SURABAYA, Indonesia — Several tall construction cranes are at work, expanding the already large shopping mall Tunjungan Plaza in the center of Surabaya, the second-largest city in Indonesia.
The building site is clearly visible from the Club Lounge of the Sheraton Surabaya, a five-star hotel that will certainly benefit from the enormous project.
“This is the paving ground for more development,” said Christopher Moore, the hotel’s general manager. “The floor plan is tremendous…There will be high-end retail outlets and Jakarta-Cunningham-style trendy restaurant areas…Everything will change. And in the middle of all this, right in the epicenter, we are building yet another Sheraton, the four-star Four-Points, with 293 rooms. Our team will be managing both properties.”
Sutandi Purnomosidi, the director of PT. Pakuwon Jati Tbk., the company that owns the present Tunjungan Plaza Mall, as well as the new development project, offered an overview of it. “TP1 [Tunjungan Plaza 1] to TP6 will form the biggest integrated mall concept in Indonesia. When these superblocks will become operational, the total lease space will be 200,000 square meters [2.1 million square feet], beating even the legendary Grand Indonesia in Jakarta, becoming the largest shopping mall in the country. TP5 will be targeting the high-end market, bringing in those international brands like Burberry, Michael Kors, Louis Vuitton, Hugo Boss, Gucci, Loewe, Armani, Salvatore Ferragamo and many more, in one special concept named The Gallery. There will also be tenants like Timberland and Bonia.
“With this new development, we hope to fulfill the demand for high-end brands by Indonesian, particularly Surabayan, customers. This way they don’t need to travel to Singapore or the U.S.A. to get what they really want,” Purnomosidi said.
“TP5 is scheduled to be ready and operating by the end of 2015, while TP6 will be functioning by the end of 2016. The concept of TP6 is to provide a hangout center, especially for youngsters in Surabaya,” he said. “TP5 is built to be joint with TP4, and above the building there will be a 20-floor office center and 19 floors of high-end condominiums [called The Peak]; the apartments there will be priced from 1.8 billion rupiah [or $150,000 at current exchange]. It will be equipped with four private elevators, an infinity pool, and a sky lobby. The Four Points Hotel, managed by the Sheraton Hotel group, is scheduled to join this ensemble as well. The TP5 will be 50 floors high in total, and will become the tallest building in the center of Surabaya. It is designed by Aedas — the same [architectural firm] that designed the Marina Bay Sand hotel and the casino in Singapore.”
The Pakuwon Company has allocated 1 trillion rupiahs, or $82 million, for the construction of T5’s 236,790 square feet and 1.2 trillion rupiahs, or about $99 million, for TP6, which will cover 430,520 square feet.
All this is gigantic by Indonesian standards. But Pakuwon can afford it because of the success of the original Tunjungan Plaza Mall.
“This constant expansion agenda is one of our attempts to trigger Surabaya’s development,” explained Purnomosidi.
Tunjungan Plaza is not the only major retail project in Surabaya. Several miles away, another mega mall — Ciputra World — is being extended by 753,000 square feet and also promises to bring in top brands for local customers.
Hendra Linanda, the chief of the promotion department of Ciputra World, described the new project: “Super Block will include an apartment building; the five-star Ciputra World hotel, which will be managed by Swiss Bell; an office tower…We sell it as ‘super block,’ or ‘one-stop.’ Now this is the trend in Surabaya.”
The finished project, Linanda said, will cover a total floor area of 1.7 million square feet. “That is an ideal size for a mall. Big enough, and if it was bigger, it would be very difficult to manage and even to navigate,” he said. “Inside, we will have entertainment venues, art and many things that other malls in the city do not have. And we will have many brands that will be arriving in the city for the first time, including Ferragamo.”
Abibayu Gustri Kamadjaja, the store manager of Salvatore Ferragamo at Ciputra World Surabaya — the only Ferragamo store in the city of 3 million — denied the brand was late in opening another unit. “Looking at the positive feedback we got after opening the Ferragamo flagship in Surabaya, we are sure that there is a big opportunity to expand the business in the future. However, in the meantime, we would like to focus on just one store first, so to speak, to strengthen our foundations here and to improve our customer database.”
But is there really space for growth in the fashion retail market in Surabaya? Is there an appetite for top-end brands like Salvatore Ferragamo?
“The fashion tastes in Surabaya are improving, and with them, the fashion retail in Surabaya also grows at a stunning speed,” Kamadjaja said. “This can be seen from the luxury/ high-end brands that keep opening their outlets over the past years in Surabaya.
“Customers are very enthusiastic,” he added. “The people of Surabaya are becoming more and more fashion oriented. And they are becoming more concerned about the quality of the products than about the price.”
Naturally, his statement applies only to a very exclusive group. Indonesia is still one of the poorest countries in the Asia Pacific, and the price of a pair of Ferragamo shoes can cost as much as the yearly income of a family of four. However, as Linanda pointed out, “The purchasing power of the citizens of Surabaya is now only marginally lower than of those living in the capital city — Jakarta.”
Silvana Chandra, store supervisor at the Tommy Hilfiger flagship in Ciputra World, also is optimistic about the future of the luxury retail market in the city.
“Looking back, five years ago, there were only a few high-end brands represented here, in Surabaya. But, today, we can see a lot of them beginning to open their stores, looking for new and newer boutique locations in Surabaya. It shows that Surabaya is perceived as one of the cities that has a strong and growing market consisting of people who are aware of fashion. Surabaya is a growing market for the fashion industry. The sales level of the TH store in Surabaya is actually rising significantly and on parallel with Jakarta,” she said.
As for the consumers themselves, two recent residents also believe Surabaya is becoming increasingly sophisticated — although hurdles remain.
“Surabaya’s taste has evolved quite fast in the last couple of years,” said Stella Lisa Wijaya, 25, a fashion designer and boutique owner. “More youngsters have a higher awareness about the latest fashion trends, and they don’t hesitate to give them a try. Still, the city is well behind Jakarta due to the lack of fashion events. New malls, or so called ‘super blocks,’ will greatly improve the situation since, for the customers, it is getting easier to get their hands on international products without the need to travel overseas.”
The larger malls in Surabaya have many of the same brands, mainly Louis Vuitton, Kate Spade and Hugo Boss. However, there are no stores for leading luxury brands such as Chanel, Christian Dior, Prada, Fendi or even for more contemporary labels such as Missoni, Phillip Lim, Marc Jacobs or Ksubi. “As for the high-end fashion giants, I think they don’t yet have the guts to open their boutiques in Surabaya,” said Vania Puspitasari, a fashion customer. “Maybe the brands are still looking at the performance of the others in Jakarta, as well as at the current giants in Surabaya. Most of the inhabitants of Surabaya are not too concerned, yet, with showing off luxury fashion and spending money on this sort of extravagance, although they definitely have money.”
Wijaya agreed. “Actually, even Louis Vuitton and Kate Spade each only have one store here, so I could not say that it is all that repetitive,” she said. “For other high brands such as Prada, Chanel, Dior, they have all established their stores in Jakarta. It has been the nature of most brands to first try the market out in the capital, with the hope that if the responses are positive, they can then expand the market to the next best city, which is Surabaya.”