Aeon booms despite ‘harsh’ retail conditions
Against a background of rising consumer prices, harsh retail conditions and increased competition in the shopping centre industry, Japanese developer Aeon opened four new malls in its home country last year and expanded regionally.
It also renovated existing malls in Japan, and set up promotional programs to stimulate the market.
Overseas, the company has been working to establish a business foundation with the aim of attracting customers to its malls in China and the ASEAN region, which it reports have been performing well. It has also added three malls in China, opened its first mall in Indonesia and launched its third in Vietnam. It has also announced plans to build a new luxury mall in Bangkok.
Aeon’s operating revenue for the three quarters totalled 167,704 million yen ($1.4 billion), which is a 113.4 per cent year-on-year increase.
However, because of expansion, operating costs rose 116.8 per cent year on year to 120,848 million yen, resulting in a gross profit of 46,856 million year (up 105.6 per cent).
But in an extraordinary loss, the company incurred expenses of 1838 million yen when it closed Aeon Mall Neyagawa and Aeon Mall Fujidera, both in Osaka. This led to a decline in net income to 14,944 million yen (83.8 per cent).
Several new malls were opened, including, in March, Aeon Mall Asahikawa Ekimae in Hokkaido, which is directly connected to a railway station; in April, Aeon Mall Okinawa Rycom, which has the concept of being a fully fledged resort mall; and in July, Aeon Mall Tonami, Toyama. As the Hokkaido and Okinawa malls are in leading tourist spots, their services were bolstered for foreigners. Meanwhile, the Okinawa mall has started accepting group tours in co-operation with nine travel agencies.
Replacing Aeon Tonami Store, which closed in 2013, Aeon Mall Tonami opened in an area undergoing urban development, and in October opened Aeon Mall Shijonawate in Osaka, which has one of the largest food offerings in the region.
Aeon also renewed five malls in the third quarter in addition to the six malls upgraded during the first half, including Aeon Lake Town in Koshigaya City. This comprises three individual malls – Kaze urban mall, Mori lifestyle mall and the Lake Town Outlet – making the complex one of the largest shoppings malls in Japan.
Overseas, Aeon saw its revenue rise to 7795 million yen (up 186.4 per cent) in China, with an operating loss of 2994 million yen. Openings included Aeon Mall Suzhou Yuanqu Hudong, its second mall in Jiangsu Province, in May; Aeon Mall Beijing Fengtai, its second mall in the capital, in September; and Aeon Mall Hangzhou Liangzhu Xincheng, its first mall in Zhejiang Province, in November. This brings its number of malls in China to nine.
A series of explosions on August 12 damaged part of Aeon Mall Tianjin Teda. Business was suspended, but general merchandise store Aeon resumed selling food and daily necessities on September. Business resumed for the rest of the mall on November 1.
ASEAN business saw a revenue rise of 493.1 per cent to 2617 million yen, with an operating loss of 729 million yen. In October, Aeon Mall Long Bien became its first outlet in the Hanoi area and the third in Vietnam.
Aeon Mall Phnom Penh opened in June 2014 as the company’s first mall in Cambodia, attracting more than 15 million customers in its first year. In Indonesia, BSD City in Tangerang, Banten Province, which opened in May as the first Aeon mall in Indonesia, also performed strongly.
In its fiscal statement, the company says overseas business is considered as the driver of future growth, but is still at the stage of upfront investment and has yet to contribute to profits.
In its information on its operating forecast, the company talks about its development plans for the Aeon Mall Tokoname in Japan, which opened in December. There was also an extension to the Aeon Mall Chikushino in the Fukuoka Prefecture, plus a revamp.
Meanwhile, the company aims to cut costs through improved operations using the economies of scale with more than 140 malls in Japan.
In China, also in December, the company opened Aeon Mall Wuhan Jingkai as its second property in Hubei Province, and Aeon Mall Guangzhou Panyu Square as its first mall in Guangdong Province. This month it is opening its third mall in Jiangsu, Aeon Mall Suzhou Xinqu, and plans to roll out dominant stores in Beijing-Tianjin, Jiangsu Province-Zhejiang Province, Hubei Province and Guangdong Province.
In the ASEAN region, construction work has started on Aeon Mall Jakarta Garden City with another mall planned to open in Bogor, West Java Province, in October. New malls are also planned for Vietnam and Cambodia.