Food retail industry in Indonesia - statistics & facts

Industry performance amidst the COVID-19 pandemic

Both packaged and fresh food make up the biggest share of the monthly household expenditure in Indonesia. Food expenditure was expected to grow significantly during the COVID-19 pandemic. At the beginning of the pandemic, most grocery retailers in the country reported significant sales increases due to panic buying as the government imposed large-scale social restrictions. Demands for packaged and canned food products such as rice, noodles, and other processed food were especially high during this time as they last longer compared to other food products. Supermarkets and hypermarkets were the leading purchase channels to buy goods in bulk during the pandemic.

Even though offline retailers have been the key purchase channels for groceries in Indonesia, online retailers have been seeing increasing sales values in the last few years. A positive change in the frequency of grocery purchases online among Indonesian consumers during the COVID-19 pandemic indicated the growing popularity of this grocery shopping method. In a recent finding, Indonesians bought groceries online two or more times a week on average.

A shift in the distribution channel structure

In terms of distribution channels, traditional grocery retailers would probably continue to dominate the market. This has been the preferred food retail channel for many Indonesians, especially those living in rural areas, due to its accessibility. Modern and online grocery retailers may face significant challenges to their supply chains when serving the rural areas and outlying islands in Indonesia. However, in the urban areas and its larger, more populous, and more well-connected islands such as Java, modern and online grocery retailers can thrive. Traditional retailers may consequently see their share of the market in such areas declining. Increasing urbanization in the country would thus contribute to significant changes in the distribution channel structure of its food retail industry.

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