ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailMenu BurgerPositive ArrowIcon PrintIcon SearchSite TitleTitle ChevronIcon Twitter

Aeon to open entertainment mall in Indonesia as retail suffers

Shopping centers overhaul their strategies as online shopping grows

One of Indonesia's largest Ferris wheels is perched atop Aeon's newest mall outside Jakarta.

JAKARTA/TOKYO -- Japanese retailer Aeon is leaving the traditional shopping model behind with its new mall in Indonesia, betting that consumers will still venture outside for entertainment even if they purchase more goods online.

Not your regular mall

Aeon Mall in Jarkata Garden City will open this Saturday, about an hour east from the city center by car. It will be Aeon's second location in Indonesia after its first opened outside Jakarta in 2015.

What makes Jakarta Garden City different from the more than 100 other malls, including Aeon's first location, in the metropolitan area is that relatively little space is devoted to traditional retail like clothing. Mainstays like Uniqlo and H&M won't be found there.

Rather, the mall is focusing on interactive facilities, and over half of its 165,000 sq. meters of space is devoted to food and drink. Out of 227 tenants, 52% are food-court stalls or restaurants, a 10 percentage point difference from Aeon's first mall.

The mall will also house Indonesia's first skate rink to meet international standards, a large movie complex and Fanpekka, a Scandinavian-style educational center for kids. The roof will be equipped with one of the country's largest Ferris wheels. The project is second to none, holding its own with new Japanese malls that also emphasize interactive experiences.

Aeon is marketing the facility as Indonesia's largest entertainment mall where family and friends can enjoy a day out. The company hopes to unearth demand from middle- and upper-class urban residents looking for recreation. 

Activities over things

Other Indonesian companies have also noticed the shift in consumption from goods to experiences. 

Local conglomerate CT Corp. purchased French multinational Carrefour's Indonesian operations. CT relaunched Carrefour's Transmart franchise after renovating the locations with movie theaters and indoor amusement parks, moving the brand away from groceries. The company plans on spending $3 billion to open as many as 100 stores.

Lippo Group, another local conglomerate, created an experimental mall centered around restaurants and a movie theater in the suburbs of Jakarta called Maxx Box Lippo Village. 

The proliferation of these facilities owes to changes in consumption patterns occurring in Indonesia and other emerging nations. Spending at malls and brick-and-mortar stores, which grew rapidly as incomes rose, is beginning to diminish due to the spread of online shopping. 

The lack of consumer interest in department stores and traditional retail is continuing. Sales at brick-and-mortar retailers in August rose 5.3% on the year, according to preliminary figures from Indonesia's central bank. Sales climbed by double digits nearly every month until last year, but have fallen into the single digits since the start of this year. Grocers were the only retailers to avoid negative growth.

Indonesian retailer Mitra Adiperkasa is considering shrinking its department store division. Stores, especially those selling clothing, continue to close, and empty spaces in malls have become noticeable. The era of attracting customers to malls by simply assembling popular brands that can be found elsewhere has passed.

On the other hand, online shopping from Jarkata-based Tokopedia, Alibaba-affiliated Lazada and others has flourished in Indonesia as local smartphone ownership surpasses 50%. 

"Fewer people are buying things that weren't necessities like they did before," said Toyofumi Kashi, president of Aeon Indonesia, since modern clothing and electronics are fairly prevalent throughout most cities. 

Fresh ideas

The shift in spending away from goods is occurring in other Southeast Asian nations as well, prompting local retailers to switch up their strategies, and Japanese companies are scouting the trends. 

In Bangkok's Central Embassy mall, opened in March, a mixed-use space comprising a book store and dining area has gained popularity. An Italian and a vegetarian restaurant are situated just by rows of bookshelves. 

Japanese companies are trying to incorporate Southeast Asian food culture into their locations back home. "There is a lot to learn from other Asian countries that still have street stands," said Akio Yoshida, president and CEO of Aeon Mall. 

Aeon set up a special division in 2016 to uncover foreign companies with strong potential that have yet to come to Japan. The company has invited a list of well-known restaurants from tourist regions to Japan and is even considering recreating an Asian-style food quarter. 

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Get Unlimited access

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media