, the malls and retail chains under Aeon’s corporate umbrella therefore provide a good bellwether for the health of the retail industry across the region, both inside and outside Japan. Operating revenue for the company continued to grow in the first half, by 3.8 per cent year-on-year to 5,190 billion Yen (approximately US$35 billion) despite a combination of sputtering growth in China, declining real wages in Japan and “opaque trade policies of the United States”. As a result of these adverse factors, Aeon noted that “consumers maintained a strong tendency toward frugality, with behaviours such as curtailing purchases and reducing the number of items bought, particularly in essential spending categories such as food, apparel, and home furnishing. On the other hand, with the arrival of the summer holiday season, service-related consumption such as dining out and travel remained solid.” Aeon attributed its revenue growth in Japan partly to the expansion of its own ‘Topvalu’ house brands that focus on price and value for money, and being able to leverage its mall properties to provide refuge and entertainment away from the summer heat, which, for the second year running, has been abnormally high. Company profit for the owners increased by 9.1 per cent to 4,048 million yen (US$27 million) in the half. All segments in all geographies grew solidly. Aeon’s shopping centre business is the real estate platform for its drive to expand outside Japan. It now has a growing fleet of malls in four countries outside Japan: China, Vietnam, Cambodia and Indonesia. Of the five countries, Japan is the only mature market where new development will be limited, and Aeon will be concentrating its capital investment on upgrades to its existing malls. So far in 2025, it has already undertaken renovation work on 15 properties, and two new projects are due to be opened in the second half, in Suzaka City (in central Honshu, west of Tokyo) and Sendai Uesugi (in the north of the island). The focus of future development, though, is on the other four, especially Vietnam, where Aeon sees the most low-hanging fruit but comes up against a well-established domestic first-mover in Vincom. The good news for Aeon in Vietnam, though, is that although Vincom has malls here, there and everywhere, many of them aren’t that good and have chronic vacancy problems. In the first six months of this fiscal year, Aeon achieved record operating revenue and profit in its mall business. Specialty store sales grew solidly in all markets: by 5.5% in Japan, 8.5% in Vietnam, 8.6 per cent in Cambodia, 3.3 per centv in China and 2.1 per cent in Indonesia. Operating revenue was up strongly in the first half in Aeon’s other business segments, too. These comprise general merchandise stores (revenues up 3.6 per cent), supermarkets (+3.2 per cent), discount stores (+6.3 per cent), health and wellness (+3.7 per cent), financial services (+8.3 per cent), services and specialty stores (+3.2 per cent), and international (+2.7 per cent). The two largest segments are general merchandise stores and supermarkets, which pull in 65 per cent of company revenues but account for only 11 per cent of operating profit. Can Aeon outflank Vincom in Vietnam? Like last summer, Aeon leveraged high temperatures to lure consumers into its air-conditioned malls in Japan. Aeon launched a special program under the quaint title “AEON COOL de ACTION 2025,” a seasonal campaign that combines heat countermeasures with community engagement activities. Outside Japan, though, is where Aeon sees its future growth and is eagerly eyeing up opportunities around Southeast Asia, where it already has a beachhead. “Under our current medium-term management plan, we have identified Vietnam—now in its demographic bonus period and showing strong consumption growth—as our most important market and are accelerating store openings there.” There is a flurry of activity by Aeon in Vietnam, although the next new openings will have to wait until 2026. The ground has been broken and construction is underway for malls in Hai Duong (75 kilometres east of Hanoi), Thanh Hoa (on the coast 170 kilometres south of Hanoi, and Ha Long, which is also east of Hanoi and has the distinction of being located near the picturesque Ha Long Bay, a World Heritage site. This centre is unlikely to be short of customers, with the Bay reputed to be drawing an estimated 8-9 million visitors in 2025-26. New development is also continuing for Aeon in the south, in and around Ho Chi Minh City, where the company is collaborating with a local developer on a new mall in Dong Nai Province. The upshot of all these new developments is that Aeon will have a strong position in each of the country’s three key regions: Ho Chi Minh City, Hanoi and their environs, and the central provinces of Hue and Da Nang.   Aeon also has five malls in Indonesia and three in Cambodia, all in Phnom Penh. Two of the Cambodian projects, although of world-class standard, are struggling with vacancy. This is partly due to a timing issue, as the malls are operating without the benefit of planned residential and commercial projects in their primary trade areas, which would boost demand for retail space as they come online.   Still, the risk for Aeon in Southeast Asia will be overbuilding too far in advance of market demand for quality retail space. Although the headline demographics look promising, they conceal the imbalance between dense urban areas and relative poverty in the countryside. Thus, good projects in the cores of the main cities tend to do well while those on the periphery and further out are undershopped. With Vincom already looking at a vacancy rate above 15 per cent outside the city centres, and Thailand’s Central Retail, another rival with 42 malls in Vietnam, sporting a vacancy rate of something similar, there are hard days ahead for any developer who moves too fast. Further reading: Battle of the lifestyle giants: Oh!some vs Moshi Moshi