The idea of adding major Family Entertainment Centres (FEC) has in malls been gaining popularity rapidly over the last few years. Several new malls have been constructed around the country, with substantial square footage allocated to FECs. They substantially extend a mall’s draw, lengthen shopper stay and even increase revenue for other tenants.
Shopping centers are traditional destinations for families. However, retail by itself appears to no longer suffice as a draw for leisure experiences. Yes, families still come to traditional shopping centers to buy what they need, but new entertainment destinations such as urban entertainment centers and location-based entertainment centers are appearing, many with retail as a significant part of their mix.
These new retail/restaurant/entertainment hybrids are capturing an increasing share of families’ limited disposable out-of-home leisure time and their retail spending. Malls have re-invented the wheel and embraced entertainment as an important driver to churn the fate of their centres.
Entertainment zones in malls have become a favourite hangout for families willing to spend quality time together – a trend in which mall developers see a great opportunity. The new attractions are video game arcades, bowling alleys, air shooting, pool, children’s play areas and adventure rides. Malls can’t do with just providing shopping and eating out amenities. A developer needs to cater to diversified interests in a mall and this is where entertainment zones become important.
The change had started few years back when major players like Smaaash and Funcity started making larger and bigger formats by offering more than just arcade games. They introduced bowling/cricket/big outdoor rides along with snow parks, thus sparking a change in the Indian FEC landscape.
Modern retail is estimated at 14 per cent of the total market, which is pegged at Rs 142,237 and is expected to grow at healthy rate. Retail expansion grew by over 50 per cent in terms of number of retail outlets and retail space with same outlets revenue growth being 20 per cent.
According to Sr. VP, Infiniti Malls, Mukesh Kumar, “If the retail is to succeed, the shopping centre needs to have a significant amount of entertainment and F&B. The customer and their lifestyles have changed, and with that, shopping centres are changing to continue to attract consumers. Entertainment centres, entertainment and destination venues, once of little significance to shopping centres and malls, are now growing in importance as an essential part of the mix in order to attract today’s consumer. Family Entertainment Centre’s are definitely playing a vital role in supporting the real estate sector in India.”
Centre Director, Phoenix Marketcity Bangalore, Gajendra Singh Rathore says, “ Delivering an aesthetic experience with high perceived value is of prime importance now and FEC’s are a result of continued efforts where the customers can actually feel the intangible direction of their experience.
Talking from her own experience, EVP and Head-Premium Malls, DLF Utilities Limited, Pushpa Bector says, “Indeed FECs are playing a vital role in supporting the retail real estate sector. With DLF Mall of India, India get its first destination mall, which encapsulates not just shopping but a never-before food and entertainment experience, the mall has redefined the concept of indoor entertainment at par with international destination mall standards’. There are plenty of options for entertainment in the mall with some iconic entertainment zones. The top two levels of the mall called the Leisure Land have 5 entertainment anchors. This makes DLF Mall of India as the ultimate destination for individuals across all age groups.”
FEC has been a part of Inorbit Malad from the very inception of the mall. Inorbit has gazed in the crystal ball and knew it from the beginning that having an FEC zone in a mall will help it in gaining more traction from the mall patrons. Executive Director, Inorbit Malls, Rajneesh Mahajan says, “In FEC category we have Timezone, it is there from very inception. F&B and Entertainment has grown, we see more footfall in these categories.”
Senior GM Marketing, Mani Group, Sudarshana Gangulee opines, “Time is the one thing that is at a premium in the lives of people today. With double income families, disposable incomes are no longer much of an issue. However, with the parents holding on to their own different jobs, and kids with their plethora of classes and activities, the biggest casualty in the lives of today’s nuclear families is the ability to spend time together. The one thing everyone is in search of is ‘quality’ time. And this is where the Family Entertainment Centres and Dining Zones in malls have an increasingly important role to play. Here, in one convenient venue, people can complete their shopping and also catch up over a meal or movie, in a comfortable, air-conditioned environment, without the hassle of having to travel to multiple locations for multiple requirements. This is why shopping malls with their Family Entertainment Centres are playing an increasing vital role in supporting the retail real estate sector in India.”
FECs Act as an Anchor Attraction for Young Families
FECs are effective in drawing younger families visiting malls more for social and entertainment purposes and it has been noticed that FEC customers spend additional time at the food court and mall stores.
Kumar, says, “FECs are gaining popularity in malls, as shopping centres these days are adding such zones to increase their footfall. These zones encourage parents to seek out exciting yet safe, fun and wholesome activities for their children, along with teens and adults seeking the latest 7D video games, sports, redemption and motion simulator games to play. With the evolution of mall culture in India and shopping nowadays becoming like a family affair, the FEC surely to play a key role in the success of any mall. Indoor large centres certainly add lot of values to the mall since it can operate 365 days of the year and is temperature controlled.”
There was a time family entertainment constituted of going to the local park, watching a movie or visiting relatives, the element of Kids entertainment was missing from family fun time. Understanding and realising the dearth of play areas, well maintained playgrounds, entertainment and gaming zones, Shalini Vij founded Hang Out.
Talking about the growing relevance of FECs, Vij, who is now the Director of Hangout, says, “The Entertainment Industry is vast from big tycoons like Disney, Seaworld, Six Flags and others that head this, too plunge in with no knowledge of the industry can be dangerous, it’s imperative to gain knowledge as there is a lot involved that doesn’t catch the customers eye. Another problem I’m forseeing is over-flooding of the industry, even in western countries like the US a 3 km vicinity radius is maintained from a business stand point to enter into business with such huge investments but here I’m noticing competition opening in next door malls, the customers will benefit but the FEC operators will only be cannibalising into their own industry and with such cut-throat competition even the customer won’t benefit eventually, because eventually the operators will look for cheaper, used equipment as options for lowering investments, risking the safety and security of the children so it’s a vicious cycle. The industry has some rules that must be respected.”
MD, Gujarat Amusement Industries, Bhavesh Shah says, “With increasing disposable income and a move away from the 80’s savings mindset. Consumers are more open to spending on new experiances and entertainment. The Indian consumer is maturing and is now willing to pay a good amount of money for FEC’s that are well-planned in terms of ambience, quality of equipment, quality of operations and staff engagement with guests.”
FEC’s today are being another anchor for malls, drawing more footfalls and helping in retaining people for much longer. And this trend will only get bigger as FEC’s develop in size and their offering. Increasing incomes and spending habits also act as catalyst in the process.
Gone are the days when multiplexes were the only leisure format; the new buzzword in the entertainment and leisure segments are FECs, with malls bettng really big on these formats.
Agreeing with the statement, CEO, Timezone Entertainment, Naveen H states, “Entertainment has become the key differentiator for the malls. Timezone is present in six countries in Australasia. After our success in Indonesia and Philippines which are comparable markets to India, we knew India would be the next big market for malls and thus launched our first store at Inorbit Mall, Malad way back in 2014.”
The modern customer is educated, connected and needs a differentiation in experience to attract him to a mall and innovative entertainment centres are today more important than they ever was.
Talking in the same regard, Director, Pitch Vision, Kapil Bhatia says, “As a supplier of cricket simulators under the brand of PowerPlay, we at Pitch Vision have recognized the sporting pulse of India which is undoubtedly cricket and have conceptualized and supply to FEC the worlds most advanced cricket simulator.”
He further adds, “As equipment suppliers to entertainment centres, we understand that there is no one size fits all option, especially in a large and diverse country like India. Our challenge is to provide a customized solution that is tailor-made, specific to and fits the requirement of each customers needs and we pride ourselves in delivering these custom made solutions which increases the ROI of our clients.”
“When I had launched ‘Getlost’ at Neptune Magnet Mall the focus was simple that FEC should be one of the top anchor of the mall and driver of the footfall.” says, Director, Complete Sports and Management (I) Pvt Ltd (CSML), Rohit Mathur.
Shifting Gears Between Spending and Experiences
Mall developers are rounding out their tenant mix and providing an option for people to do more in a mall than they might have done 10 years ago. Department stores that anchor malls used to be the attraction that drew people to malls. But Indians’ shopping habits are changing as they shift spending to experiences. With online buying options growing easier than ever. That has some retailers looking to cut stores, and mall operators bringing in new businesses, which mall visitors of today will find more of an attraction.
Movie theaters and F&B have been pairing up with malls for years. But offate malls have been increasingly open to include the entertainment options for families. That is the main reason for FEC culture to spruce up in malls.
Talking about the same Bector talks about the importance that FEC has in DLF Mall of India, which touts itself to be a destination centre in India, she says, “DLF Mall of India houses India’s largest indoor entertainment zone known as ‘Leisure Land’. It’s about non-stop fun – the zone occupies approx 30-32 per cent of total mall space, promises to cater to all age groups with cutting edge concepts like Smaaash (one of its kind virtual indoor gaming land), Ski India (an indoor snow park modeled after Ski Dubai) and Funcity (thematic amusement park equipped with fun rides).”
Spokesperson of Phoenix Marketcity, says, “FEC is one of the important categories that further enhance the urge to visit malls and add to ‘a day well spent’ proposition. We have wide range of options like rock climbing, cricket, bungee jumping, gaming center, bowling, large event spaces etc,. which are spread in different areas of the mall.”
It is also to be remembered that for an average family today, a shopping centre visit is not just about buying products and services. It is about the entire experience. Hence, shopping centres need to innovate and to focus on the important areas of family entertainment and eating-out options which are crucial to ensure that mall visitors go back with happy memories – and not just concentrate on the shopping aspect of the visit.
Gangulee, says, “In Mani Square, a lot of thought and planning has gone behind the dining and family entertainment zones. The family entertainment options at Mani Square comprise of: 4-screen multiplex – PVR (earlier Cinemax), dedicated Family Entertainment Zone – Amoeba, 7D Theatre – Adventure Plex and Scary House. The total area taken up by these four formats would be almost 60,000 sq.ft., which is almost 15 per cent of the gross leasable area of the mall.
Talking about Forum Malls, COO-Retail, Prestige Estates Projects Ltd, V.Muhammad Ali says, “FECs are present across all the Forum Malls and we strongly believe that they are essential in completing the mall experience. However, mere FEC cannot draw footfalls and will not be able to survive on its own.”
Further adding, Ali, says, “Despite of huge entertainment tax, they have continued to grow. The key challenge observed in FEC is that they need to depreciate their equipment at 20- 25 per cent per annum and change these equipment with new and better technology within 4-5 years to sustain the engagement and interest among kids whose preferences and demands are changing by the year. Due to these challenges, there are only 2-3 organised players who are expanding and growing. Our new centres which is Forum Shanti Niketan, Whitefield and Forum Falcon City, Kanakpura Road, Bangalore will take FEC to new levels, which will have large centres upto 20,000+ sq.ft. with double height of 7.5 meters. Our FEC centre in Hyderabad with 17,000 sq.ft. has shown more than 40 per cent year-on-year growth since inception and we are planning to double FEC offering in Forum Fiza Mall, Mangalore from 10,000 sq.ft. to 20,000 sq.ft. Such large FEC centres alongwith other essential categories make up for a destination which cannot be missed. We are also observing several international players entering the country which will take the offering and competition to a new high.”
Kumar of Infiniti Mall, says, “We have Family Entertainment Centre at mall, area of Planet Infiniti is about 60,000 sq.ft. We are the only mall to have a 360-degree indoor roller coaster. We also have multiplex with 5 screens.”
Adding a different dimension, CEO, Instore Kids Corners, Tushit Agarwal says, “The great environment beings with a good mall that has taken into consideration the above mentioned aspects but it’s important that the individual retailers within the mall or in high-streets also realize the value of a fun, child-friendly and stimulating environment. Especially when it’s created and designed for children and keeping the real estate concerns of the retailer in mind. A lot of time parents want their kids to be around them when they shop, it can be for themselves or for their kids. How do you solve that problem? That’s exactly what IKC address. We make small areas for kids within the retail environment, starting from 5 sq.ft. to 5,000 sq.ft. Which does not require any supervision and maintenance.”
FECs Draw in Potential Shoppers Who Otherwise Wouldn’t Have Been Exposed to the Mall
According to Bector, “FEC’s draw a lot of different set of customers (specially families) who turn out to be potential shoppers and it definitely impacts the mall’s footfalls and fashion brands to cater to a new set of customers which further increases the sales.”
According to Rathore, “ Motives for visiting the malls vary with every individual and are based upon the mall visit’s purpose and entertainment is the key quotient that motivates and increases the mall’s appeal drawing in potential shoppers.”
If the retail is to succeed, the shopping center needs to have a significant amount of entertainment and restaurants. Giving her perspective on the same, Gangulee, says, “The average Indian is still a very cost-conscious shopper and the term ‘retail therapy’, in the larger context, is stiill confined to few pockets of affluent, predominantly urban consumers. Hence, in most retail developments, repeat visits to the mall for the express purpose of shopping remains restricted to regular-use product formats like in a hypermarket or in the various value retail chains. Purchases from more expensive brand stores is confined to events (viz. birthdays, anniversary, etc), festive periods, or during end-of-season sales. In such a situation, the FEC zone and the dining options have a very important role to play. It is these formats that draw visitors to the mall even when they do not wish to do any shopping. In that sense, a shopping mall has expanded beyond the concept of a mere ‘market’; it is now the destination where families spend their times together, irrespective of whether they want to expressly indulge in shopping or not. That is why the quality of the FEC zone has a significant impact on ensuring year-round footalls in the mall.”
According to VP, Quest Properties India Ltd, Sanjeev Mehra, “The new age retail entertainment centering around FEC’s is a reality. This trend which originated and spread in the West has slowly seeped into our country and demands attention. A family outing to malls during weekends has become extremely common and hence retail therapy has been redefined to cater to the entire family. Consumer’s revelation of preferences for food and movies along with other sources of entertainment has been massively growing and with demand, comes supply.”
Malls which are more entertaining will be more productive. Talking on the same, Kumar of Infiniti says, “FEC culture in India is definitely catching up fast. India is projected to be the largest country with the youngest population by 2020, and we do not have enough centres to cater to this growing demand. In the last decade, FEC in a mall in India was considered more of a filler. However, the trend has changed in the recent past. They are now one of the primary drivers of footfalls into the malls making them a necessity for every mall to possess.”
Hearing From the Horse’s Mouth
‘It’s easier said then done’, as a good FEC takes up a space of around 15,000 sq.ft. upwards and with space being the biggest paucity in India. FEC operators have to maneuver through lot of testing times, let’s hear it out from the horse’s mouth about the constraints that they face and how they mitigate this challenges. Talking about the challenges, MD, SVM Private Limited, Vijayender Tulla reveals, “The biggest challenge was and is the capital investment. This is a very capital intensive business. Unfortunately there isn’t any established manufacturing base in India for this sector hence a lot of the equipment has to be imported. Government charges 30 per cent customs duty on the equipment which increases costs further.”
Mathur from CSML says, “The most important point is getting the right space in the mall, even if this is done than a developer who understands the value that a fec brings. Still not many developers understand this. But this is changing and we have few progressive shopping mall onwers who are treating entertainment with respect.”
“Technical service to repair expensive equipment is difficult in India as many overseas manufactures do not have back up in India. we order one extra piece of equipment jut to use as back for parts. Average FEC is delayed for 1 to 1.5 years for many reasons and equipment stays in storage with no revenue. We do not order equipment till site is ready,” says, Director, Galaxy Funworld, J Shah.
Managing Director, Shott Amusement LLP, Rishi Shah, “Biggest challenge was to create awareness of this modern-day entertainment in the minds of the customers, specially in a Tier II city like Surat. With some ambush and traditional marketing techniques we could position the brand well. Also FECs require ample amount of manpower to run day-to-day operations. Acquiring quality staff that share the same objective of providing excellent experiences to the customer was also a huge challenge. But we could tackle it by filtering the recruits and only hiring the suitable people. Special training programs were conducted month-on-month to keep the quality of service intact. Another problem that we had faced was to deal with the international suppliers, right from attraction selection, price negotiation to supply chain management. Over the years, we have gained that knowledge of handling international suppliers.”
Investment and ROI
Investment amounts vary from site to site depending upon size, height,location etc as every concept is customised to the particular location and market. Some of the leading FEC operators shares their insights on the same.
According to Shah of Galaxy Funworld, “A good FEC requires Rs 5-15 crore and payback should be 2-3 years depending on location.”
“Total investment ranges from about Rs 8,000-9000 per sq.ft., majorly depends upon the city, location etc. Based on the ROI the break-even is easily achievable in 40-48 months time period. Attraction mix also depends upon the city’s level of acceptance, which would clearly redefine the investment in the project.” Says, Shah of Shott Amusement LLP.
Naveen H of Timezone Entertainment, says, “For a 12,000 sq.ft. store, investment is in the range of Rs 6,000-7000 per sq.ft. Investment per sq.ft. is higher for smaller size stores. Being high capital intensive business we do not consider operating cash break-even but post depreciation break-even. Our selection of mall is with the criteria of breaking even in the first year itself.”
According to Vij, “On an average Rs 6,000-10,000 per sq.ft. depending on the operator and the kind of equipment they put in. Also depends on the model, toddler areas/ playground require different type investments as oppose to a full fledged high-tech game room with state of the art rides and VR. Return on investment varies on type of FECs and return on investment you can sought based on the footfalls and price points.”
Talking from the perspective of expanding through franchising, Tulla says, “We have 4 centers operational in the franchise model in Hyderabad and Pune and we are actively looking for newer franchisees across the country. We offer an end-to-end solution to the franchisee; the entire set-up and ongoing day-to-day operations are handled efficiently and with a lot of care, by our teams. We will soon be launching 2 more franchise centers this summer.”
Future in Tier II and III cities
FECs have tremendous growth prospects in tier II and III cities too, in fact that is where the maximum scope is as those markets are yet to mature and people have more time for leisure compared to the metros.
According to Shah of Shott, “As the requirement of malls are increasing in the Tier II and Tier III cities, the need for FECs are also taking positive stride forward. We as an FEC in Tier II city are doing exceptional business by keeping the quality product and service intact. The investment and ROI will obviously differ but performance in business requires intent and dedication.”
According to Naveen H of Timezone, “FEC format is most suited for Tier II and III cities because these cities have limited entertainment options compared to big cities, more available time compared to big cities, disposable income comparable with big cities.”
FEC culture is at a nascent stage in India, with India’s young and savvy population, FEC sector will surely boom in the coming years with a lot more innovative games and entertainment options being regularly introduced.
According to Shah of Shott Amusement, “FECs in India are the next trend. Every mall has to have a standalone FEC to boost the required footfalls. The players who would take the level of service to the next level will survive in the coming next years.”
The FEC culture in India will only grow and we are just in the beginning of the curve. Resonating the thought, Tulla, from SVM Private Limited, says, “FEC market is set to explode with some international operators expected to commence operations, including few well-known theme/ concept-based operators from the West.”