Preference for local brands in Indonesia, study finds

The growing preference for local brands is a rising trend in the Indonesia market. According to a report by Technavio, Indonesians have a strong preference for local brands owing to better value for money. Foreign companies seeking to invest in Indonesia are trying to capture the market with the help of localisation or acquisition strategies. The retail market growth in Indonesia is expected to be driven by the following factors:

• Expansion of retail landscape
• Growing popularity of private-label brands
• Rising prominence of in-store bakeries in supermarkets

Moreover, the retail industry in the country is witnessing the emergence of retailers that operate according to Sharia law or Islamic precepts. At present, the retail market size in Indonesia is expected to increase by US$44.13 billion from 2021 to 2026.

In addition, the growth momentum of the market will accelerate at a CAGR of 4.6% during the forecast period. The retail market in Indonesia is fragmented, and the vendors are deploying growth strategies such as forming strategic partnerships to compete in the market.

At the same time, the retail market in Indonesia is highly competitive and fragmented, with the presence of small as well as large vendors. With the rise in competition, the industry has been witnessing consolidation, wherein smaller players are acquired by or merged with large players. Vendors should distinguish their product and service offerings through clear and unique value propositions to survive and succeed in this competitive environment.

By product, the food and beverages segment will offer significant growth opportunities for market players during the forecast period. Factors such as an upward trend in the prices of commodities will play a crucial role in driving the growth of the segment. The rise in prices has resulted in an increase in the purchasing power of people in regions that produce commodities, such as Sumatra and Kalimantan.