A case in point is the recent survey of over 2,500 respondents in Indonesia by Home Credit to gain an understanding of the products Indonesians buy at different shopping outlets, how often they make purchases and what forms of payment they use. The Customer Shopping Behaviour study shows that rather than switching outright from physical to online, shoppers have moved firmly between the two in order to receive the best that both retail worlds have to offer.

“The study doesn’t just tell us about the volume of transactions made in physical stores and those that have moved online.  Even more importantly, the study tells us why consumers have made these choices, and how diverse these decisions are between retail channels,” says Animesh Narang, President Director of Home Credit Indonesia.

Marketers today are facing new demands as they tackle target customer segmentation. They have to consider the differences between online and traditional shopping but also hybrid variations. To do that efficiently, it is crucial to know the shopping habits of your customers well. “Knowing the reason where people shop, the types of items they buy, how often they do so, we can better target or segment our financing products to fit our customer’s needs,” says Animesh.

Customer segmentation according to key demographic and lifestyle attributes such as age, gender, location and interests are not new concepts to marketers. Online shopping can give them more data with frequent updates. However, modern digital payment methods can do the same for traditional shopping venues. Home Credit’s study provides data and insight across all sections – different types of physical retail outlets, including traditional street markets, and various online stores. The survey shows that the most used payment methods in online stores are cash-on-delivery (COD) and debit card or direct bank transfers. This contrasts with financial services such as bill or installment payments available at modern minimarkets that more than a third of the surveyed customers use on regular basis.

For example, traditional Indonesian stores that are comprised mostly of family-owned and small shopfronts dominate the sales of fresh produce and food staples. The study shows that 88% of Indonesians shop for their daily food products in these traditional stores. On the other hand, nearly all Indonesian shoppers (93%) opt for modern retail formats, including minimarket and superstore chains, for personal hygienic items, clothing, home cleaning or electronic products. It shows how savvy traditional market stall operators have become with digital payments, but also how important omnichannel strategies are for traditional retailers in general.

This could be an indication that operators of modern shopping outlets such as hypermarkets may not need to focus on offering food products to entice new and repeat customers. Instead they have to focus staving off online competition. The Home Credit study shows that 79% of Indonesians purchased online in the three months prior to taking part in the survey, reflecting the heightened importance of e-commerce due to lockdown restriction from COVID. They mostly shopped online for fashion, jewelry, furniture and electronic gadgets. The breakdown of purchases of the personal electronics such as mobile phones are split roughly evenly between physical and online stores. This gives an advantage to Home Credit’s offering as it can help consumers make purchases quickly and conveniently through multiple channels.

“The process of digitalization has shifted consumer behavior into a mixture of options, generating choice, putting pressure on prices, and driving competition with traditional markets,” says Animesh. “The implication for business is to diversify their payment and financing options, including those viable both in online and offline shopping platforms.”

Indonesia is not immune to the digital transformation affecting the daily lives of most people around the world. Nevertheless, the country may stand out as an example of how digital payments can thrive along with cash at traditional stores. The Home Credit survey shows that convenient digital services follow in step with demand, bringing cashless payments to the masses. “Our study shows that almost 90% of Indonesians shop at traditional stores, including market stall vendors. With such a high foot traffic it’s no surprise that the traditional retail outlets have added digital payments offerings, including smart ATMs, to entice their repeat customer even more closely,” says Animesh.

Bank Indonesia has pioneered the standardization of a QR-based system handled by smartphones. In October, the digital payment tool known as Quick Response Indonesia Standard was used by nearly 4 million small outlets in the traditional market segment.