Skip to main content Skip to footer

As it is the last quarter of 2020 and the retail sector is volatile, what are the opportunities for the remaining year?

1. Since the Jakarta government’s large-scale social restrictions and rules, also known as Pembatasan Sosial Berskala Besar (PSBB) was put in place as a transition system until 25 October 2020 and with the possibility of a recession, how will the retail sector hold up?

Recessions obviously aren’t very positive for consumer trust; consumers tend to set stricter priorities and reduce their overall spending. This, of course, negatively affects the retail market.

The uncertain outlook on the COVID-19 pandemic has caused retail sales to drop, and a recession will most likely accelerate this downward spiral. While not every consumer has the same response and spending habits during such a period, it is important for retailers to have a deep understanding of their customers and continue to engage with them in order to stay relevant when times improve.

We see and understand that the government aims to help the economy recover by allowing businesses to operate again in this PSBB transition, as long they follow and stick to the rules and regulations. The re-opening of shopping malls, restaurants and retail stores to the public is a positive development, even if it is only for 50% of the total capacity.

As for the traffic, we may not see a significant increase for some time, because even as people can now go to the shopping malls, they could still hesitate to go out and remain cautious about the situation. There will be a slight increase in activities and footfall to the major malls, similar to the first transitional PSBB, but Colliers expects this to gradually increase overtime.

2. What strategies are retail tenants and retail landlords employing for the remainder of 2020, and how are they preparing themselves for 2021 while the economy is unstable?

It is clear that retailers are becoming more conservative in their expansion strategies, and we see a clear pattern of retailers shifting their focus from malls to roadside/stand-alone stores. Retailers are increasingly looking at roadside or stand-alone stores as part of their expansion strategy as those stores may still operate when malls must close.

Colliers expects to see changes in store design as well to make stores better fitted to e-commerce sales. F&B operators and coffee chains will increasingly demand for drive-thru at standalone sides and enough space for GoJek/Grab drivers to pick up orders, so that it does not interfere regular operations. And fashion retailers change their stores design in such way that they can serve as fulfilment centres for e-commerce sales with more and separated space for pick-up and delivery services like GoJek/Grab etc also to prevent interference for regular visitors to the stores.

Retail landlords are generally continuing to try to help their retail tenants get through this pandemic and the coming recession. Obviously, it is critically important for mall owners to maintain their tenant mix and, hence, they remain generally flexible toward their tenants or at least to those in real need in terms of rental rebates, service charges and other costs.

Fortunately, during this PSBB transition, malls are allowed to open and F&B tenants are allowed to have dine-in guests. Also, as the restrictions only allow 50% of a facility’s total capacity, most are still going to rely largely on delivery services. Colliers has seen mall owners charge their F&B tenants for the cost of electricity and AC pro-rata instead of charging the full-service charges (when these costs are included in the service charge). Rent rebates are continuously being given to tenants to help them through this period of pandemic and economic downturn.

3. What opportunities in the retail sector do you think could maximise the potential of retail despite the current unstable situation?

Despite the unstable economic situation right now, it doesn’t close the door on opportunities that retail properties have. Because of the increase in online sales, Colliers sees some retailers generating data that can be used to improve their business operations and innovate their products or Stock Keeping Units (SKUs).

To give a real world example, one of Indonesia’s well-known coffee chains is using data science to determine where to open new stores. Initially, the majority of their stores were opened in the CBD area and other densely populated areas where people worked and spent their day.

Now, due to the pandemic, most people are working and staying at home in areas where they did not have a dense network of stores. Based on the data generated from the application, they knew what areas most people were ordering from, and they have used that data to make heat maps to determine where to open new stores.

They have also introduced new products based on customers’ feedback. Now that most people work at home, they do not want to order a single cup for example, so the coffee chain has introduced a one-litre concept to fulfil the demand.

In this situation, Colliers sees how the growth of online shopping, technology and offline retailers can be integrated to increase sales. This shows that there are still opportunities that can be taken advantage of by both retail tenants and retail landlords. Colliers sees the potential for there to be endless possibilities and innovations in the retail sector in the near future.

Ask Question

Liked what you read? Read more from our Research Page and subscribe to our mailing list for more thought-pieces on the latest in commercial real estate.


Related Experts

Sander Halsema

Senior Associate Director

Retail Services


Sander joined Colliers International in July 2013 as Head of Marketing for Colliers the Netherlands, based in Amsterdam. After working for Colliers the Netherlands for two years Sander moved to Indonesia to join the Colliers team in Jakarta. Sander is currently heading the Retail Services Department at Colliers International Indonesia.

View expert