Marketing Perspective (MALL-- June 14)

Marketing Perspective (MALL-- June 14)

Great sales! Shop until you drop

Arif T. Syam
Contributor/Jakarta

Are you a window shopper or a shopaholic? If you are the
latter, you will be in your element during the Jakarta Great
Sale. During this event, which will be held from mid-June to mid-
July, shopping centers in Jakarta will compete with one another
to slash prices for buyers.

In addition, to draw shoppers, a series of attractive
entertainment programs will be held in shopping centers, ranging
from the presence of celebrities to a variety of contests. In
short, Jakarta will be a haven for shoppers.

Jakarta Great Sale, held in conjunction with Jakarta City's
anniversary, has been designed along with other programs held in
the city's recreational centers and several housing complexes in
the city.

Jakarta has recently witnessed the emergence of many new
shopping centers. Almost every day there are advertisements in
the print media about the opening of these centers or the
commencement of the construction of a new mall.

Sometimes the advertisements give information about certain
programs and special discounts.

A look at the growing number of structures being built will
show that the Jakarta residents in particular and Indonesians in
general, are being increasingly pampered. The greater number of
centers also means keener competition. At the end of the day,
buyers will be able to enjoy the most competitive prices.

The trend in the construction of shopping centers has also
caused some worries among economists because many kiosks and
stalls are unoccupied, closed, or offered for sale or for rent.

This situation gives the impression that investment in the
construction of these buildings has been wasted or there are huge
bad debts involved.

In spite of this, construction never seems to stop. An
illustration of this is the annual report issued by PT Procon
Indah indicates that this year there will be many more shops and
kiosks that remain unoccupied.

As many new buildings housing shopping centers have emerged,
the supply of kiosks that these buildings offer has also risen.

The report says that up to December 2004, Jakarta had a supply
of 1.89 million m2 of buildings for shopping centers. In Depok,
Bogor, Tangerang and Bekasi -- or Debotabek - the supply of
shopping center space has risen to 567,000 m2. In 2005, it is
estimated that the combined supply of space in Jakarta and
Debotabek will almost double to 3.47 million m2.

According to the report, around 427,860 m2 of the entire
shopping center space provided in Jakarta and Debotabek will be
unoccupied.

This means that the occupancy rate has yet to reach 90 percent
of the total supply, or, to be precise, this rate stands at only
82 percent to 83 percent. A greater area is expected to remain
unoccupied as more new malls or shopping centers emerge.

"These shopping centers need some time to reach the optimum
occupancy rate," said Lini Djafar, director of PT Procon Indah.
As a result, the average occupancy rate in these areas will drop.

According to PT Procon Indah, Jakarta will see the emergence
of new shopping centers like Roxy Square, Mangga Dua Square and
Tanah Abang Wholesaler Center. Meanwhile, Debotabek will witness
the opening of Plaza Sinar Merdeka Mas, Mahkota Trade Center and
ITC BSD this year.

PT Procon Indah issued a report in 2003 flashing a red light
at the property industry in the retail sector warning of the
great amount of unoccupied space in shopping centers.

However, as time went on, businesspeople were increasingly
upbeat about Indonesia's economic conditions and there was an
increase in the sales of kiosk space in shopping centers.

The building management of shopping centers realize the need
to organize events to attract the public. They often use one or
two anchor tenants to attract visitors. These anchor tenants will
also attract other vendors to set up business in these centers.

The emergence of combined mall and shop-office blocks like
Megaglodok Kemayoran (MGK) is interesting, observers say. MGK has
been built using a totally different concept from that used in
other shopping centers. Intended to serve as a shopping center
for industrial products and electronic goods, which are usually
found only in Glodok, Kota, the mall should also have competitive
prices because many of the Glodok traders are expanding their
business there.

"We have built a mall with a different concept from other
malls or shopping centers that are springing up fast everywhere,"
said Suhandi, the marketing director of MGK. MGK is also much
cleaner and more modern in appearance than the traditional,
dirty, crowded and run-down Glodok-Kota area. Not surprisingly,
all the spaces in MGK were sold by September last year.

In addition, MGK Mall will also house the Indonesian Marine
Center (IMC), which will be the only one of its kind in
Indonesia. The IMC, a center dedicated to promoting boat-building
fishing and other sea-based activities, will occupy an entire
floor. "Hopefully, the IMC will encourage the revival of the
maritime industry in Indonesia," Suhandi said.

Location is vital to determine whether a shopping center will
attract vendors or visitors. Bekasi Trade Center (BTC), which is
located close to the East Bekasi exit toll gate has no competitor
in the area. The BTC has taken only a short time to attract
visitors although it has no anchor tenant. A similar situation is
found at the Cililitan Wholesale Center (PGC). Around the PGC
you can find only the Ramayana Shopping Center and Kramat Jati
traditional market, both less attractive in appearance.

Another factor that can attract both vendors and visitors to a
shopping center is the promotional programs the building
management organizes. Many shopping centers organize these events
frequently to attract visitors.

Print ads or banners put up on the roadsides are commonly used
to keep the punters rolling in. Generally, these malls organize
entertainment programs or invite celebrities for a meet-the-fans
event.

"Meet-the-fans programs are quite effective in attracting
visitors to a new shopping center," said Sandi Ariandi of Benang
Merah Communications, a marketing-communications company that has
organized similar events in a shopping center in North Jakarta.

Kelapa Gading Mall (MKG) organizes these programs every month.

The Jakarta Great Sale, of course, is a mega-version of this
kind of promotional event. The sale organizers hope to change the
shopping atmosphere the entire city, creating a more colorful and
competitive environment.

The question mall operators must ask themselves is how
prepared are they? Will they make use of this opportunity or will
they simply let it pass without leaving any impression on
prospective visitors or buyers?