bang up malls everywhere in the region. Aeon Mall, which is a powerhouse in its native Japan, is aiming to have 50 malls in operation overseas by the end of 2025, with China, Vietnam, Cambodia and Indonesia the main targets. (It also had its eye on Myanmar but the politics there have put that on hold.) Currently, it has 33, with 22 of them in China, which account for about 75% of the operating revenue. In 2021, the company opened only two malls outside Japan: Aeon Mall Tanjung Barat in Jakarta, and Aeon Mall Guangzhou Xintang in China. In Cambodia, Aeon is already the dominant mall player with two important centres in central and northern Phnom Penh (Aeon Phnom Penh and Aeon Sen Sok City) that have made it a key conduit for international brands into the country. In March, Aeon Phnom Penh, the older of the two and informally known as ‘Aeon 1’, hosted the opening of H&M’s first Cambodian store, an 1800 square metre shop spread over two levels offering women’s, men’s and kids’ clothing and accessories. Ground was broken on a third Phnom Penh mall, Aeon Mall Mean Chey, in October 2020 that is scheduled to open next year. Like the first two, Aeon plans to tailor the tenant mix closely to the local demographics, which differ materially in each of the three locations. The mall will have almost 100,000 square metres of gross leasable area and 250 shops. Malls: the Homogeneity Problem Although this ‘tailoring’ idea is something of a cliché in the mall business, Aeon is taking it seriously and not just talking about it. It’s importance cannot be underestimated, and not just in Cambodia. A key unwelcome trend in the mall industry everywhere over the past 10 years is homogenization resulting from individual companies consolidating ownership of large national networks of retail properties. This first became particularly evident in the US with consolidation of ownership under the Simon Property Group banner. The result was a huge portfolio of malls that were professionally managed and which attracted a strong tenant base of high-profile brands. There was only one problem: it all got a bit boring because everyone knew exactly what to expect before setting out on the shopping trip. Footfall and productivity at many of these centres were already well and truly in decline before Covid. A similar pattern is beginning to emerge in Asia too, for example with the preeminence in Thailand of Central Group, which has dominant malls in major urban areas around the country, each anchored by a department store also owned and operated by Central Group and, surprise surprise, named Central Department Store. Vietnam is the big prize The country that is perhaps at most risk of following this same trend is not Cambodia, but Vietnam, and here also Aeon has a pony in the race. In Vietnam, Aeon has six malls, but is in a footrace with local developer Vincom Retail which is a listed company with a strong balance sheet, an established foothold in the market and big ambitions to be Vietnam’s answer to America’s Simon Property Group. Aeon wants to have 16 malls in operation in Vietnam by 2025. Vincom operates more than 80 malls already, not just in the main cities but spread around the country. As the company self-describes, its “dominant position and nationwide scale make it Vietnam’s ‘Go-to’ platform for international and established local brands”. Still, Vincom’s occupancy rate across its portfolio is a not-overly-impressive 83%, even though the company can rightly point to a miserable run with Vietnam’s extended draconian lockdowns as a major contributor to its vacancy problem. Vincom, notwithstanding, Vietnam’s large population and juicy demographics make it a key country in Aeon’s Asian expansion strategy. It has good tenant relationships of its own, particularly with those coming from Japan, and Uniqlo for one will be opening its first store in Hai Phong at Aeon Mall Hai Phong Le Chan this year. Indonesia is also a prime long-term target for Aeon Mall. There, Aeon has been in business since its first opening in May 2015 at Tangarang, in West Jakarta, and now has four malls operating in the country. Construction has also now begun on Aeon Mall Deltamas in the east of the capital, with a 2024 projected opening date. It will be another superregional centre with leased area of about 85,000 square meters. Striking a balance between excellence and sheer size will be key to Aeon’s long-term success in ASEAN. It will need to be able to differentiate from Vincom in Vietnam and from other major developers in countries of interest, and tailor to its localities just as it has in Cambodia. The temptation to lob malls everywhere will be large and it is one the company will do well to resist. In this respect, Aeon can learn from another company that succeeded in America by limiting its development network and focusing on quality and differentiation in key markets: Taubman Centers. Taubman never developed more than 25 or so malls in a country of more than 300 million. It could have done a lot more but remained incredibly focused and profitable, so much so that it eventually became one of Simon’s acquisitions at the end of 2020. Aeon Mall has a track record of success so far outside Japan despite the fact that as a mall developer it confronts significantly more risk overseas than it does in Japan itself, particularly in relation to greater political instability and regulatory risk. Moreover, two years of Covid disruption has led to a new leg up for e-commerce. Mall operators everywhere are talking up a good game about how this is a good thing rather than a challenge, but there is no question that the mall game has changed since 2019. An encouraging sign for Aeon Mall investors is that the company has so far demonstrated discipline in its growth strategy. It will need to hold firmly to that line even as the Covid clouds lift over Asia.