Temporarily difficult to shake the high-end market, high foot traffic in TRX mall does not necessarily mean high sales.
TRX shopping center attracted attention from the entire city at the opening, but now some industry insiders have found that high foot traffic may not necessarily translate into high sales.
After conducting on-site research, the Kenargi Investment Bank research cohort released a report today indicating that although the TRX shopping center's opening effect is good, the foot traffic does not necessarily result in higher sales of luxury brands.
Analysts said, "When the mall first opened in November 2023, it attracted a large number of shoppers who flocked to explore the newly launched luxury brands."
"However, most retailers in the shopping center now believe that the previously hyped popularity is gradually fading, leading to a significant decrease in the number of shoppers visiting the store."
Retailers interviewed also pointed out that during the busy lunch hours, the foot traffic concentrated on the lower dining floor of the mall does not directly drive sales of luxury brands.
The survey results also show that the sales volume of luxury brands in the mall has been declining since mid-2024.
"This is mainly attributed to seasonal factors, as there are no festive events like the Lunar New Year or Eid al-Fitr during this period to effectively stimulate consumption."
From a pricing perspective, the speed of price increases for luxury brands has also slowed down, as retailers are now adopting more cautious pricing measures to maintain competitiveness and attract sales in the current economic environment.
The survey found that the price increases of the respondents mainly ranged within 5%.
The appreciation of the Ringgit has adversely affected sales volume.
In addition, the surveyed retailers also mentioned that affluent consumer cohorts tend to choose to purchase luxury goods abroad when the Ringgit is strong, further leading to a decline in domestic sales.
According to analysts' observations, although major brands failed to attract significant foot traffic, 20% of luxury brands generate monthly revenue exceeding 3 million Ringgit, 30% generate revenue between 1 million Ringgit and 3 million Ringgit, and the remaining 50% generate revenue below 1 million Ringgit.
Furthermore, the distribution of foot traffic in TRX shopping center includes tourists, but from the survey results, only one-fifth of the stores' sales are driven by out-of-state tourists.
Analysts found that although there are many visitors to the shopping center, the sales of luxury brands are still mainly from domestic customers, with only 22% of respondents believing it depends on tourists.
We believe that only certain brand businesses may have a higher proportion of tourist visits due to the nature of their products, thus resulting in this survey outcome.
The potential risks have been reflected.
Despite this, the launch of the TRX Shopping Center is believed not to pose a significant threat to other existing high-end shopping centers.
The report mentions that because the government is actively planning the relevant area to be transformed into the next financial center, the TRX mall has an advantage in terms of connectivity.
"However, we believe that this move will not diminish the attractiveness of other nearby malls, as Suria KLCC is located at the iconic landmark of the Petronas Twin Towers, and Pavilion KL remains a favorite destination for many high-net-worth individuals."
In conclusion, the potential impact of the TRX Shopping Center should already be reflected in the market price.
Currently, the top stock picks of Kenanga Investment Bank are still $SUNREIT (5176.MY)$ and $PAVREIT (5212.MY)$with target prices of 1.81 ringgit and 1.66 ringgit respectively.
It is important to note that this survey result is based on interviews conducted by Kenag Investment Bank at TRX Shopping Center with only 25 respondents; analysts also revealed that they had contacted half of the luxury brands at the bottom level, but 30% of the respondents refused to participate in the survey.
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📈 Check out the stock items in the text at once 📉
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📝[Reporter: Lin Qiaosen]
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Source of information: Nanyang Siang Pau
Disclaimer: This content is for reference and educational purposes only, and does not constitute any specific investment, investment strategy, or endorsement. Readers should bear any risks and responsibilities resulting from relying on this content. Before making any investment decisions, be sure to conduct your own independent research and evaluation, and consult professional advice when necessary. The author and related participants are not responsible for any losses or damages caused by the use or reliance on the information contained in this article.
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