Grant Thornton Indonesia's Update

2018, A Year of Hope for Retail Industry is Coming

Till the end of 2017, buying weakening became the point of attention as many renowned retail stores cut down its stores number or even given up. Named it 7-Eleven, Debenhams, Ramayana, Lotus, Golden Truly and Matahari.

The rise of e-commerce accused as the cause of the collapse. However, many parties didn’t agree with the hypothesis. “I agreed, online expenditure is rapidly growing, but it’s not them who caused the retail decreasing this year,” said economist Dradjad Wibowo.

According to Wibowo, the accusation didn’t work in the United States which become the center of online expenditure of the world. Retail sales remain good. For example, in 2016, e-commerce expenditure grew about 15,6%, lower than a year before that was only 14,6%. It turned out that the rapid online expenditure totally does not break of retail sales.

In 2017, retail sales kept growing to range from 3,5-4,0%. Considering about 2/3 of the U.S. economy depends on household consumption expenditures, retail sales still the key to it.

In England, the similar circumstances happened. Although Brexit referendum was very happening in 2016, retail sales of Britain remained growing high. It was 2%, equal to 2015. In 2017, Brexit uncertainty negotiations made the growth descend to about 1.6 %. And, how online sales growth online in England 2016? Almost 16%!

The facts proved that the rapid development of online expenditure does not automatically destroy retail sales. The growth of retail sales in US and Britain are still equivalent to the rate of economic growth. Wibowo assumed that middle-up classes of consumers detained the budget. They are waiting on how government will finally realize a scary threat such as tax amnesty.

Political Year

New year of 2018 becomes the key period because there will be 171 elections all of Indonesia. Many people are in doubt that retail industry will be getting better. So much uncertainty in politic is predicted will make a lot of people retain their consumption in order to maintain the worst condition due to the election effects. Really?

The fear actually in contrast to the data. According to one of Director from Statistic Indonesia (BPS) Puji Agus Kurniawan, the political event will make the economy better.

“There will be a lot of money in the market. The channels are culinary, and party attributes order,” Puji said.

The similar thought came from Indonesia Finance Minister, Sri Mulyani. The former Managing Director of World Bank mentioned more international events will support the economic sector.

“Idul Fitri goes forward in June, and other international events, hopefully can be the driver of the consumption. Investment will increase as well,” Sri Mulyani explained. A fresh air for retail industry, right?