05 April 2021
Anonymous Writer
The Future of Malls in the New Normal Era
Mardiani ST., Dr. Matius Jusuf, M.M., MBA dan Dr. Elisabet Siahaan, S.E., M.Ec
Students and Lecturers at USU Postgraduate School Master's Program in Valuation and Property Management
Starting from Wuhan, China, and reaching Indonesia in early March 2020, the COVID-19 pandemic caused a significant decline in human economic activity, leading to negative global economic growth. From March to June, outdoor activities had to be postponed due to large-scale social restrictions (PSBB) to prevent the rapid and easy transmission of COVID-19. The government encouraged working from home by utilizing technology like the internet, laptops, and mobile phones. As of August 22, 2020, the daily growth of COVID-19 cases has increased from 2 to 2090, although the recovery rate has also increased from 5% to 69%, and the mortality rate has decreased to 4% (source: Kompas).
The PSBB conditions resulted in new problems, impacting Indonesian workers in both formal and informal sectors, especially the informal sector. The informal sector is the economic sector consisting of small-scale business units that produce and distribute goods and services, with the main goal of creating employment and income opportunities for its participants. This sector requires people to conduct economic activities outside the home, such as traders, construction workers, online motorcycle taxi drivers, domestic workers, farmers, breeders, daily laborers, roadside workshops, public transportation drivers, pedicab drivers, and so on. This informal sector accounts for 75.9% of the population (source: research results by Hidayat, Wikipedia). Formal workers whose operations require working outside the home, such as bank employees, factory workers, restaurant employees, hotel staff, mall employees, and others, were also affected.
The working conditions under the COVID-19 pandemic restrictions have successfully reduced our economic growth from 5.2% in 2019 to -5.32% (Bank Indonesia, mid-June 2020). Unemployment and poverty rates have also increased sharply. Meanwhile, to this day, a COVID-19 vaccine is not yet available. If we continue to implement social restrictions, the economy will worsen further. How long will this situation last? What is the solution to stay safe from COVID-19 while remaining productive at work? Therefore, a new way of working (New Normal) is needed while waiting for experts to work hard to develop and find a vaccine to control the COVID-19 pandemic.
New Normal is based on adapting to cultivate clean and healthy living behaviors. It involves routines like washing hands with soap, wearing masks when leaving the house, maintaining a safe distance, and avoiding crowds. What about malls that require high visitor numbers? Will their sales decline, remain stable, or even increase compared to before COVID-19, during, and after the New Normal?
In early June 2020, malls were allowed to reopen with the new normal concept, which means conducting economic activities as usual while the deadly virus is still present around us. Activities in malls under the New Normal to prevent COVID-19 transmission include: (a) Checking visitors' body temperature, with those who are sick advised to rest at home first. (b) Having officers ensure the number of visitors entering the mall does not exceed 50% to reduce crowds. (c) Applying disinfectant to footwear at the entrance before visitors enter the mall. (d) Providing automatic hand sanitizers at various access points and common areas, such as the mall entrance. (e) Requiring all mall employees, tenant employees, and visitors to wear masks. (f) Adding washbasins/handwashing stations in several locations. (g) Arranging distances and providing markers for consumers to follow social distancing rules when queuing at elevators, escalators, and other areas. (h) Arranging seating, especially in the food court area. F&B tenants are also asked to rearrange tables and chairs to maintain distance. (i) Placing disinfectants in areas like the entrance, toilets, escalators, elevators, and other areas. (j) Posting many reminders in strategic places for mask usage and social distancing to mall visitors, not only to create a sense of security but also to raise awareness. (k) Providing an isolation room if a visitor suddenly falls ill. The protocol is that if someone gets sick, they are immediately taken to the isolation room, and if there are indications of COVID-19, the mall coordinates with the nearest hospital for further handling. (l) Elevators are now equipped with touchless sensors, and there are markings inside the elevators to maintain distance. Does the implementation of New Normal in malls affect the number of visitors? Through random sampling surveys conducted on mall visitor levels in the Medan city area, it was found that the number of visitors has improved as of August 2020.
Before the implementation of the New Normal, mall sales had already experienced a decline due to online shopping or the onslaught of e-commerce. Fortunately, some malls quickly adapted by becoming not just shopping places but also designed as leisure, entertainment, and culinary destinations. Visiting the mall is no longer just about buying goods but also a place to relieve work stress (hangouts), relax with family and friends, discuss, gather, and so on.
Currently, mall managers are required to be more creative to attract visitors through interesting activities that match the desires of their target audience. Managers have to spend extra money to attract visitors to come. It's like attracting money by first spending money. Managers have to spend a lot of extra money so that visitors come and spend a lot of money in the mall. Providing an interesting experience at every step of the visitor's journey is considered the key for malls to survive. If in the past visitors were not allowed to take photos in the mall area, now the mall management is actively providing attractive decorations to be photographed and later posted by visitors on their social media. This will be free promotion for the mall management. Malls that are unwilling to change their old habits and adapt will eventually die.
So, how is the number of visitors after the Covid-19 outbreak? There has been a drastic decrease of up to 10% until the end of June 2020. The uncertainty of when a Covid-19 vaccine will be found affects the number of mall visitors. The campaign for Covid-19-free malls and the discipline in implementing health protocols will be crucial factors for visitors to visit a mall. The issue of "safety first" becomes a very crucial issue for the level of mall visits.
Now, malls have entered the New Normal phase, but the number of visitors has already exceeded the number during the "Work From Home" phase, although it is still not as high as during the "normal" phase before 2020. Why? Because malls are still a choice for some consumers due to the higher level of satisfaction when shopping in malls/stores (offline shopping) compared to online. This is because consumers can directly touch, choose, and try the goods directly (without guessing or estimating), besides, consumers also like friendly service from salespeople.
Although malls have entered the new normal phase, it still takes time to achieve ideal profit growth. It is estimated that before the new normal period, the number of visitors will be at a maximum of 50% compared to before Covid-19. For areas like DKI Jakarta, where various media report that the number of malls is already too high, a reassessment is needed: (1) Is the mall building still suitable for use as a mall for how many more years? (2) Does this mall have competitors in the same location? (3) What are the strengths, weaknesses, opportunities, and challenges of this mall? (4) If there are competitors, how many visitors are likely to be absorbed by this mall? If the mall is no longer optimal, it is necessary to change the function of the building to another business that is more optimal to overcome the impact of losses in the future.
The challenges of the mall business will be under more pressure in the future compared to the period before Covid-19. Therefore, strong and intelligent management is needed, as well as a more active, creative, and smart marketing team, for example, by offering many discounts on goods, actively offering special and personal events door to door to potential customers that can be provided in the mall, and don't forget to first be able to convince potential visitors that the mall has been well sanitized so that it is safe and comfortable to visit.
What about the mall business in Medan? There are 29 malls in Medan (source: mall-plaza-ritel, blogspot), some are still young but have started to die, some are getting old but still alive, and there are some that are newly born but are actually crowded.
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