Snacks and soft drinks brand owners looking to build traction in Indonesia should target local convenience stores amid a soaring trend for young, wealthy consumers to socialise in this retail space, Euromonitor says.
Growth of local conveniences stores, or ‘minimarkets’, across Indonesia has been explosive, according to Euromonitor, with a threefold growth since 2006 and 2011 sales surpassing the US$4.1bn mark.
Alongside this surge, “the outlets have also emerged as a popular social space for that country’s vast cohort of young people, giving the channel an importance in terms of branding and product visibility that belies its still-small share”, Euromonitor said.
“The importance of convenience stores in Indonesia as a social space is relatively unique, one with major implications for players in a host of industries.”
“For soft drinks and snack brands looking to build brand awareness among young people with growing purchasing power, convenience stores hold an importance well in excess of their current share of total spending,” it said.
Small space, big branding power
In particular, opportunities to drive brand awareness and visibility lie strongest in ‘Warungs’ – smaller, neighbourhood shops found across all towns and cities that sell small impulse items like soft drinks, snacks, confectionery and cigarettes, Euromonitor said.
These stores often serve as place to stop for daily necessities but also a place to sit, chat with friends and enjoy a light snack, it added.
Warung shop owners have also invested in Wi-Fi, foodservice selections, seating areas and public sports viewings to encourage this trend further.
“Convenience stores now rival fast food chains and coffee shops as destinations for millions of young Indonesians,” Euromonitor detailed.
In 2011, Warungs accounted for more than 50% of all grocery retail in Indonesia, data showed.
Smaller is the right choice
Choice of distribution channel has been highlighted as a crucial decision for manufacturers working across the Asia Pacific region by Nielsen.
Peter Gale, managing director for retailer services at Nielsen, previously told this publication that manufacturers must select a channel “most relevant to [the] consumers in the long term”.
Gale added that smaller format stores, such as minimarkets and small supermarkets, would be an ideal channel in Indonesia and Malaysia amid mushrooming demands for convenience.