But this year, the coronavirus outbreak may impact the hundreds year long tradition. Government issued public health directives such as physical distancing means traditions, along with consumption behavior will inevitably have to adjust to the situation. Businesses will need to rethink their strategies and approach to Ramandan, while adapting to the following impacts to consumer behaviour.
Social gatherings shifting from F&B outlets to homes
During Ramadan, Muslims conduct fasting, a conscious refraining from eating and drinking for a whole day. To end the day of fasting, Muslims break the fast in the evening. In Indonesia, a tradition called Buka Bersama, an activity where friends and family gather in restaurants and cafes to break fast together is one of the most celebrated traditions. However, with large-scale social restrictions in place, it’s likely that large gatherings may not happen during this Ramadan period.
Despite decreasing dining-out, consumers may still order foods and beverages to dine in with nuclear families in the comfort of their homes. On the converse, we expect a surge in grocery spend where consumers will turn to shopping for groceries online or in person as they cook meals for their families. Expect consumers to fill their online carts with fresh foodstuffs such as meat, fruits and vegetables.
Businesses in the groceries sector may face a sudden surge of sales during Ramadan, and now would be an opportune time for businesses to go online to showcase their fresh produce, food and drink products better. With Xendit, you can bring your grocery business online and collect payments easily.
Expect Less Travel and Homecoming
Mudik is an activity where people return to their hometown to celebrate Hari Raya. It is also one of the most celebrated traditions in Indonesia as millions of people mobilized from urban cities to rural parts of the country. Mudik typically has a significant contribution to the Indonesian economy, with billions of rupiah spent on travel tickets and subsequent consumer spend in the various cities outside of Jakarta.
However, the tradition as well as positive economic effects will inevitably be disrupted by the coronavirus outbreak. On April 24, Indonesian government issued a ban on mudik activities, with all air and sea travel restricted, and police officers positioned at checkpoints to prevent land travel. Most Indonesians will be under the large scale social restrictions at least until June. Expect a slow down on the travel and hospitality sector on this year’s Hari Raya.
Online Sales May Increase
Under Indonesian labor laws, employers are obligated to provide Religious Holiday Allowance (Tunjangan Hari Raya) which are given in celebration of each religious holiday, which includes Hari Raya Eidul Fitri, at the end of Ramadan. Generally, consumption will rise as consumers spend their allowance on mudik and gift-giving. As mudik is cancelled this year, consumers may spend their allowance buying gifts for their loved ones.
According to data from iPrice, two most purchased items categories during Ramadan are fashion and consumer electronics. Amidst the Covid-19 situation, consumers may still shop for these two items online. Indonesian muslims have a tradition of shopping for fashion during Ramadan to prepare for Hari Raya festivities. Despite the large-scale social restrictions and Mudik ban, families may still shop for clothes as they may still be taking photos together and sharing Hari Raya greetings to family and friends via WhatsApp and social media. This year, sales from consumer electronics categories are also expected to increase. With large scale social restrictions in effect, most Indonesian will be working and studying from home and are in need of electronics such as web cams, computer accessories and mobile phones to boost productivity.
As most Indonesian are unable to visit malls or physical stores during this time, it is expected that most will shop for the items online. With Covid-19 related restrictions, Indonesia’s eCommerce may continue to thrive. If you own a retail store and would like to leverage on the expected increase from eCommerce, check out our guide to build your own eCommerce store.
Consumers may spend on investment products
It is also possible that most of this year’s allowance ends up in investment products, or insurance. Covid-19 outbreak has boosted insurance buying with The Economic Times reporting that online sales of insurance products increased by up to 30% in March 2020.
With offline sales and agents networks disrupted due to Covid-19 outbreak, insurers may have to sell through online channels. Learn more about how the pandemic has affected premium collections and claims payout, and how Xendit can help businesses in insurtech automate and improve business processes.
Want to learn more about how Xendit can help your business accept digital payments during the pandemic? Check out our Covid-19 resources.
How can we help?
In preparation for the festivity, you may want to arm yourself with how you can provide a pleasant payment experience for your customers. Check out our guide to organize your orders and accept payments during Ramadan season here.
Accepting payment methods preferred by your customers can help to increase conversion and revenue for your business. With Xendit, easily enable payment methods such as e-Wallets, virtual accounts (bank transfers), credit / debit cards, retail outlets and even cardless credit. Get started fast with no set up or monthly fees.