Spending on consumer products soars: Survey
JAKARTA (JP): Increased spending on consumer products drove up the domestic retail sales index 8 percent during May and June, a survey by research company ACNielsen Indonesia found.
ACNielsen's managing director Farquhar Stirling said on Tuesday the research showed stronger retail sales of food products than nonfood products during the period.
"The sales volume for packaged food products on the index rose 11 percent in May and June. The index for nonfood products, such as household cleaning and personal care products, was up only 5 percent during same the period," he told The Jakarta Post.
He noted the increasing trend was absent from the consumer durable product market during the two months.
Sales of consumer durable products, such as cars and motorcycles, dropped substantially, he said. Motorcycles sales, for example, plunged 30 percent.
Stirling stressed the increasing trend in retail sales was not necessarily caused by an increase in consumer income.
"Consumer income has not significantly changed compared to the precrisis condition. The thing is that consumers are becoming wiser in spending their income."
He said people were using money they would otherwise spend on vehicles, travel and savings to cover the purchase of daily groceries.
People have started to trim their expenses on tertiary needs and focus more on the basic needs, said the company's retail client service director, Teguh Yunanto.
"People are now back to basics. They only buy things that they need, such as food."
He said the company's research also showed that more consumers used supermarkets for their daily needs, which led to higher sales in the modern markets than in traditional ones.
He said ACNielsen conducted regular research on more than 4,600 shops nationwide, ranging from supermarkets to sidewalk stalls.
"Our retail sales index for supermarkets rose 18 percent in the first half of this year compared to the second half of 1998... Indonesian consumers definitely appreciate the convenience and comfort of supermarket shopping."
The survey found the prices of good went up since the crisis began in the second half of 1997. Compared to the price level at that time, prices of food and nonfood products increased 149 percent in the first half of 1998, doubled to 205 percent in the second half of that year, and stood at about 213 percent in the first half of this year.
However, prices of food and nonfood products in both supermarkets and traditional shops have remained steady in the past two months, Teguh added.
He said prices of food products remained relatively stable despite increased demand, and the price of the nonfood produce declined slightly by 1 percent.
The recent upward trend in food product retail sales have boosted manufacturers' confidence in the sales outlook for the next few months.
ACNielsen's research indicates that a clear sign of recovery in the country's retail market was observed in the first semester this year although it was still 20 percent down from volume in the precrisis period in 1997.
Many companies have started to boost their promotions in line with the signs of recovery, a tendency reflected in the steady increase in the value of advertising spending. The value of advertising spending in the first half of 1999 was 76 percent higher than the amount spent in the second half of 1997.
The second semester of 1998 was the lowest point for the retail market, dropping 78 percent from the level recorded in the second half of 1997.
ACNielsen said the retail market would grow faster if the country could maintain its political stability and traditional trade begin its upturn.
Continued stability of the rupiah to the U.S. dollar would probably ensure only a modest hike in some prices and a possible decline for some factors.
However, the company warned of an impact on stock levels in the run-up to the New Year due to fears over the millennium bug, possibly triggering panic buying. (cst)