Indonesia’s future of retail lies in a blended approach

Industry leaders discuss the innovative strategies to meet evolving consumer needs at Retail Asia Forum 2024

THE future of retail is firmly rooted in a blended approach, which seamlessly integrates the finest aspects of both physical and digital experiences. This consensus emerged clearly amongst the panellists at the Retail Asia Forum 2024 at the Shangri-La Jakarta last 16 May.

Moderated by FM Sidhartha, managing partner of Trade Marketing Indonesia, the panel discussion featured industry leaders Haryanto Pratantara of PT. Kurnia Ciptamoda Gemilang, Monish Mansukhani of PT Matahari Department Store Tbk, Marlo Budiman of PT Lippo Malls Indonesia, and Richard Stanlay of K3MART.

Underscoring the need for a strategy that combines in-person and online shopping to meet evolving consumer demands, the panel cited dramatic shifts in consumer behaviour in Indonesia, the rise of experiential retail, and innovative strategies for leveraging technology and data.

Mansukhani highlighted the challenges in forecasting consumer trends in the dynamic fashion industry, noting the significant impact of macroeconomic conditions, technological advancements, and environmental concerns.

“The rise of technology and the comfort in making online purchases have been fundamental shifts,” he said, highlighting the increased income disparity as measured by Indonesia’s Gini coefficient.

This has led to reduced spending amongst lower-income groups whilst higher-income consumers focus more on experiences over products, he told forum attendees.

Chiming in, Pratantara said: “The Indonesian retail market is highly diverse, with varying preferences and spending habits across different regions.”

He stressed the importance of personalisation and localisation in retail strategies, particularly in a market as varied as Indonesia. “It’s crucial for retailers to understand and adapt to these nuances to effectively meet consumer needs,” he said.

Experience economy

Stanlay of K3MART echoed Mansukhani’s sentiments, underscoring the growing consumer 

He cited the popularity of brands like Kakafe and Miniso, which offer immersive experiences preference for experiences.combined with strong social media strategies.

“People come to K3MART not just to buy products but to experience a slice of Korean culture,” said Stanlay. “Our stores are designed to make customers feel like they're in Korea, providing a unique experience that goes beyond mere shopping.”

He also discussed K3MART’s approach to customer engagement. “Our strategy involves creating an emotional connection with our customers,” he said.

“Through themed events, live demonstrations, and interactive displays, we offer an engaging and memorable shopping experience,” he added.

Stanlay cited a recent campaign where customers could participate in Korean cooking classes, which drew significant attention and increased foot traffic.

New realities

Budiman, for his part, delved on the significant changes in the retail landscape, particularly the decline in mall occupancy rates.

“Occupancy rates have not fully recovered to pre-pandemic levels, but we’ve seen a significant improvement in traffic, with about 15 million customers visiting our malls each month,” said the PT Lippo Malls president, noting how this translates to an annual footfall of approximately 180 million. 

Lippo Malls’ strategy to enhance the customer experience by increasing the proportion of food and beverage (F&B) outlets, which now make up over 20% of total tenants, he said.

“People go to malls not just to shop but for the experience, whether it's dining, entertainment, or family activities,” said Budiman.

One notable example is the Hyundai Experience Centre in Senayan Park, which offers visitors an immersive look at Hyundai's history and technology, complete with a café and interactive exhibits. “It’s about creating a memorable experience that keeps customers coming back,” he said.

Leveraging technology and data

Mansukhani elaborated on how Matahari is leveraging technology to enhance the shopping experience and optimise store operations. “We capture and analyze traffic data to understand customer behaviour within our stores,” he said.

This data-driven approach allows Matahari to identify which sections of the store attract the most traffic and where conversion rates might be falling short.

“For instance, during peak shopping periods like Lebaran, we identified bottlenecks at our fitting rooms and cashiers,” Mansukhani said. “We addressed this by expanding the number of cashiers and setting up additional, less permanent fitting rooms to facilitate faster service.”

This adaptive strategy not only improves the shopping experience but also maximises sales opportunities.

Mansukhani also stressed the importance of omnichannel integration. “Our goal is to provide a seamless shopping experience, whether the customer is online or in-store,” he said.

By implementing technology that allows customers to check stock availability across stores and warehouses, Matahari ensures that shoppers can find and purchase the products they want, even if their preferred size or color is not available in the store they visit.

Space utilisation and customer engagement

The panellists also discussed innovative ways to utilise retail space and engage customers.

Budiman shared a case study from Lippo Plaza Sidoarjo, a small mall in East Java. “We conducted a traffic analysis and found that the area is predominantly occupied by young families with small children. In response, we revamped the mall's tenant mix to cater to these families, adding entertainment options like soft play areas and tenants that appeal to young children,” he said.

This strategic shift resulted in a significant increase in foot traffic and occupancy rates, with the mall now enjoying a 95% occupancy rate and bustling activity on weekends.

“By understanding our customers and tailoring the mall experience to their needs, we've been able to create a vibrant and popular destination,” he noted.

A blended approach

All in the panel agreed that the future of retail lies in a blended approach. “The physical space is not just about selling products; it’s about providing an experience that can’t be replicated online,” Mansukhani concluded.

“By integrating technology, leveraging data, and focusing on customer experience, retailers can thrive in this new landscape,” he said.

Pratantara underscored the need for continuous innovation. “Retailers must be agile and responsive to changing consumer demands,” he said. “The ability to pivot and introduce new concepts quickly can make a significant difference in staying relevant and competitive.”

Stanlay added, “The future of retail is experiential. Customers are looking for more than just transactions; they want meaningful interactions and memorable experiences. Retailers who can deliver on this front will have a distinct advantage.”

As the retail industry continues to evolve, Indonesian retailers are adapting by embracing technology, optimising space utilisation, and focusing on creating unique and engaging customer experiences.

The insights shared at the Retail Asia Forum 2024 provided a roadmap for navigating Indonesia’s dynamic retail landscape and meeting the changing needs of consumers.