Indonesia’s groceries market is plentiful but fragmented. While traditional supermarkets still reign, wet markets and independent grocery stores are gradually being replaced by modern retail chains and hypermarkets, a superstore that combines a supermarket with a department store or moving to ecommerce.
With a population of more than 258 million and an emerging middle class with surging purchasing power, hypermarkets, supermarkets and online players are working hard to capture the Indonesian potential.
How will they compete for the attention of shoppers? Data. Consumer insights are valuable to retailers and marketers because it provides them a peek into the population’s purchase patterns and product preferences, which allows implementation of successful marketing strategies.
Startup from Indonesia Snapcart aims to do exactly this for their clients. The app offers shoppers cashback and rewards in return for photos of their offline shopping receipts. Data from the receipt is then collected by Snapcart, providing a window into the shopping behavior of Indonesians, Southeast Asia’s largest market.
Snapcart has shared exclusive data with ecommerceIQ to reveal what consumers are buying on a monthly basis at the country’s top five offline grocery stores: Alfamart, Carrefour, Hypermart, Indomaret and Super Indo.
By understanding offline retail trends, retailers can adjust sales campaigns or push out creative marketing strategies to make ecommerce more attractive to shoppers. What do we mean? Here’s how marketers can improve their online marketing tactics through Snapcart offline data:
Bundling refers to the grouping of products to maximize sales and often an effective strategy used by marketers. By selling complementary products together, it incentivizes shoppers to make a larger purchase at one time to save money and time.
Fast food companies such as McDonald’s and Burger King have seen a significant rise in sales due to the introduction of combo deals. Approximately 35% of customer visits to these chains have been to purchase a ‘meal’. Starbucks also cashes in on the bundle deal, offering a customizable $8 ‘power lunch’ that combines a sandwich, popcorn, fruit bar and a bottle of water.
However, there’s a catch. If a retailer is looking to purely sell through bundling strategy, it may backfire. Researchers from Carnegie Mellon University found that:
Companies profited best when the bundle strategy was coupled with an option to buy each piece individually.
Looking at customer data from Alfamart, baby diapers, cookies, fresh milk and cooking oil rank in the top 10 categories consistently every month. It would be simple for the retailer to bundle fresh milk and cookies together or formula milk and diapers together to boost the sale of both category items. (see fig.1)
Bundling is also used to sell less popular products. For example, cooking oil was a best seller every month at Super Indo and could be paired with an underperforming frozen package food at a promotion, to nudge shoppers with their grocery choices.
Other data also shows that Indonesians love to snack. Online retailers could offer shoppers the option to customize a snack basket online and increase basket size.
At Carrefour, instant noodles outperform every other product category each month (see chart). If consumers are purchasing large amounts of instant noodles regularly, Carrefour could introduce a subscription model.
For example, online shoppers would be able to order a customized instant noodle box, with variations in both brands and flavors, to be delivered to their homes once a month. Global brands in Southeast Asia such as NESCAFE are already adopting a subscription model strategy for everyday necessities people buy regularly such as coffee.
Another startup from the US called Love with Food is expanding globally with a subscription-based service that sends consumers a box of all-natural, organic, and gluten-free snacks. Everything in the box comes from smaller food brands that want to get their product in front of customers.
Supermarkets lacking an online presence can create a simple popshop that will allow shoppers to sign up to have instant noodles or diapers in bulk delivered monthly to their homes.
Both the supermarket and distributor have the ability to push out a sale. But a sales strategy isn’t only about lowering the price of a product, it should effectively increase sales.
A discount strategy should be used sparingly, and is effective only when a retailer awards loyal customers or happens occasionally.
Adjust pricing to increase short term sales or to boost impending dead stock to increase inventory turnover. This also means that as a retailer, you have a chance at negotiating a good deal with your product supplier as you will have increase in stock order.
For some grocery stores, they tend to offer discounts just before closing time, so discounts usually begin around 7pm-8pm.
The ‘buy one get one free’ strategy is arguably one of the most effective psychological pricing strategies that is used with shoppers. Consumers are typically drawn to the word ‘free’, which makes them buy more than they initially wanted but a lot of doubt surrounds this model.
British supermarkets such as Sainsbury’s and Tesco have started to phase out BOGOF deals, following the release of a report highlighting how it misleads shoppers.
Retailers actually increase the price of the product customers think they’re getting a deal on. Instead of BOGOF, a ‘buy 5 get 2 free’ strategy seems to be more effective because the price isn’t deliberately pushed up as high for the sake of luring customers. For retailers that want to adopt this strategy, choose to promote everyday items such as shampoo or cleaning detergent.
The future of groceries
The data collected from Indonesian shoppers can enhance marketing campaigns both online and offline for retailers. As grocery retailing in Southeast Asia begins to move online, chains without a digital strategy such as Carrefour and Super Indo should consider transitioning to ecommerce.
There is still potential in the country for disruption as 69% of surveyed online shoppers are millennials, which means an upcoming generation of shoppers will be accustomed to using various online channels. Retailers should be ready to capture this audience by using offline customer behavior data they already possess to align their digital strategies and effectively enhance sales across channels.