Mall Operators Shift Expansion Outside Java Amid Economic Headwinds

Amid global economic and geopolitical turmoil, public visitation levels to shopping centres remain relatively stable. Chairman of the Indonesian Shopping Centre Management Association (APPBI), Alphonzus Widjaja, stated that malls continue to serve as community gathering hubs despite a shift in shopping patterns towards products with lower unit prices. This condition is linked to the weakening purchasing power of the lower-middle class, causing spending on goods to lean towards cheaper items. Furthermore, shopping patterns remain dependent on seasons and situations, even though the sector is currently in a low season following the Ramadan and Lebaran period. On the other hand, the weakening of the Rupiah and global turmoil that has driven up fuel prices have increased logistics costs, causing operational expenses to surge by more than 30%. Currently, the expansion of new shopping centre developments is largely focused outside Java, considering the potential of the lower-middle segment and market which remains quite promising.