Despite COVID-19, the Indian Retail & Shopping Centre
Industries are on verge of welcoming the festival season. The season, which commences around the month of September has been the ‘bread and butter season’ of the industry for decades now.
Inspite of the fact that COVID cases are still rising and there is an atmosphere of uncertainty in the world, the lockdown is now over. Cinemas and multiplexes also opening in October, along with food courts (of states which had not yet been given the green signal) and other FEC zones, and malls are hoping the coming months will play a major role in their revival. The industry – especially the F&B sector which had suffered losses worth crores – is hoping that the next few months will signal a recovery of sorts.
What Research Reports Say
As per a CRISIL analysis, the revenue of mall operators is set to halve this fiscal because of pandemic-driven lockdowns. Currently, shopping malls have a debt of around Rs 4,200 crore and they have a retail space of 7.5 million sq. ft. across the country. While these malls are under pressure, CRISIL said that the impact on credit quality of these malls is limited for near time since they are backed by “strong sponsors” and they have “high debt service coverage ratio (DSCR) of nearly 1.5 times on average.
“Food courts and cinemas, which contribute about 22 percent to the total revenues, have borne the brunt of the impact on operations due to social distancing and are also expected to take the longest to recover,” the report said.
Aside from this, people are still scared and in two minds – should they eat outside of their homes, in a public place or not? The fear of exposure to a virus which spreads through contact is still holding back many visitors from eating in a restaurant – be it then a shopping mall food court or a fine dine restaurant. This was obvious in the fact that food courts in shopping malls were deserted in the initial phase of the re-opening.
While home deliveries and takeaways picked up after the initial dry phase during Unlock but eating out with family and friends
lost its charm. To counter this crisis, mall developers and the F&B brands, with the help of the technology, had to come out with different marketing initiatives and services to attract customers, to lure them out of their homes and back in malls, shopping and dining.
Consumer Response So Far
As restrictions ease and unlocking India is successful, many of the bigger and more premium shopping malls are witnessing a quick turnaround and recovery. Even malls in Tier II have had a positive response from consumers, leaving mall developers hopeful of a quicker recovery.
“For DLF Shopping Malls the response so far has been very encouraging. Both DLF CyberHub and DLF Promenade have witnessed improvements in orders, week on week. Additionally, after the directive from the government on opening bars, we have seen an increase in our footfalls by 50 percent. Interestingly, the popularity of our restaurants at DLF Promenade is such that a few cult brands have seen waiting even on weekdays,” says Pushpa Bector, Executive Director, DLF Retail Malls.
Abhishek Bansal, Executive Director, Pacific Group agrees, saying, “When we reopened post lockdown, the response was slow for beginning days, but significant footfall increased by 12-15 percent week after week. By abiding to social distancing guidelines, 50 percent seating arrangement at food court and restaurants is being followed; food outlets have been serving at maximum capacity within these limited seating arrangements.”
“The response from consumers has been progressively better, with a month on month increase of walk-ins and dine-ins. There is a sense of growing confidence in the market and people are choosing to come to dine- in and are also making reservations in advance given the requisite for social distancing. Food courts have also seen an increase in people enjoying with their family and friends,” explains Yogeshwar Sharma, Executive Director & CEO, Select CITYWALK.
According to Manoj K Agarwal, Chief Executive Officer, Viviana Mall ever since the eateries have been permitted to allow dining, people have shown confidence and have decided to venture out to eat.
“We are thankful to the government for having allowed us to reopen the dine-in facility at the restaurants and food courts. Ever since the Unlock 1.0 guidelines have been implemented, there was an increasing trend of people ordering for food at their respective homes and workplaces. In the last one week, ever since the eateries have been permitted to allow dining, people have shown confidence and appreciated the safety protocols put in place. We have a mixed crowd of families, individual shoppers, friends, etc. coming in. Most customers are taking a much awaited meal or snack at the food court. We are very happy to see that some customers have already started visiting the mall in smaller groups to celebrate birthdays and special occasions,” he says.
Rohit Gopalani, Leasing Head, Inorbit Malls, concurs, saying, “The F&B sector has shown amazing growth in recent years. With the opening of food courts and restaurants (without liquor) since June 20 in Hyderabad, Bangalore and Baroda, sales have slowly started picking up. Food courts and restaurants have started operating in our Malad and Vashi Malls since October 5, 2020 and so it’s too early to comment, but we are seeing customers visiting the food court and restaurants. Restaurants are taking prior reservations so that they follow the 50 percent capacity rule.”
“LuLu Mall has been witnessing a very tepid response in the initial 2 months of reopening. Then, in August, due to Onam in Kerala, we saw the food court’s performance improving. But, the fact is that people are now more hesitant to try new flavors and eat outs. They are dining in or ordering from known places where they are convinced about the safety measures undertaken. Consumers are also spending more consciously now. Youngsters aren’t moving out a lot. Most of them are working from home and hence cafes are also missing out on their usual business,” adds Shibu Philips, Business Head, LuLu Shopping Mall.
“For Express Avenue, the response has been decent in the absence of multiplexes and FEC – since they are not operational yet – and we also had anticipated such a response. The most important thing here is the opening of the food court and fine
dining for normalcy to set in,” says Munish Khanna, Chief Revenue Officer, Express Avenue.
“In the current times, we have witnessed a significant
drop in shopping. Our current footfall constitutes more serious shoppers. It’s the people who actually want to buy who are visiting the malls and it is much more organised as well compared to earlier. Customer engagement is of paramount importance all year round. However, it is important to engage with customers ahead of the festive season and encourage them to visit the malls. Moreover, when consumers spend more time in the malls, they tend to shop and indulge more in food as well, therefore it will bring more footfalls to the food court as well,” says Mukesh Kumar, CEO, Infiniti Mall.
“The food court has been allowed to open from October 5, 2020. And this is encouraging for us especially since customers have been enquiring about the opening date of the food court since the mall reopened in August,” explains Shrirang Sarda, Director, City Centre Mall Nashik Private Limited.
“After reopening the mall, in the initial phase till July, there was less traffic in both food courts and fine dining. Online delivery
was dominating especially in the QSR format. Gradually, from August onwards, the scenario was changing. People were welcoming experiencing food in the food court and fine dines.
September onwards, here in Bengal the shopping for Durga Puja got initiated and eventually consumer response for food court and other F&B formats were pretty encouraging,” says Arijit Chatterjee, COO, Junction Mall.
Even malls which don’t have full-fledged food courts are overwhelmed by consumer response.
“Creaticity Pune recently got the directive from the authorities
to reopen its F&B outlets inside the mall and we are very excited to re-start the opening process. As our mall doesn’t have a typical food court with kiosks and QSRs, each restaurant has its exclusive dining area which helps in following social distancing norms for the safety of our customers. We have over 10 F&B outlets that serve Indian, regional and global cuisines under the brand name Pubtown,” says Mahesh M, CEO, Creaticity.
The Emergence of New Norms at the Food Court
With new norms and SOPs related to social distancing, safety and hygiene in place, the essence of the entire food court is going to undergo a major transformation. The crowds, along with the buzz in the food court, will be missing. Alongside this COVID will:
SIGNAL THE END OF SOCIAL DINING: Food court and restaurants will no longer witness this trend. The concept of sharing empty table space with strangers will no longer be possible as people themselves will be reluctant to sit with a stranger in COVID times.
ENSURE TABLES & SEATS ARE NO LONGER CLOSE TOGETHER: With seating capacity reduced to 50 percent even in food courts, visitors will have to sit with apart to maintain the 6 ft social distancing norm.
BE THE END OF FREE SAMPLES: As the restaurants and F&B brands will be operating with less seating capacity, the concept of free samples will be rare. Free samples of food are often circulated between all tables and visitors, making them more prone to germs. Also, with limited audience available, brands would not want to spend extra on the free sampling.
BE THE END OF FOOD TRAYS: The concept of serving food on plastic trays will also be avoided as per new norms. A large section of the consumer population will not be comfortable in eating in reusable plastic trays to avoid exposure to infection.
BE THE END OF LONG QUEUES: There will be no long queues for placing an order or to pay a bill. Cashless payment and ordering from the table via phone, tabs and app will be followed by all F&B brand outlets.
ENSURE CLEANER, BUT NOT CHEAPER FOOD: The cost of food in the food court and restaurants will go up as the brands will now be allowed to have only a limited number of seating in a limited time slot – at least for the time being. In this case, F&B brands may find it harder to compete on price alone.
Technology: The Game Changer
The onset of the COVID-19 pandemic showed us how quickly consumer behavior changed and how quickly the F&B brands at the food court and restaurant industry had to adapt the same. COVID-19 is transforming everything. The industry is facing new challenges and the only solution to overcome this situation is technology.
The pandemic also made mall developers and retailers realise that the years of transformative investments in technology made by them is finally making an impact. The operations, delivery from cloud-based software platform, streamline ordering, payments and inventory are proving their worth now. These technologies enabled the industry’s pivot to promote social distancing and remote ordering and delivery, almost overnight.
Smart menuboards and online/ in-app ordering is one key area in which quick-service operators are focusing on adding speed and value to transactions. However, in most Tier I cities malls, the food courts are quite advanced and equipped with all these equipment, but malls in Tier II & III are looking forward to this concept and are in process of enabling it. Greater customisation and enhanced access allow guests to feel appreciated, heard and valued. These experiences are critical to maximise every moment the restaurant engages with its guests to help ensure prompt, efficient, and most importantly, quality service. They also create substantial opportunities to capture more of the consumer’s wallet through upsell and average ticket enhancing properties.
As the landscape shifts repeatedly so that consumers can order rapidly, everyone can stay safe, and we as an industry can remain prepared for what the future of the quick-service experience may look like.
Mall developers and experts believe that the revival phase has already begun, and it won’t take much time to reach pre-COVID levels. Earlier the prediction was that the revival would be slow and a delayed one.
“A ‘New normal’ is gradually forming and people are slowly learning to adapt to it. Till now we have recovered 50 percent sales of Pre-COVID days and with encouraging week on week increase in footfall numbers, we are hopeful that by November this year we should recover up to 80 percent. But returning to normalcy will be very different and will be a long process,” says Bector.
“At Growel’s 1O1 we have witnessed a massive up rise in planned shopping with conversion rates as high as 75 percent across categories. Categories like CDIT (consumer electronics, Durables, IT, and telephones), salon, footwear, home, F & B – delivery and pick up, are doing exceptionally well – with 100 percent conversions for F&B, Groceries and Salon Services. We believe the trend is similar across the industry and are hopeful that the festive season will boost the consumer sentiment, helping us to achieve 80 percent of sales of last year (y-o-y). Hopefully, by the exit of the current financial year
recovery should happen for most categories should interruptions/ restrictions continue to ease,” says Sachin Dhanawade, Chief Operating Officer (COO) Retail & Real Estate, Grauer & Weil (India) Limited.
“For Express Avenue Chennai, normalcy has already been set
in. The mall has managed to get a fantastic response due to the fact all stores trading from Day 1 of the reopening and footfalls
and consumption clocking at 45-50+ percent in the very fi rst month post lock down. With the multiplex, FECs opening soon, festive season, vaccination around the corner traction is bound to increase further,” says Khanna.
As far as the mall is concerned, we have already reached 60 percent of the pre COVID level and expect to reach 100 percent in next few months. And as the food court is opening in the festive season, we expect to reach our normal level very quickly subject to the government relaxing the food court timing till 9.00 pm,” says Sarda.
“We are optimistic that by December the F & B brands will recover 50 percent of their regular sales and by March the situation should be back to normal,” added Philips.
“The industry has well-adjusted to the standards and regulations of new normal, and the scenario is here to stay until a successful vaccine or treatment is available to the general public. As far as the business and revenue are concerned, we are expecting 80-90 percent consumption by Dec’20 – Jan’21,” says Bansal.
“The industry was badly affected from mid-March as
there was a total shutdown of business due to lockdown, although it was an important decision by the government to safeguard everyone. Now with the progressive unlocks, consumer and industry sentiment is returning. It will take a few months more for normalcy to return to the market,” says Sharma.
“We are yet to receive comprehensive inputs since we are just about to open. Industry experts have predicted a long road to recovery, but I am of the opinion that by Q1 of next financial year, there should be good buoyancy in the sentiment and therefore spending on dining out as well,” says Mahesh M.
“Overall, our malls have ramped to 65-70 percent of our last year consumption. We are looking forward to the festive season for upliftment of mood and expecting business to spike up in this quarter,” states Gopalani.
“Sales have not returned to 100 percent normalcy, but it is better than what we were prepared for. We are expecting these festive months will help us a lot to return to normalcy. Although, maximum brands have already achieved 80 percent of their normal business of pre-COVID times,” says Chatterjee.
“Contrary to our assumption, the pandemic and subsequent lockdown lasted longer. In the early days of lockdown, the retail and mall industry anticipated little impact of the business. Nonetheless, as the cases spiraled, the lockdown was continued. However, with effect from August 5, malls and shopping complexes across Maharashtra including Mumbai have resumed operations with few restrictions imposed. Keeping the same in background, as an observant, the recovery rate in Maharashtra has considerably improved. Last month, we witnessed FMCG demand returning to pre-COVID levels.
If by 1st Nov.’20, the malls and F&B are permitted to remain
open as per the normal preCOVID trading hours as well as the multiplex and entertainment centre are opened up by the said date, we expect to witness 70 to 80 percent of demand recovery during the festive season, which would augur well for all the retail businesses and the economy. Festive shopping holds the key as it will provide the required push to the macroeconomic retail indicators and revive demand. On an optimistic side, it should not take more than six to nine months for the sales to gradually and steadily return to preCOVID-19 levels and beyond. On purely the financial side of the business, normalcy in terms of the pre-COVID scenario should be restored over the coming 12-18 months,” concludes Agarwal.
Despite COVID-19, the Indian Retail & Shopping Centre