The correct option is C that's a great
Option C: 'That's a great' describes the nature of the suggestion. It completes the sentence, in the sense that it is an acknowledgement and appreciation of the suggestion: "Have you tried the factory outlets...?" made by Babita.
Hence option C is correct.
Option A: 'The' in 'that's the great' must be replaced by the article 'a'. This is because 'the' is a definite article, it is used for adjectives that are of a superlative degree. But, 'great' is an adjective of the positive degree. Hence A is incorrect.
Option B: 'I'm grateful' does not complete the sentence in structure as well as meaning: 'I'm grateful suggestion.' Hence B is wrong.
Option D: 'Yes, that's a' also not complete the sentence in meaning. 'Yes, that's a suggestion' means that it's a confirmation that what Babita said was a suggestion. But this 'confirmation' isn't required at all. Also, it isn't coherent with the gratitude expressed: 'Thanks. Yes it's a suggestion'.
Hence D is incorrect.