NIELSEN MARKET SNAPSHOT: INDONESIA
Indonesia is battling a heavy slowdown with the GDP contracting by 5.32% in Q2 2020, led by weakening of production and overall demand from its exports with the onset of the pandemic. With businesses and factories hit due to stall in production on account of stay at home and restrictions, there is a notable rise in unemployment especially in the informal sector.
The uncertainty around job prospects and growing concerns around personal finances are some factors underlying in the recently reported consumer confidence at 102 in Q2 2020 (down 25 points compared to Q1 2020), whereas it was at 123 in Q4 2019. Household spends have reduced by 23% in Q2 2020 in comparison to the previous year same quarter as many constrained spenders are seeking ‘value for money’ in FMCG purchases.
The survey revealed that, aside from the economy that has the majority of consumers worried (56%), there are looming concerns about health (29%), work life balance (24%) and crime (12%). Consumers are spending their spare cash on essentials only, limiting discretionary purchasing wherever possible, as per the CCI survey results for Q2 2020.
According to consumers, much of the monthly spend has been allocated in categories such as - FMCG in home (12% of household spending), Fresh (staples, meat/poultry, vegetables, at 23%), communication services like mobile phone, landline, Internet (5%), and loans/investments (19%). Indonesia remains in the top 10 most optimistic countries as per the consumer confidence sentiments in the second quarter of 2020. Much needs to be witnessed how the economy can emerge from the recessionary cycle set in by coronavirus.
While in the earlier phases of the pandemic consumers reacted to the news cycles and announcements which lead to heavy purchasing of FMCG essentials, such is not the case anymore. According to the recent study released by Nielsen - ‘Future Consequences of Covid-19’, consumers have witnessed prolonged stages of restricted movement and in many cases they are being impacted by structural changes in their economic situation.
Rising unemployment and concerns on the future, has transformed purchasing behaviour to reset based on personal financial situation instead of response towards the rising transmission of the virus. Consumers' decisions are being influenced by new governance and regulations, therefore they are weighing spends based on health measures necessary in everyday life keeping in context to the disposable monies in their wallet while maintaining a buffer for old and new needs emerging from health safety. Socio-economic factors supersede in consumers’ lives in the present and in the immediate future - leading them to reset purchase decisions on the basis of affordability, time spent at home, rationale and essential basket depending upon the degree of constrained or insulated spending capability.
In a recent survey on mall visit behaviour the top five things consumers said they would do in their mall visit aside from the ambience and refreshing experience post-pandemic would be purchasing groceries (65% of consumers), snacks (64%), over 60% said they will purchase clothes and movies.
It is important that manufacturers understand the pulse of consumer needs, focus on transparency to build trust and think about how to offer immersive experiences for consumers. On the other hand, retailers have the opportunity to promote effective and efficient shopping experiences, push categories which largely fall under tertiary needs besides including health and safety protocols in their processes.
 CCI - Consumer Confidence Index by The Conference Board Global Consumer Confidence Survey conducted in collaboration with Nielsen
 Nielsen Homepanel | Family Spending | Q2 2020 vs Last Year
 Nielsen Report on COVID-19 Impact to Mall Visit Behaviour