How malls and FECs are combating showdown due to Covid-19?

The Indian entertainment & amusement industry is bracing itself as the coronavirus pandemic continues to escalate.
How malls and FECs are combating showdown due to Covid-19?

All FECs(Family entertainment center) & Parks have been hit hardest, with many entering their second month of seeing business down by upto 30-40 percent. But now, in the wake of the official declaration of a pandemic the next 2-3 months look very challenging. As guests are not going outside from home much, the entertainment industry has come to a halt and all over the world too, it is facing a major setback. The outbreak has caused guests to stall their outing and travel. As a business we have faced a fall of 35% revenue over the last few days, but we are sure that what is important right now is to not look at these numbers but to obviously think of ways to stop the spreading of this virus in India.  Containing the virus should be a "greater priority" than any other concerns right now for our industry of business.  We don't know how serious [the virus] is, we are in a completely unknown phase of this, and I think in terms of preventing the spread, if this continues for the next 1 month, and then it will take a greater priority than environmental concerns also.

The top ten cities of India have approx 70 entertainment FECs & parks, & with the closure of malls and multiplexes have brought organized entertainment retail to a grinding halt. Even a short-term closure will have significant financial implications on industry. This is an uneasy waiting game. Parks & destinations of entertainment those which rely on tourists are already down, and it's getting worse. Based on what we're seeing out of India, it is likely to get really bad. Entertainment industry in India is said is expecting to take a $100 million hit loss from the recent coronavirus outbreak.

Painful recovery
Even so, the entertainment industry will take time to recover and have to make some tough calls to contain losses, with the spread of coronavirus, the sales and footfall will continue to see a downward slide for atleast eight to 12 more weeks. We expect resurgence only in late 2020. Meanwhile, industry stakeholders must make some tough decisions.
With declining sales, players will have to control their fixed expenditure such as employee cost, power, and rentals. As a first step towards this, malls and restaurants could reconsider their operational hours to minimise the impact of falling footfall and lower sales & also look to sell advance tickets online like Pay now Play later etc.

Staffing implications
If a lot of people get this virus, I am more concerned about revenue - we can survive a 20% hit there - but we have to worry about labour & how will we even stay open?
When people are off work because they are self isolating, we do not have to pay them legally. But I believe we have a moral obligation to do that and entertainment industry is not a high-paying industry, Staff cannot survive if they are not paid for a couple of days only.

Scope for support from landlords & malls & government
None of us have received any help from landlords in the form of rent reductions, they are not prepared to do anything just yet. They're a bit tough. I guess we just have to ride it out. There is not much we can do at this stage, landlords know that if you default, you're on the hook for it. The total industry trend will show an overall 50% drop by the time everything will be all right.

Coronavirus is fast disrupting Indian's daily lives, from school to work to going out to socialize— and some HR heads are already saying that will spell trouble for some Indian workers more than others. Many cities have already been locked down by the Govt with regards to entertainment centers & parks plus declining consumer confidence, potentially severe retail-traffic declines, and temporary store closures are evolving risk factors that depend on uncertain variables like the geographic spread of the virus and the timing of containment/eradication solutions.

Being in the entertainment & hospitality industry, we have started taking the best precautionary measures for the safety of our guests and staff. Our team is vigilant and is following the recommended precautionary measures, protocols and guidelines from various health organizations.

The ride will be bumpy for the balance of the year, but within 6 months, you will see the situation recover significantly. Indian amusement & entertainment industry is well-managed with a deep bench of experienced leaders and prominent brands that are so critical to its success. And it’s diversified in its operations so it can ride out the storm.

The article has been authored by Jaydeep Ray, General Manager, Marketing, Smaaash



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