Shopping malls become trendsetters

Shopping malls become trendsetters

Benny Sindhunata, BIRO data center

Shopping malls and plazas in big cities particularly in
Greater Jakarta have played a significant role as trendsetters in
the dynamic development of the country's retail industry.

Their existence has allowed both buyers and sellers to be
engaged in mutually beneficial interaction.

The latest survey of Business Intelligence Report (BIRO) has
found that shopping centers are building an image as a place
where specific products are available.

This trend is one of the conclusions made in BIRO's survey on
the existence, problems and potential of the national retail
business.

The survey, titled: Prospects and Opportunities of the Retail
Business in Indonesia, conducted between Aug. 2001 and Oct. 2001,
evaluates two aspects, namely the retail businesspeople or mall
vendors and shopping mall owners on a national scale, in macro
and micro analyses.

For Greater Jakarta, which includes Bogor, Tangerang and
Bekasi, the analysis has been conducted on the basis of 14 malls
measuring a total of 807,700 square meters with 3,489 tenants.
Some conclusions of the survey are:
1. In terms of the tenants' businesses, fashion stores top the
list of tenants with 770 outlets or 22.1 percent of the total
number of tenants, followed by restaurants (643 outlets or 18.4
percent), electronics stores (395 outlets or 11.3 percent) and
footwear and accessories stores (271 outlets or 7.8 percent).
2. There is a trend in which some malls are oriented toward
specializing in specific products or goods. This will eventually
result in an image of the mall as a shopping center offering
specific products. This trend is evident from the concentration
of tenants in malls and plazas.

Fashion outlets, for example, account for 24.1 percent of the
total tenants in Mal Taman Anggrek, 32.8 percent in Plaza
Senayan, 33.2 percent in Plaza Indonesia and 44.8 percent in
Pasaraya Blok M.

On the other hand, computer and electronics vendors dominate
Roxy Mas, Mal Ambassador and Plaza Gajah Mada. In these shopping
centers, computer and electronics outlets represent 50 percent,
34.3 percent and 39.1 percent of the total number of tenants,
respectively.
3. In terms of number of tenants, Mal Taman Anggrek has the
biggest number, with 490 outlets, followed by Megamal Pluit with
478 outlets, Mal Ciputra, 368, Mal Ambassador, 300 and Plaza
Gajah Mada, 279.

A large number of tenants has a positive impact on the
existence of the mall as it can offer a richer variety of
products to consumers, especially if the mall is dominated by
certain products.
4. Giant retailers play a very strategic role and, as anchor
tenants, have more bargaining power with mall owners. Take for
example, Matahari department store. It occupies 19 percent of the
total shopping space in Mal Ciputra, 17.5 percent in Mal Taman
anggrek and 19 percent in Megamal Pluit.

Likewise, Sogo occupies 36 percent of Plaza Indonesia shopping
space, 35 percent of Plaza Senayan and 33 percent of Mal Kelapa
Gading.

Metro department store takes up 60 percent of the total
shopping space in Mal Pondok Indah and about 20 percent in Plaza
Senayan. Therefore, it stands to reason that developers usually
look for giant retailers as their prospective anchor tenants
before building a shopping center.
5. By the year 2003, it is predicted that Greater Jakarta will
have 19 new shopping centers with an additional shopping area of
852,000 sq m.

Of this space, some 60 percent or 497,000 sq m will be
located in Central Jakarta and will comprise six projects. In
South Jakarta, there will be five projects measuring a total of
128,000 sq m and in Bogor, two projects to occupy 60,000 sq m.

West Jakarta and Bekasi will each have two projects, measuring
53,500 sq m and 49,000 sq m respectively, while North Jakarta and
East Jakarta will each have one project, measuring 55,000 sq m
and 10,000 sq m respectively.
6. The composition of the main shopping center owners is
predicted to change with the entry of Djarum Group, which will
supply 210,000 sq m of new space, or nearly a quarter (24.6
percent) of the total new space available. In the future the "big
three" controlling 60.3 percent of total space will comprise
Djarum (24.6 percent), Sinar Mas (20 percent or 175,000 sq m) and
Agung Sedayu (15.8 percent or 135,000 sq m).
7. In the long run, selling of space/shop units on the basis of a
strata title arrangement should be reason enough for caution for
mall owners, especially if the buyers are investors not
merchants.

If more investors than merchants buy the space, the impression
will be that the malls are empty even though all the space has
been sold. Obviously, investors would not use the space they have
bought as they will wait for an opportune time to resell.

Efforts must be made to ensure that the marketing of
apartments on the basis of the strata title arrangement, as was
done in Jakarta during the property business boom, does not
reoccur.

From the above findings BIRO can draw several conclusions
about the country's retail business;
1. The trend among shopping centers of selling specific products
can have a positive impact, especially if it is supported by
internal management policies to communicate that image to
consumers.

Each shopping center will have a certain dominant product
segmentation without having to reject the presence of other
strategic sectors. Malls have become pioneers in ensuring that
retailers shape the behavior and segmentation of consumers.
2. The plan for retailers' expansion to the regions in the
context of benefiting the wider regional autonomy must be
immediately anticipated jointly by retailers and developers who
own shopping centers as both are strategic partners and work in
synergy with one another.

Every year, the trillions of rupiah that the public spend on
consumer goods flows from Jakarta to the 360 regencies in the
country.
3. Competition in building both new medium-scale shopping centers
and mega projects should be seen more clearly in the light of the
ongoing crisis.

The likelihood of failure and bad debts is still looming
large. In this context, clear strategies and positioning of each
shopping center will be needed.
4. The expansion of foreign retailers, through both branding and
direct investment is a real consequence of the global business
battle. It explains why no special measures, except the
government's policy to impose selective restrictions on a
national scale, have been taken to prevent these foreign
retailers from operating.

However, their expansion into the regions will give rise to
different perceptions and policies among regional
administrations. Each region will vie with the other to lure
investors by offering various facilities and adopt different
regulations.

This, indeed, is one of the important points that must be
taken into account, by both the central government and regional
administrations, if these establishments wish to get rid of the
unfavorable impact brought about by the entry of modern
retailers, national or otherwise.