits, vegetables, and health supplements.
• Fitness and Wellness: Growth in fitness centres, yoga studios, and wellness retreats.

Key Statistics:

• Organic Food Market Growth: Expected to grow at a CAGR of 15% by 2025 (Allied Market Research, 2023).
• Fitness Industry Revenue: Projected to reach $3 billion by 2025 (Statista, 2023).

Consumers are becoming more health-conscious, seeking products and services that promote a healthy lifestyle. Brands in the food, fitness, and wellness sectors should emphasise the health benefits of their offerings and adopt transparent marketing practices.

Strategies:

• Health-Oriented Marketing: Highlight health benefits and use clear, transparent labelling.
• Community Engagement: Build communities around health and wellness initiatives through workshops and social media groups.
• Product Innovation: Develop new products that cater to health-conscious consumers, such as low-calorie snacks and fitness supplements.

Sustainability and Ethical Consumption

Indonesian consumers are becoming more environmentally conscious, with a growing demand for sustainable and ethically sourced products. Brands that prioritise sustainability are gaining favour among consumers.

Consumer Expectations:

• Sustainable Packaging: Preference for eco-friendly and recyclable packaging.
• Ethical Sourcing: Demand for transparency in sourcing and production practices.

Key Statistics:

• Sustainable Products Market: Expected to grow at a CAGR of 10% by 2025 (Grand View Research, 2023).
• Consumer Willingness to Pay More: 62% of consumers are willing to pay more for sustainable products (Nielsen, 2023).

Brands must integrate sustainability into their core operations and communicate their efforts effectively. This includes adopting eco-friendly practices, reducing carbon footprints, and ensuring ethical supply chains.

Strategies:

• Sustainability Certifications: Obtain certifications to build consumer trust.
• Corporate Social Responsibility (CSR): Engage in CSR activities to demonstrate commitment to sustainability.
• Transparent Communication: Clearly communicate sustainability efforts and achievements to consumers.

Technological Advancements

Adoption of Fintech Solutions

The fintech sector in Indonesia is booming, with digital payment solutions and banking services becoming increasingly popular. This trend is driven by the need for financial inclusion and convenience.

Key Statistics:

• Digital Payment Users: 58% of the population used digital payment methods in 2023 (Statista, 2023).
• Popular Fintech Platforms: GoPay, OVO, and Dana.

Trends:

• Mobile Wallets: High adoption of mobile wallets for everyday transactions.
• Online Banking: Growing use of digital banking services for savings and investments.

Fintech solutions are making financial services more accessible, especially in underserved areas. Brands can leverage fintech to enhance customer experience and streamline payment processes.

Strategies:

• Partnerships with Fintech Providers: Collaborate with Fintech companies to offer seamless payment solutions.
• Security and Trust: Invest in robust security measures to protect consumer data and build trust.
• Financial Literacy Programs: Educate consumers on the benefits and usage of digital payment solutions.

Smart Home and IoT Devices

The smart home market in Indonesia is on the rise, with consumers adopting connected devices for convenience and security. This trend is creating opportunities for tech companies and service providers.

Popular Devices:

• Smart Speakers: Increasing use of voice-activated devices like Google Home and Amazon Echo.
• Home Security Systems: Growing demand for smart security cameras and alarms.

Key Statistics:

• Smart Home Market Growth: Expected to grow at a CAGR of 17% by 2025 (MarketsandMarkets, 2023).
• Consumer Adoption Rate: 23% of households expected to own at least one smart home device by 2025 (Statista, 2023).

Smart home devices are becoming more affordable and user-friendly, driving higher adoption rates. To meet consumer demands for smart living solutions, brands need to focus on innovation and integration.

Strategies:

• Product Integration: Ensure compatibility with other smart home devices and platforms.
• Consumer Education: Provide clear instructions and support for setting up and using smart devices.
• After-Sales Service: Offer reliable after-sales service to address consumer issues and enhance satisfaction.

Entertainment and Media Consumption

Streaming Services

Streaming services are rapidly replacing traditional media in Indonesia with a preference for on-demand content. Platforms like Netflix, Disney+, and local players like Vidio are gaining popularity.

Key Statistics:

• Streaming Subscribers: Over 40 million subscribers by 2024 (Statista, 2023).
• Popular Genres: Drama, reality TV, and local content.

Streaming platforms offer a wide range of content tailored to local tastes, driving their adoption. Brands must consider partnerships with streaming services for targeted advertising and content placement.

Strategies:

• Targeted Advertising: Utilise data analytics to target ads based on viewer preferences and behaviours.
• Content Sponsorships: Partner with streaming platforms to sponsor popular shows and movies.
• Original Content: Collaborate with local content creators to produce exclusive content that resonates with Indonesian audiences.

Gaming Industry

The gaming industry in Indonesia is thriving, particularly in the mobile gaming segment. The rise of esports is also contributing to this growth.

Key Statistics:

• Mobile Gamers: 95 million mobile gamers in 2023 (Newzoo, 2023).
• Esports Audience: Expected to reach 25 million by 2024 (Statista, 2023).

Mobile gaming is driven by affordable smartphones and free-to-play models. Brands can tap into this market through in-game advertising and sponsorships.

Strategies:

• In-Game Advertising: Place ads within popular mobile games to reach a large, engaged audience.
• Esports Sponsorships: Sponsor esports teams and events to build brand visibility.
• Game Development Partnerships: Collaborate with game developers to create branded content and experiences.

Travel and Tourism

Domestic vs. International Travel Trends

Post-pandemic, Indonesians have a marked preference for domestic travel. Local destinations are seeing a surge in popularity as international travel remains uncertain.

Popular Destinations:

• Bali: Consistently top destination for both domestic and international tourists.
• Yogyakarta and Bandung: Popular for cultural and natural attractions.

Key Statistics:

• Domestic Travel Growth: 30% increase in domestic travel bookings in 2023 (Traveloka, 2023).
• Tourism Revenue: Domestic tourism revenue is expected to reach $40 billion by 2025 (World Travel & Tourism Council, 2023).

The trend toward domestic travel presents opportunities for local tourism operators and brands to offer unique and immersive experiences.

Strategies:

• Local Partnerships: Partner with local tourism operators to offer exclusive travel packages.
• Experiential Marketing: Create immersive marketing campaigns that highlight unique local experiences.
• Sustainable Tourism: Promote eco-friendly travel options and sustainable practices.

Rise of Experiential Travel

There is a growing demand for unique and immersive travel experiences. Consumers are seeking personalised and off-the-beaten-path adventures.

Trends:

• Eco-Tourism: Increasing interest in sustainable and nature-based travel.
• Cultural Experiences: Demand for authentic cultural interactions and activities.

Key Statistics:

• Experiential Travel Growth: Expected to grow at a CAGR of 12% by 2025 (Allied Market Research, 2023).
• Consumer Preferences: 55% of travellers prefer experiential travel over traditional vacations (Booking.com, 2023).

Experiential travel allows brands to create meaningful and memorable interactions with consumers.

Strategies:

• Curated Experiences: Offer curated travel experiences that cater to specific interests and preferences.
• Storytelling: Use storytelling to highlight the unique aspects of travel experiences.
• Customer Feedback: Collect and analyze customer feedback to continuously improve and innovate travel offerings.

The popularity of Motorcycles in Indonesia

Motorcycles play a crucial role in Indonesia’s transportation landscape, serving as the primary mode of transport for millions of people. Given the country’s challenging traffic conditions and the need for affordable and efficient mobility solutions, motorcycles’ significance in Indonesians’ daily lives cannot be overstated.

Key Statistics:

• Motorcycle Ownership: Over 115 million motorcycles were registered in Indonesia as of 2022 (Statista, 2023).
• Primary Transport Mode: Motorcycles are the main mode of transportation for 85% of households in urban areas (Indonesia Ministry of Transportation, 2023).
• Market Growth: The motorcycle market in Indonesia is projected to grow at a CAGR of 4% through 2025 (ResearchAndMarkets, 2023).

Motorcycles are favoured for their affordability, fuel efficiency, and ability to navigate congested urban areas. The rise of motorcycle-based services, such as ride-hailing and delivery, has further cemented their importance in the economy.

Trends:

• Electric Motorcycles: Increasing interest in electric motorcycles due to environmental concerns and government incentives for electric vehicle adoption.
• Ride-Hailing Services: Growth of motorcycle ride-hailing services like Gojek and Grab, which offer convenient transportation and delivery options.
• Customisation and Accessories: Growing demand for motorcycle customisation and aftermarket accessories, reflecting consumers’ desire for personalised and stylish rides.

Strategies:

• Electric Vehicle Promotion: Brands should focus on developing and promoting electric motorcycles, leveraging government incentives and growing environmental awareness.
• Partnerships with Ride-Hailing Companies: Collaborate with ride-hailing services to offer fleet solutions and maintenance services, tapping into a large and consistent user base.
• Market Research: Conduct targeted market research to understand the preferences and needs of motorcycle users, particularly in urban areas, to develop tailored products and services.

Motorcycles will continue to be an integral part of Indonesia’s transportation system, presenting numerous opportunities for brands to innovate and cater to this significant market segment.

Regional Variations

Urban vs. Rural Consumer Trends

There are significant differences in consumer behaviour between urban and rural areas in Indonesia. Urban consumers are more digitally connected and have higher purchasing power, while rural consumers are gradually adopting modern retail formats.

Urban Consumer Characteristics:

• Higher Spending Power: More disposable income for lifestyle and premium products.
• Digital Savvy: High adoption of e-commerce and digital services.

Rural Consumer Characteristics:

• Traditional Shopping Habits: Preference for local markets and traditional retail.
• Gradual Digital Adoption: Slow but steady increase in online shopping and digital payments.

Key Statistics:

• Urban Retail Growth: Expected to grow at a CAGR of 8% by 2025 (Euromonitor International, 2023).
• Rural Retail Growth: Expected to grow at a CAGR of 5% by 2025 (Euromonitor International, 2023).

Brands must tailor their strategies to cater to the distinct needs and preferences of urban and rural consumers.

Strategies:

• Localised Marketing: Develop marketing campaigns that resonate with local cultures and preferences.
• Tiered Product Offerings: Offer different product tiers to cater to varying purchasing powers.
• Education and Awareness: Educate rural consumers on the benefits of modern retail and digital services.

Cultural Influences

Indonesia’s diverse cultural landscape influences consumer behaviour across regions. Brands must be culturally sensitive and tailor their marketing strategies accordingly.

Key Considerations:

• Cultural Sensitivity: Understanding regional customs and preferences.
• Localised Marketing: Adapting messaging and campaigns to resonate with local audiences.

Key Statistics:

• Cultural Diversity: Indonesia has over 300 ethnic groups and 700 languages (Statistics Indonesia, 2023).

Cultural diversity requires brands to adopt a nuanced approach to marketing and product development.

Strategies:

• Cultural Insights: Conduct in-depth research to gain insights into regional cultures and preferences.
• Localised Content: Create content that reflects local traditions and values.
• Inclusive Marketing: Develop inclusive marketing campaigns that celebrate cultural diversity.

Future Outlook

Predicted Trends for the Next 5-10 Years

As Indonesia continues to develop, several key trends are expected to shape the consumer market.

Key Predictions:

• Digital Dominance: Continued growth in digital services and e-commerce.
• Health and Sustainability: Increased focus on health, wellness, and sustainable consumption.
• Technological Integration: Greater adoption of smart technologies and fintech solutions.

Key Statistics:

• Digital Economy Growth: Expected to reach $146 billion by 2025 (Google, Temasek, Bain & Company, 2023).
• Health and Wellness Market Growth: Expected to grow at a CAGR of 10% by 2025 (Allied Market Research, 2023).

Strategies for Brands to Stay Ahead

To succeed in Indonesia’s dynamic market, brands must stay agile and responsive to emerging trends.

Recommendations:

• Continuous Market Research: Regularly update consumer insights to stay relevant.
• Local Partnerships: Collaborate with local companies and influencers to build trust and credibility.
• Innovation and Adaptation: Invest in innovation to meet evolving consumer needs and preferences.

Strategies:

• Consumer-Centric Approach: Prioritise consumer needs and preferences in product development and marketing.
• Agile Business Models: Adopt agile business models to quickly respond to market changes.
• Sustainability Integration: Integrate sustainability into core business operations and communicate efforts transparently.

Indonesia’s consumer market is teeming with opportunities for brands that can navigate its complexities and leverage its growth potential. By understanding and adapting to key consumer trends, brands can position themselves for long-term success in this vibrant market. Engaging with local partners, prioritising sustainability, and staying attuned to digital transformation will be crucial strategies for thriving in Indonesia’s ever-evolving landscape.