February 2010
Economic Insight
Jakarta
The Changing Retail Landscape in Jakarta
2 On Point • The Changing Retail Landscape in Jakarta • February 2010
The Changing Retail Landscape in Jakarta
As a developing country, Indonesia continues to progress and
endure modernisation in many aspects of its economy. The retail
sector is amongst the fastest-growing industries, supported by
strong consumption, rapid urbanisation and rising middle class.
Meanwhile, the pace of globalisation and media expansion has
exposed Indonesians more to international brands and products,
thus creating new awareness and changing consumer lifestyle.
From Shopping Centres to Lifestyle Centres
Key Points
• Retail centres in Jakarta have evolved from ‘the place to shop’ to
‘the place to go’. Triggered by the demand for leisure and
entertainment and boosted by the spreading ‘cafe culture’, retail
centres emerged as the main option for individual or groups
looking for recreational destination, thus making them the centre
of modern urban lifestyle.
• Following the success of Citos, many new developments adopted
the lifestyle concept, which relied heavily on F&B retailers and
Some 30 years ago, Jakarta was introduced to modern shopping
entertainment operators. These types of tenants have proven to
centres. Initially, they were built to cater for the need of Jakarta’s
be effective in luring visitors to malls, even during the hard market
affluent population to shop for branded goods, like fashion apparels
period. Due to their strong and attractive F&B and leisure
and accessories. All shopping centres in that period were dominated
components, occupancy rate in popular malls remained high.
by fashion apparel and accessories stores—and the department
store is the most common anchor at that time.
• The retail outlook and the expansion of lifestyle centres in Jakarta
are expected to continue growing along with the country’s
economic recovery. However, referring to the prediction that the
With the onset of the Asian financial crisis, followed by the national
anticipated economic growth in 2010 is seen to be accompanied
crisis in 1998, the economic fundamentals as well as socio-political
by mounting inflationary pressure, it is expected that the recovery
settings were deeply shattered. People cut their spending as they
in consumer spending and the expansion of lifestyle centres may
struggled to recover from the crisis. However, the condition paved
be deferred for a while.
the way to a new trend. Triggered by the need for leisure and
entertainment at affordable prices, a new format of cafés and
Since then, the F&B sector is regarded not only as a supporting
restaurants began to mushroom in the city. Locally known as ‘kafe
component in a shopping centre, but is now considered as an
tenda’ or tented cafeteria, these establishments quickly gained
effective crowd puller. In order to maintain good market share, some
popularity during the 1998 and 2001 period. The concept, which
prominent malls like Plaza Senayan, Mal Pondok Indah, Mal Taman
combined dining with entertainment (e.g. music or live band) at a
Anggrek and Mal Kelapa Gading built an extension to their mall
much lower price than regular cafés or restaurants, proved to be
dedicated specifically to house F&B and lifestyle-related tenants.
highly successful. As it continued to spread over the following years,
While many fashion and department stores have suffered minimum
the ‘café culture’ gained a strong foothold in Jakarta and it
sales over the past five years, a lot of F&B tenants enjoyed relatively
increasingly became a lifestyle across diverse segments of the
high growth rate and steady expansion.
population. It also marked a new era of F&B domination in the retail
market in Jakarta.
Table 1. Retail Centres That Allocate Over 50% of Their Space
For F&B, Leisure and Entertainment-Related Sector
In 2002, a new concept in retail development was introduced in
Year
Project Name
Location
Jakarta with the opening of Cilandak Town Square (Citos). Instead
2002
2004
2004
2005
2005
2007
2007
2007
2008
2009
2010
Citos
Entertainment X’enter
Setiabudi One
La Piazza
Plaza Senayan Arcadia
City Walk Sudirman
Pluit Junction
Oakwood Shopping Arcade
F/X
Teraskota
Epicentrum Walk (Proposed)
Cilandak
Thamrin
Kuningan
Kelapa Gading
Senayan
Sudirman
Pluit
Mega Kuningan
Sudirman
BSD
Kuningan
of having lanes of stores selling fashion and the likes, the project
focused on cafés and restaurants. Surprisingly, the concept gained
huge success and became popular amongst Jakarta’s hip
communities as well as retailers. Since then, the success of Citos
prompted other developers to build retail centres based on a similar
concept – some even used the same ‘town square’ label in hopes
that the public would associate their projects to Citos.
Source: Jones Lang LaSalle Research
On Point • The Changing Retail Landscape in Jakarta • February 2010 3
Furthermore, as the impact of the recent global financial crisis hit
Those who customarily ‘eat out’ opted for less expensive
domestic consumption, the F&B sector – once again, came up as a
restaurants, instead of stopping their dining out habits. So it is not
saviour for landlords in generating visitors to malls.
surprising while fashion retailers suffer falling sales, F&B and other
lifestyle tenants continue to pin new outlets in almost every new
Current Performance of Lifestyle Centres
mall. These tenants have benefited the landlords as well as they not
only help in generating high visitor flow during tough times, but they
Time goes by and shopping centres today are seen as more than a
also provide steady income to the landlords. With the current trend,
place to shop and buy things. Instead, they have become a lifestyle
the multi-function of a mall makes F&B retailers and the likes, the
destination, a crucial part of urban living and the centre of various
‘must have’ tenants in every new shopping centre.
social activities. We can practically find anything we want in the
mall, from groceries shops, fashion stores, restaurants, cinemas,
Key Growth Factors
video arcades, lounges, health clinics to piano lessons and even
church services. During working hours, business meetings and
The blooming lifestyle concept in Jakarta can not be separated from
luncheons are held in restaurants and cafes instead of offices or
the growth of middle class and the shift in urban lifestyle. These two
hotels. After office hours, malls are packed with people who visit
factors are the main drivers generating market demand as
gyms and cafés to socialise. On weekends, lifestyle elements are
consumerism and shopping habit change over time.
even more emphasised as mallers maximise their leisure activities
by enjoying various types of entertainment such as family karaoke,
Other factors supporting the growth of lifestyle centres are
cinema and clubbing spots.
urbanisation and globalisation. The exposure to the other parts of
the world has raised foreign brand awareness thus changing
Not even the global financial crisis can stop Jakartans from flocking
consumer behaviour and preferences. The spirit of consumerism
to the mall. Visitor traffic in popular shopping centres across Jakarta
which is more evident amongst young people today is also used to
remained high during economic hardship. A survey conducted by
promote lifestyle trends in the city.
MARS Research in 2009 reported that over 80% of visitors go to the
mall just for window shopping or dining purposes. During the crisis,
Lastly, the scarcity of outdoor recreational facilities (i.e. public parks
consumers may be able to cut spending on fashion, accessories,
and open space) and high pollution levels in Jakarta streets has
electronics and other tertiary goods, but it is difficult to change the
made local residents choose air-conditioned malls for individual,
social habit and the need for leisure. Another survey by MasterCard
group or family hang-out and recreation. This had led the way to the
also revealed that between the 2H08 and 1H09 periods, Indonesian
birth of ‘mall culture’ in the city.
consumers chose to spend more money in entertainment and dining
rather than in fashion products and accessories.
Figure 1. Occupancy Rate in Selected Popular Malls Compared to Market Average
100%
95%
90%
85%
80%
Plaza Senayan
Mal Kelapa Gading
Taman Anggrek
Pondok Indah Mall
Market Average
75%
2004
Source: Jones Lang LaSalle Research
2005
2006
2007
2008
2009
4 On Point • The Changing Retail Landscape in Jakarta • February 2010
The Future Outlook
Furthermore, landlords should begin to consider planning reguler
events and marketing programmes to help tenants boost their
Shopping centres are now part of the daily life of Jakarta
sales volume. Initiatives such as strategic partnership between
residents. Learning from the past and the ongoing trend, lifestyle
retail tenants with banks or credit card providers to attract focus
retailers, especially F&B and entertainment operators, are
groups have proven to be a good marketing too. Last but not the
expected to play a more important role as they continue to be
least, it is important for landlords to have good knowledge of
seen as effective crowd puller.
market dynamics and to closely watch consumer trends. Should
all of these requirements be met, a pleasant mall experience can
Looking ahead, the domestic retail sector is seen to grow
be created, thus helping to maintain a centre’s attractiveness,
positively along with the economic development. Massive
which can potentially increase visitor volume, so that quality
population, growing middle class and urban expansion would
becomes even better.
provide a great upside for potential growth over the long term.
Yet, the anticipated economic growth in 2010 is seen by many to
be accompanied by rising inflationary pressure as prices of
goods and utilities are projected to pick up. This would potentially
Authors
affect purchasing power and consumer lifestyle. Such correlation
Leslie Savitri
can be seen in the car sales trend over the past few years (we
Assistant Manager, Research
use car sales trend as a representation of middle class dynamic,
Jones Lang LaSalle (Indonesia)
which is closely related to purchasing power and urban lifestyle).
Following a period of high inflation, people normally take a
Leslie Savitri joined Jones Lang
cautious approach and wait until prices stabilise, which in turn,
LaSalle in 2008 and assumed the
affect sales growth during that period. Following the fuel price
position of Assistant Manager in
increase in end-2005, that boosted inflation to over 17%, car
Research Department. Aside from
sales dropped quite significantly in 2006. Then, after two years of
maintaining the Firm’s database for
low inflation in 2006 and 2007, car sales began to pick up in
2008. As we expect the increase in prices to begin in 1H10, the
impact on consumption is seen to take place in 2H10 onwards.
This, of course, might disrupt the recovery of retail sector,
contributes to consultancy assignments and the production of
local and regional research reports such as the quarterly Jakarta
Property Market Review, Asia Pacific Property Digest and REIS
including the expansion of lifestyle centres in Jakarta.
publications
Figure 2. Car Sales and Price Inflation
Anton Sitorus
700,000
Car Sales
all property sectors, she also
Inflation
600,000
20%
Head of Research
18%
Jones Lang LaSalle (Indonesia)
15%
500,000
13%
400,000
10%
300,000
8%
Anton Sitorus joined Jones Lang
LaSalle in 2002 and assumed the
5%
position of Head of Research, who
100,000
3%
is responsible for research and
0
0%
service deliveries in Jakarta office.
200,000
2000
2001
2002
2003
2004
2005
2006
2007
2008
Source: Central Statistics Bureau & Gaikindo
If such situation happens, the issue will be for the malls to
maintain the flow and quality of visitors to keep it attractive.
Hence, unique concepts and good tenant mix are crucial in every
project. In addition, F&B and other lifestyle components are likely
to continue to become effective crowd puller in the future.
His department regularly comes up with research publications as
well as thought-leading research papers on topical issues. As an
analyst, Anton has worked on various assignments, including
market and feasibility studies, development consultancy, project
reviews and asset disposal strategies for clients. Anton is an
architect and engineer by training, and brings with him
perspective from development and project management.
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The Changing Retail Landscape in Jakarta – February 2010
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