Shopping centers, malls enjoying upsurge in spending

Shopping centers, malls enjoying upsurge in spending

By I. Christianto

JAKARTA (JP): Some shopping centers and malls in the capital
are seeing the old habit of local shoppers return: spending their
money on everything offered therein.

Although there is no data on the spending habits of shoppers
in Indonesia, particularly in Jakarta, several leading shopping
centers in the capital have seen impressive changes in spending.

Natalia A. Hatmarini, advertising and promotion manager of PT
Senayan Trikarya Sempana, the owner and operator of the prominent
Plaza Senayan, maintains that public purchasing power has
returned to "normal" after the prolonged economic turmoil.

Another indication is that many outlets are opening more
branches while international brands are facing fiercer rivalry in
the local market.

"Our own experience tells us that the waiting list never
ends," she said.

M. Syohirin, a director of PT Plaza Indonesia Realty, also
said that Plaza Indonesia always saw an occupancy rate of over 90
percent.

"We never reach 100 percent as we are continuously
refurbishing one part or another," he said.

Plaza Indonesia and Plaza Senayan are the most prestigious
shopping malls in Jakarta. Though two malls are never directly
involved in sharp competition as each has its own segment.

"Perhaps our tenants are the same, but real competition never
exists," said Natalia.

She said this could be due to a small number of players in
this field.

Property consultant Procon Indah/Jones Lang LaSalle (JLL) says
the ailing property sector in the capital is gradually
recovering, with the retail market leading the rebound.

The demand in the retail sector was exceptionally strong in
the second quarter of this year, JLL said. The strong demand in
the retail sector was attributable to increased consumer
spending, low interest rates and bank liquidity.

JLL predicts that given a strong demand and an increase in
rentals in the retail sector, several postponed construction
projects would likely resume in the short term.

In the meantime, Ratu Plaza shopping center, a popular mall in
the 1980s, is scheduled to reopen later this month, after being
closed since 1995. One of the victims of the riots in May 1998,
Plaza Slipi Jaya in West Jakarta has also recently reopened.

According to JLL, retail space in Jakarta increased to 1.15
million square meters, while in the Bogor-Tangerang-Bekasi
(Botabek) area, the total modern retail area as of June 2000
stood at 264,000 square meters.

Net take up of Jakarta retail space during the second quarter
of 2000 was recorded at 9,100 square meters, compared to 34,150
square meters in the previous quarter, and in the Botabek area,
net take up was 4,400 square meters. JLL says that the lower net
absorption does not represent weaker real demand.

No competition

Nonetheless, Syohirin and Natalia say their malls are not
competing against each other.

"Customers have their own selection and preference. So, even
if the market is the same, every mall has its own customers,"
said Natalia."

She said that although customers might probably have
questionable loyalty, some people did seek various concepts in
visiting malls.

Syohirin said, "The only challenge in running shopping malls
is how to maintain safety and security, especially during this
kind of political climate."

Syohirin, who is also the chairman of the Association of
Indonesian Shopping Centers, said there was also no competition
in rental rates.

He said that as the rate was set in U.S. dollars, the
association had pegged the dollar to between Rp 3,250 and Rp
4,500 per dollar, to alter the amount in rupiah. The rate is
evaluated every 6 months.

"Every shopping centers can fix their own rates, depending on
their market segment," he said.

JLL reported the average gross rental ground floor premium in
Jakarta at Rp 214,600 per square meter a month, reflecting an
increase of 8.2 percent over the second quarter of this year.

However, the malls must still maintain their appearance to get
even more visitors.

Plaza Senayan, for instance, always tries to have different
decorations.

"We know that our segment is young professionals seeking
ambience. So we want to show something different every month and
when there's a special event. We also have to be careful in
mixing our tenants and merchandisers," Natalia said.

Plaza Indonesia also tries measures to attract visitors.

"We regularly hold live music shows. We select popular singers
but also try not to attract too many people because this is a
mall," Syohirin said.

Other shopping malls also try to attract visitors.

Adrianto Budiarsa, marketing manager of PT Perwita Margasakti,
which runs the Ambassador Mall, said it was important in order to
target specific segments.

"The Ambassador Mall aims to be a mall for IT. We're looking
now for tenants specializing in computers, electronics, the
Internet, communications and telecommunications," he said.

By doing so, the Ambassador is promoting itself as the first
mall in the city offering IT products and services.