Consumer characteristics in Indonesia
Indonesia's population structure also indicates strong potential for domestic consumption, as the age group with the largest and most stable consumer demand, those aged 15-64, accounts for as much as 68% of the population. In addition, the urbanization rate has continued to rise, with nearly 165 million people, or 58.6% of the total population, living in urban areas (World Bank data, 2023). The capital city of Jakarta and major cities such as Surabaya, Bandung, and Medan are Indonesia's administrative and industrial centers with vibrant consumer markets, creating many opportunities for distribution, retail, and merchandise trade.
The living standards of Indonesian people have improved considerably over the past decade, with GDP per capita increasing from USD 3,441.1 per person per year in 2014 to USD 4,876.3 in 2023. The benefits of growth have been distributed unevenly across social groups and regions, leaving a wide rich-poor gap in Indonesia. Income disparities result in differences in spending capacity by individual and by region. Nevertheless, strong urbanization and the expansion of the middle class have generally increased domestic consumption demand, thereby creating favorable conditions for trade activities in Indonesia.
Consumer trends in Indonesia
Price is a key determinant of Indonesian consumers' purchasing decisions. They tend to compare prices online before making purchasing decisions and to look for discounts, promotions, and incentives in order to buy at better prices. Indonesian consumers' price sensitivity also partly weakens brand loyalty, as they are willing to switch to another retailer if alternative options offer greater benefits. Therefore, businesses introducing new products to the market can take advantage of this through effective pricing strategies and promotional campaigns.
Indonesians often make similar purchasing choices based on recommendations from friends, family members, or other influential persons. Because of their collective mindset, they often prioritize the shared needs and preferences of the family or peer group over individual desires.
Indonesia has the largest Muslim population in the world, accounting for nearly 88% of its population. Therefore, compliance with Islamic principles has become a decisive factor in consumers' purchasing choices. Halal certification - certification confirming that a product complies with Islamic requirements - has even become an almost indispensable requirement for imported goods entering this market.
With the middle class expanding rapidly as a result of economic growth and urbanization, Indonesian consumers' demand for higher-value products such as cars, jewelry, and technology products has also been rising as a way to enjoy a better quality of life and to affirm their status and financial achievements.
Online shopping and the influence of social media have also been increasing in Indonesia. Indonesians are active users of social platforms and often rely on recommendations and reviews from influencers when making purchasing decisions.
A distinctive feature compared with many other countries is that Indonesian consumers show a strong preference for domestic products. According to Ipsos' Global Trends Survey 2021, 87% of Indonesian consumers are more likely to choose domestic products over imported ones. However, Indonesian consumers are also gradually opening up to international brands, especially urban youth, provided that such brands offer good quality, reasonable prices, and compatibility with local culture.
A segment of Indonesian consumers has begun to prioritize sustainability in their purchasing decisions. Many are willing to pay more for sustainable products, for example food products with biodegradable packaging. As awareness of sustainability continues to rise, the choices of this group of consumers are helping reshape the market and encouraging brands to adopt greener and more ethical practices.
Source: Center for WTO and International Trade - VCCI
