Shopping malls have become a hotbed of various retail formats. In the Klang Valley alone, you would have noticed that the shopping mall industry does not just relate to typical shopping malls but would now include hypermarket players like Giant, Aeon Big and Tesco with their own localised tenant mix.
We have also seen a “power centre” with Ikano Power Centre (now known as IPC). These are large shopping centres that almost exclusively feature big-box retailers as their anchors. As with IPC, its big-box retailer is Swedish furniture and home appliances giant IKEA.
There has also been a boom of neighbourhood shopping malls to complement the ones in the city centres and suburban regional shopping malls. Added to that has been a strong entry of outlet shopping malls in the past five years.
We have to first understand the difference between a factory outlet centre and an outlet centre. A factory outlet centre would normally be attached to or near an existing factory producing the goods. We do not have that format in Malaysia.
We have had in the past no fewer than two local projects attempting the idea of an outlet centre but did not last long.
However, in December 2011, America’s first venture in Malaysia opened the first premium outlet in Johor. It broke the barriers not only in offerings but also in design and location. Johor Premium Outlets or JPO is in a location surrounded by oil palm plantations, offering premium and brand name outlets as its tenants.
The mall is designed on a single level with an outdoor ambiance. It also promises discounts of up to 65% for premium and brand name goods. It made waves and is still very well-patronised by locals and tourists. Today, it houses 130 tenants.
In May 2015, another version of an outlet centre was opened by a Japanese venture. The Mitsui Outlet Park (MOP) is located near the KLIA airport and unlike JPO, it is enclosed and air-conditioned.
It promised more than affordable luxury as its tenant mix. Goods are priced with attractive discounts for off-season uppermiddle to high-end off-season brands. It currently has about 130 stores but plans are afoot to increase that to 190 stores via an expansion exercise next year.
By 2021, according to reports, MOP would be the largest outlet shopping centre in Southeast Asia with about 250 shops. As with JPO, it opened well and is still drawing good patronage from locals and tourists.
In November 2015, a British venture opened Freeport A’Famosa Outlet (FAO) in A’Famosa Resort, Melaka. It offers a themed outdoor ambiance over a single level. It promises up to 80% discounts off normal prices and provides for brands to quickly turn around off-season stocks.
It is the first venture in Southeast Asia. Today it houses more than 70 shops of various brands. It is also doing well with domestic tourists forming the bulk of the customers.
Malaysia’s first strong local venture – Penang Design Village (PDV) – opened in Penang last November and is located on the mainland very near the second Penang Bridge.
The outlet shopping centre in Penang is also the first in the northern region. It had a strong opening and has about 100 shops offering premium brands with up to 70% discount. It also promises a family-centric outdoor ambiance over a single level.
The outlet shopping centres are truly a format which has not failed as seen from the opening of the last four outlet shopping centres. We have now seen an American, Japanese, British and now a Malaysian version of how outlet shopping centres are conceived and managed.
There are two more outlet shopping centres under construction. One would be the Genting Premium Outlets (GPO) which is expected to open by next year and Horizon Village Outlets (HVO) is reported to open by the middle of next year.
GPO would be the second premium outlets shopping centre under the same group who brought us JPO. GPO is located in Genting Highlands whilst HVO is located in Bandar Serenia, Selangor, very near to Xiamen University of Malaysia. It is also not very far away from KLIA and MOP.
Many have wondered if the outlet shopping centres would complement or add competition to the shopping mall industry.
In fact, any shopping mall format would surely complement the industry but the hint of competition would still be there. There is no such thing as any format or new shopping mall opening not having a complementing or a competitive effect on the consumers.
Outlet shopping centres are created primarily out of the need for steep discounts to clear off-season stocks. With the advent of speed and technology, the speedy change in fashion for example creates a sense of obsolescence.
This also creates stock issues. Hence, there was a gap for having a decent and well-designed facility to cater to the required pipeline.
Traditional enclosed shopping malls, whether or not in city centres or neighbourhoods, would cater to the needs of trends and up-to-date lifestyles and basic necessities.
These would also have hubs for social interaction via the creation of distinct restaurant and cafe zones along with entertainment zones. Typical shopping malls are normally very complex as they aim to create an experience or more to differentiate.
An outlet centre is more straightforward. Throughout the world, many of these are located far from the city centre.
They are normally located up to 50km from the city centre or central business district along a major highway or attraction. In Malaysia, you see the same with JPO, MOP, FOA and PDV. The upcoming GPO and HVO would not be any different.
Outlet shopping centres are also very sales and discount-centric as you can easily see form their tenant mix. They also have limited restaurants and cafes but do a lot more for connectivity and convenience.
Looking at all the existing outlet shopping centres, you would find that shuttle buses, for instance, are a norm and come free with convenient timings and pick-up points.
Shoppers and patrons who go to an outlet centre tend to be focused on a good bargain especially when fashion moves so fast that an off-season item is not necessarily out of fashion. In most cases, these are still sought after.
We will see a few more forays by developers to create outlet centres as these are built normally now as part of a new township. It forms a catalyst for growth along with community shopping malls.
Outlet centres are created to provide a new format and outlet for both the retail industry and consumers. However, they would not replace a traditional shopping mall but would both complement and compete at the level of value.
Anthony Dylan is the member of Malaysia Shopping Malls Association