The pandemic had a profound impact on business sales, leading many operators to either exit the market or adopt a partnership strategy.
However, Outlet Mall Co under Pena House Group, a local garment company, is taking a different approach to ensure its long-term sustainability by seeking a new growth trajectory.
Fuelled by steadfast confidence in Thailand’s tourism industry, Outlet Mall remains committed to its outlet business, but opted to curtail substantial investments in the construction of large outlet malls in tourist destinations, a practice it pursued in the past.
The company made the decision because the tourism sector is still recovering and there are other unpredictable factors, such as the Russia-Ukraine war and the renewed Israel-Palestine conflict, said Rojanee Boonyarudy, deputy managing director of Outlet Mall Co.
In addition, the economic health of some countries, particularly China, which is a major contributor to Thailand’s tourism industry, remains uncertain.
Although Outlet Mall’s business has regained momentum this year, foreign tourists at its outlets still exhibit lower spending power compared with visitors from China and the Middle East, she said.
“Instead of acting as landlords providing retail space for brands and manufacturers, we are creating speciality store brands for each product category and establishing them in strategic locations outside our Outlet Mall,” said Mrs Rojanee.
The company recently opened two speciality stores — Golf Challenge and Kidz Superstore — at the Central Village Outlet with the goal of reaching new customer segments.
Outlet Mall projects 40 million baht in sales during the first year of operating the two new stores.
The company also plans to open at least 6-8 speciality stores at tourist attractions in Bangkok next year, she said.
As a result of this strategy, Outlet Mall anticipates sales of 300 million baht from speciality store business, on par with some successful outlet malls in tourist destinations, although only 5 million baht is spent per speciality store.
Building a large outlet mall in a tourist destination requires an investment of up to 300 million baht, said Mrs Rojanee.
The company also initiated more than 60 sales events across the country this year, targeting tourist destinations, cities and office buildings.
These events generate cash flow and provide insights into the spending habits and product demand for their speciality stores, she said.
“We decided to temporarily postpone the construction of new outlet malls for a few years, as the tourism industry has not fully recovered. Even in Phuket, a major tourist destination, business has only reached 50% of its pre-crisis levels,” said Mrs Rojanee.
“We are eagerly awaiting the return of tourists from China and the Middle East. We are generating cash flow from local shoppers, although the profit margins are relatively modest.”
She said there is considerable risk in allocating a significant budget for new large outlet malls at this time.
The Tourism Authority of Thailand estimates foreign arrivals of between 25-30 million this year, up from 11 million in 2022, with the figure rising to 30-35 million next year.
“We expect a glorious period of tourism when the number of tourists reaches 40 million in the near future,” Mrs Rojanee said.
More brands to come
She said in addition to the expansion of its speciality stores Golf Challenge and Kidz Superstore, the company is prepared to establish other speciality stores if it has the resources, such as Sports Stadium for sportswear, Jeans Station for jeans, “Brabara” for lingerie and women’s nightwear, and Cucina for homeware.
Outlet Mall also ventured into online-to-offline initiatives, using fan pages to create awareness and stimulate demand, said Mrs Rojanee.
The company recently partnered with Warrix Sport Plc to purchase and sell Warrix products at Warrix speciality stores in all Outlet Mall branches, starting with three locations in Pattaya, Ayutthaya and Khao Yai at Pak Chong.
Outlet Mall has plans to open Warrix speciality shops in all its branches within two years, she said.
Mrs Rojanee said Pena House Group also secured the rights to open “Miffy’s Voyage Café” from the Netherlands in various tourist destinations across Thailand.
The first café opened at Camel Republic in Cha-am in Phetchaburi province, with a second branch operating at Pattaya Outlet Mall in Phase II, drawing more customers to the mall, she said.
Additional cafés are slated to open in tourist destinations in Bangkok, said Mrs Rojanee.
The company operates eight Outlet Mall stores in Thailand, with branches in Pattaya, Cha-am, Khao Yai, Ayutthaya, Krabi, Phuket, Udon Thani and Chiang Mai.
Before the pandemic, 80% of Outlet Mall’s customers were foreign tourists, while 20% were locals. The majority of customers are now local.
Pena House Group also introduced its own restaurants, branded as “Kinlenn Eatery & Play” modernist cafes offering authentic Thai dishes and a selection of beverages in the Soi Ari area.
She said Outlet Mall’s sales reached 3 billion baht in 2019, then dipped to 1.6 billion and 2.1 billion in 2021 and 2022, respectively.
Given its various initiatives and activities, the company expects its sales to tally 2.4 billion baht this year and return to pre-pandemic levels next year, said Mrs Rojanee.