Retail closures across Indonesia continue to accelerate, raising concerns among government officials and prompting swift action. The Ministry of Trade is actively evaluating conventional and digital trade regulations in response to the growing number of shuttered retail stores. Officials attribute the closures not to weak purchasing power but to shifting consumer behavior, especially the rise of online shopping.
Surge in Indonesia Retail Closures
Retail closures in Indonesia have affected numerous large-scale modern retailers, particularly hypermarkets and department stores. These businesses have struggled to adapt to evolving consumer preferences and the increasing cost of operations. Shoppers today no longer make large monthly purchases, which were once typical at major retail chains. Instead, they now prefer daily or weekly visits to nearby minimarkets or traditional stores.
Trade Minister Budi Santoso emphasized, as cited by Antaranews, “This situation has caused large-format supermarkets, such as hypermarkets, to struggle to compete as their turnover declines, ultimately making it impossible to cover operational costs.”
He added that the decline of brick-and-mortar stores stems from their failure to align with modern shopping patterns. Although he did not disclose specific closure figures, he confirmed that the Ministry is taking steps to address the issue.
Government’s Strategic Response
To mitigate the impact of Indonesia’s retail closures, the Ministry of Trade is reviewing and harmonizing regulations governing both traditional and online distribution systems. This initiative is part of a broader effort to modernize the retail sector and ensure its resilience in the digital age.
“In the near future, we are working on several strategic steps, namely evaluating and harmonizing regulations concerning the conventional distribution of goods and electronic commerce,” said Septo Soepriyatno, Director of Trade Business Development. The government also continues to hold discussions with retail associations, such as the Indonesian Shopping Center Management Association, to understand emerging challenges and find adaptive solutions.
Rise of Digital Shopping Behavior
Digital shopping trends are transforming the retail landscape. Younger consumers, particularly millennials and Gen Z, now favor online platforms for household purchases. They prioritize convenience, affordability, and speed—factors that traditional retailers often struggle to deliver.
In addition, today’s consumers are more selective with their spending, focusing on necessity rather than impulse buying. This shift has made it difficult for large retail formats to maintain profit margins, leading to store closures and business downsizing.
Support for Retailers to Go Digital
Recognizing the urgency, the Ministry of Trade plans to support retailers with data-driven assistance and digital adaptation programs. Authorities are encouraging businesses to integrate into Indonesia’s fast-growing digital ecosystem.
Retailers are also advised to evolve beyond their core function as shopping destinations. Budi Santoso explained, “Malls, department stores, or modern shopping centers that survive are those that offer experience and journey. People want to shop while walking around, eating, or hanging out with family and friends.”
The Ministry is simultaneously promoting initiatives such as the “Thursday Wear Local” movement to encourage domestic consumption. Campaigns like these aim to strengthen local demand while helping businesses transition toward hybrid retail models.
Embracing Change in Indonesia’s Retail Industry
The wave of Indonesia retail closures reflects a broader transformation in consumer expectations and retail operations. According to industry leaders, the closures do not signal a decline in purchasing power but highlight the need for businesses to keep up with modern lifestyles.
With proactive government support, regulatory reform, and a shift toward digital engagement, Indonesia’s retail sector holds potential for revival. As Budihardjo Iduansjah of the Indonesian Retail and Shopping Center Tenant Association noted, easing licensing processes and offering tax incentives could also help retailers expand and compete effectively in today’s evolving market.
Source: antaranews.com, ekonomi.bisnis.com
Image: Shutterstock
