Rarely before have consumers been spoiled like today. We have Lebaran sales that extend to Christmas, and extend again to New Year, and further to Chinese New Year.and still extend indefinitely. Look around you, everything is on sale. Walk around in shopping centers and look at all the sale signs.
Further sales reductions, up to 70 percent off, or worst still - closing down sales! Which makes one wonder, has the retail industry really got that bad?
Or all of these are simply psychological effects from the stock market crash? If so, how come the foot traffic to the food and entertainment sections of shopping centers has increased in the past months?
I wish I had two things, a crystal ball to predict the future, and a magic wand for a speedy economic recovery.
Unfortunately, both are not acquirable, at least not by me, hence I am left with analysis, experience, logic, and common sense.
As a retail consultant, I have been asked numerous times for the magic formula to exit the current downturn in retail. Let's remember the 1998 crisis, the sudden high unemployment and retail market shifts to new trends like factory outlets and warung tenda (hawker centers).
Did we like shopping in factory outlets and eating in those warung tenda? Given the choice, we would say no, however we were driven to them out of sympathy. Psychologically we felt the urge to be responsible, show support and be seen in those places.
The trend faded away after a while with the economic upsurge, yet the viciousness of the experience is still resonant.
Jakarta, as the capital of shopping in Indonesia, has provided 1,8 million square meters in shopping space, a low total compared to neighboring Singapore with it's 2.8 million square meters but with a population only reaching a quarter of Jakarta's day time population.
Buying power? The number of top to middle tier income Jakartans is not so far away in size from the total population of Singapore.
So why do we indulge ourselves in shopping trips to Singapore?
The weather is as warm, the products and brand ranges are equally as good (if not worse), and the malls are definitely no better than we have here.
Plus, we have the critical mass, and the knowledge that many of us are increasingly becoming mall rats. We flock to malls for all sorts of reasons, whether it is for meetings, eating out, entertaining and killing time, as well as shopping.
This is still the number one activity chosen by many parents and children for weekend activities.
Then why does it seem that both developers and retailers remain static and anomalous? Whilst it is prudent and sound to be cautious and conservative, on the contrary isn't it encouraging acquiring the opportunity to increase market share, to be the survivor of the fittest, and become the man among the boys?
If the sales are decreasing, and the customers are reducing their frequency to shop, both mall owners and retailers need to start exploring the common denominators. The formulation of the questions will help determine the outcomes, without having to take a leap of faith.
The desire to coexist should be the key driver, this is imperative to any proposition in the current sensitive market.
Customers are no longer attracted to sales; they are attracted to product concepts, mall concepts, marketing concepts, event concepts, and an overall integrated concept to encourage their mall visit frequency and spending patterns.
Competition between malls and retailers are a healthy boost to create better proposals, yet since the common denominator is simply sales figures and the traffic count, then cultivation of opportunities and capitalization of the process through partnerships and collaboration becomes important.
Individual interests become a secondary priority, it is the time to combine strengths, resources, and skills prior to establishing a nicely wrapped proposition and deliver accurate subtle communications to the customers.
Sink or swim. Before you swim, you need to be able to tread water to stay afloat, and to do that you have to jump in and get into action sooner rather than later.
The writer is the director and head of retail department at Jones Lang LaSalle Indonesia
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