Indonesia’s retail landscape accelerates amid digital transformation

Indonesia’s retail sector accelerates as digital innovation, AI, and omnichannel strategies  to redefine growth and enhance customer experience.

The Retail Asia Summit - Indonesia, held on June 25 at Pullman, Thamrin, Jakarta, provided a timely forum to discuss emerging trends in Indonesia’s retail sector. Under the theme "Digital Transformation and Retail Innovation in Indonesia" industry leaders and experts shared insights on navigating the country’s rapidly evolving retail landscape.

Opening the event, Rifan Ardianto, Director of Trade Through Electronic Systems and Trade in Services at the Ministry of Trade, highlighted retail’s pivotal role in supporting Indonesia’s 5.3% economic growth. Retail contributes approximately 13% to the nation’s GDP, fueled by rising household consumption. “E-commerce is expected to reach nearly $90 billion in gross merchandise value this year,” Rifan noted, attributing this surge to widespread smartphone use, a young population, and a consumer shift toward omnichannel shopping.

Rifan also outlined government initiatives aimed at facilitating this growth, including regulatory reforms, investments in digital infrastructure, and programs designed to modernize traditional markets while increasing MSME participation in the digital economy. He stressed that collaboration between the government, private sector, and communities remains essential to building a resilient, inclusive retail ecosystem prepared for future challenges.

A key session, a C-level fireside chat, featured Anthony Cottan, COO of PT Mitra Adiperkasa Tbk. (MAP), one of Indonesia’s largest retail groups managing over 150 brands and 3,700 stores. Anthony emphasized trust as the foundation for strategic partnerships with global brands. MAP has made significant strides in digital retail, with its tech division now rivaling fashion in scale after six years of deliberate investment. “Our omnichannel sales now represent 10% of total revenue,” he shared, highlighting MAP’s efforts to create a seamless online-to-offline customer journey through initiatives like MAP Club. Internally, MAP promotes a people-first culture with a decentralized structure to keep resilience.

The panel discussion, moderated by Juan Pisente Widjaja of Gideon Consulting Group, explored whether retail size still matters. Panelists included Santiwati Basuki, Chief Marketing Officer of PT Lippo Mall Indonesia; Ananditha Mayasari, AVP and Head of Marketing at Kopi Kenangan; Andy Sumual, President Director/CEO of FreshMart; and Mark Go, Chief Strategy Officer of Erajaya Digital and Apple Enterprise and Education Lead.

Panelists agreed that success depends less on physical size and more on how space is utilized to match customer behavior and preferences. For example, “Kopi Kenangan is shifting from small kiosks to larger, Instagram-friendly outlets to appeal to younger consumers who seek social spaces rather than quick stops,” said Ananditha. Erajaya and FreshMart emphasized customizing store layouts to local contexts, with increasing focus on product display and brand storytelling. Lippo Malls plans mall revitalizations and event programming to drive foot traffic. Customer flow, accessibility, and emotional connection now define retail space success far more than square footage, the panel concluded.

Alphonzus Widjaja, Chairman of the Indonesia Shopping Center Association (APPBI), spoke on the challenges facing shopping malls in Indonesia. He argued malls must undergo digital transformation to enhance the offline customer experience that remains their core identity. “Malls that merely serve as retail outlets without providing memorable face-to-face interactions risk becoming obsolete,” he said. He urged malls to integrate digital systems for visitor flow management, personalization, and improved services, tapping into Indonesia’s underdeveloped mall infrastructure and growing middle class.

In a panel focused on local brand success stories, five retail leaders joined moderator Kames Natakusumah, Head of Indonesia and Head of CRB Indonesia at WTW, along with panelists Gregory S. Widjaja, Director of PT Aspirasi Hidup Indonesia Tbk (AZKO); Hendy Setiono, Founder & CEO of Baba Rafi Enterprise; Ben Ripple, Founder & CEO of Big Tree Farms; Ahmad Romero Comacho, CEO of MBloc Space; and Darwin Goh, Co-Founder of K3mart. They discussed blending online and offline strategies with a strong emphasis on customer identity and community engagement. Strategies included rebranding, loyalty programs, partnering with MSMEs, and pivoting retail spaces into experiential hubs. 

The panel underscored that building brand awareness now requires intimate customer knowledge, leveraging AI tools and analytics, and crafting resonant experiences across digital and physical platforms. “To create messages to make business more important is initially our team will do market research before opening new outlets including to collect data about the density in the area, wages and competitor analysis as well,” said Hendy.

Martijn Peeters, Consulting Leader at PwC Indonesia, presented on AI’s transformative role across the retail value chain. He highlighted how generative AI is reshaping customer engagement, supply chains, and personalized marketing, shifting retail from product-push to consumer-centric models. He warned, “Indonesian retailers to adopt AI or risk falling behind global competitors who leverage these technologies to capture market share.”

Joseph V. Buntaran, Executive Director of the Indonesia Retail & Tenant Association (HIPPIND), discussed the complex regulatory environment facing retailers, with over 90 documents needed to open a store. He emphasized the importance of supporting local products and MSMEs to bolster the domestic economy, alongside simplifying licensing processes. “There must be greater recognition of traditional markets and labor-intensive retail’s role in Indonesia’s economy, urging the sector to embrace innovation and digital adoption to survive amid fierce competition and evolving consumer habits,” he said.

Fashion retail’s digital transformation was spotlighted by Anggelia Indah Berliana, Head of E-commerce at PT Kurnia Ciptamoda Gemilang. She showcased the company’s integration of omnichannel systems, automation, data analytics, and technologies like smart fitting rooms and RFID stock management to enhance customer experience and efficiency. “Cybersecurity and talent development as critical enablers for sustainable transformation,” she stressed while advocating for the adoption of emerging technologies such as autonomous robots and smart glasses to elevate Indonesia’s retail competitiveness.

Iwan Margono, EY-Parthenon Indonesia Strategy & Execution Leader, presented on how generative AI is revolutionizing the consumer products and retail industry. He emphasized the shift from ad-hoc AI uses to a strategic, goal-driven approach, highlighting AI’s role in hyper-personalization and autonomous customer engagement. “However, there are also a risks such as bias, transparency issues, copyright, and privacy, stressing the importance of responsible AI adoption,” he said.

Following him, Roy N. Mandey, Chairman of AGRA, discussed retail strategies for resilience, relevance, and revenue amid current global and local challenges. He outlined six key strategies focusing on synergy, collaboration, and operational efficiency in Indonesia’s retail sector. Roy emphasized the impact of climate change, inflation, supply chain disruptions, and changing consumer behavior, urging retailers to prioritize experiences over mere products. He also highlighted integrating offline and online channels and using AI-driven analytics for optimizing tenant mixes and customer engagement. “For those retailers aiming to increase market share and considering mergers, there must be innovation and data-driven management to navigate uncertainties and ensure future growth," he concluded.

The event concluded with a panel on AI-powered tools in e-commerce, moderated by Edo Karensa of YCP and featuring Arshy Adini, Executive Director of the Indonesian E-Commerce Association (idEA), and Amelia Tediarjo, Head of Business Growth and Operations at Lazada Indonesia. 

The discussion emphasized AI’s growing influence in optimizing seller operations, enhancing buyer experiences with personalized recommendations, and securing platforms against fraud. “The biggest challenge in AI adoption for retailers lies in shifting mindsets and mobilizing traditional sellers through socialization and integration of AI, while navigating market uncertainties and a still-developing regulatory landscape,” said Arshy. Both panelists acknowledged challenges around data privacy and regulatory support, stressing the need for collaboration to maintain user trust and build a secure, user-centered e-commerce environment.