July 25, 2020
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How Businesses Are Re-inventing The Wheel In A Post-Covid World

Social distancing will impact travel, tourism and hospitality business that thrived on intimacy and people’s warmth

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How Businesses Are Re-inventing The Wheel In A Post-Covid World
How Businesses Are Re-inventing The Wheel In A Post-Covid World
outlookindia.com
2020-07-13T12:54:04+0530

Imagine a visit to a mall where you are the only person within a 10ft x 10ft space. Think about the situation that when you enter a PVR theatre with your husband and child to watch a first-day, first-show blockbuster, you confront “staggered seating arrangement”, empty seats on both sides, and floor stickers to indicate the one-metre social-distancing gap. Visualise a logistics company that offers you the option to not just work-from-home, but work-from-anywhere.

COVID-19 has changed the professional and social atmosphere in offices and factories, transformed business models across sectors, and altered the mindset of consumers. This is especially true of segments such as tourism, travel, and hospitality, where physical proximity and person-to-person politeness was considered inevitable, and an intimate part of businesses. No longer can owners, employees, and customers feel the same, or beh­ave in the same manner, as they did yesterday.

Photograph by Tribhuvan Tiwari

We look at three sectors—physical retail, logistics, and entertainment­—where the hustle-and-bustle and congregation of crowds was considered a norm. In the future, footfalls may fall in the malls, but per-capita spending will go up. A simplified model of “click, ship, done” may be adopted in logistics. Amusement will largely be in the form of home-entertainment, without live audience or restricted one, and with a focus on how to curate content, rather than merely to create it.

Physical Retail: A slow-and-steady approach

It is evident that over the next few months, or more, buyers will be choosy, thanks to job losses and salary cuts. A survey by the Retailers Association of India (RAI), with LitmusWorld, revealed that 78 per cent of the respondents felt that their shopping spends will reduce. However, the confidence level among consumers was high at 62 per cent. Another RAI study among 100 retailers concluded that malls witnessed de-growth of 77 per cent, and high-street retail 61 per cent in the June 1-15, 2020, period.

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“Most customers will hesitate to resume shopping in the coming months,” says Kumar Rajagopalan, CEO, RAI. Shoppers will venture out only if they have to; their visits will be need-based. The situation is exacerbated by health and social-distancing norms. The new norms res­trict the entry of visitors, with an eye on footfall counters, based on the size and common areas of the malls. For example, there will be one customer for every 100 sq ft of common area.

The frequency of sanitisation will increase—the cleaning of public spaces and utilities every two hours—which too will restrict the number of people in the malls. There will be fixed and mandatory gaps between two groups of people inside the shops. Many of these changes will remain in force for longer periods. Rajneesh Mahajan, CEO, Inorbit Malls, explains, “Our short-term worry revolves around health concerns, and holding people back, which is not going to help the sector.”

Obviously, footfalls have declined. Now that some states have allowed a few malls to re-open after lockdown, the reported visits were 35-40 per cent of the numbers during the pre-Covid period. However, there is a positive impact. The conversion rates are higher; those who come to the shops are more eager to spend because they come with a purpose to buy specific items, be it essential provisions or electronic goods. The hanger-outs, who filled the malls earlier, aren’t visible.

These trends have disrupted the business models of the retailers, and affected their expansion plans. In March this year, contends Anuj Kejriwal, CEO and MD, Anarock Retail, the industry was estimated to witness the launch of 54 malls spanning 22.2 million sq ft in 2020. Of this, 35 were to be constructed in the top seven cities. Now, only five or six of them may be built this year. The construction of the others, over 19.4 million sq ft, will be delayed to the next year.

At the same time, the crisis provides an opportunity for owners, who wanted to shut down their unviable operations or sell off the malls. Susil S. Dungarwal, Promoter and Chief Mall Mechanic, BeyondSquarefeet, which manages eight malls, says that he has several enquiries from owners who have sought professional advice. The latter want him to take over the management of their malls. BeyondSquarefeet may finalise a couple of deals over the next few weeks.

There will be consolidation, change in management, and closures. A dozen brands that own or control 5,055 of the estimated 600 malls in the country may expand their reach. New retail economics and real estate trends will drive a shift in retail mall dynamics. Instead of a focus to woo customers through the year, the focus will be more on specific occasions—Christmas and New Year sales and festival discounts—to drive volumes, and change the sentiments of the cautious consumers.

Logistics: Digitisation and aggregation

Over the past few years, India’s position in the World Bank’s Logistics Performance Index climbed 10 notches to reach No. 44 (2018). More importantly, in the pre-Covid era, the aim was to reduce overall logistics costs from 13-14 per cent of GDP to 9-10 per cent. The sector was estimated to grow at an annual growth rate of 10.5 per cent over the next few years, and employ 14 million people. All these figures will go out of the window due to the ongoing public health crisis. What is required is a new blueprint.

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While this may seem like a huge setback, it offers prospects to accelerate the existing twin trends of digitisation and aggregation. “Automation will be one of the key verticals, as we witness a major shift tow­ards robotic processes. This will increase efficiencies, and reduce turnaround time to respond to emergencies,” explains Vishal Sharma, CEO, who looks after the Indian sub-continent operations of DB Schenker, which is part of the Deutsche Bahn Group.

Clearly, there will be changes in the workforce structure. The need of the hour will be skilled employees, who are comfortable with cloud, internet, 3D printing, virtual reality, and artificial intelligence (AI). “The employment landscape will witness dramatic reallocations, as the changed processes require new skills,” says Sharma. Aditya Vazirani, CEO, Robinsons Global Logistics Solutions, adds, “There will also be a skew towards localisation of labour and resources.”

Dual and multiple sourcing by end-users, the desire to make the supply chains more agile, and the objective to protect against unforeseen calamities dislocate existing business models and workforce management. Vazirani predicts an era where the administrative and non-field staff may have the option to work-from-anywhere. Sharma talks of a simplified logistics process that’s restricted to three steps— “click, ship, done”. This will help customers to customise their needs with instant real­-time quotes, and online visibility.

Aggregation and third-party licensing will become an integral part of the transportation and delivery segments. This will give a fillip to nascent, but emerging and growing, business models adopted by the likes of Swiggy, Grofers, and Zomato. India’s current transportation costs—Rs 2.28 per km for roads, Rs 1.41 for railways, and Rs 1.19 for waterways, as estimated by the World Bank—are still high. In addition, two-thirds of the goods are shipped through five million trucks.

Post-Covid, there are renewed attempts to consolidate the truckers. Most vehicles are owned by MSMEs, which are now ent­husiastic to join aggregators such as Rivigo, Blackbuck, and TruckSuvisha. The latter offer benefits like insurance, boarding, and lodging to the drivers. “We cannot invest huge sums in technology, as the big companies can, and which is crucial today. We have to deploy our fleet with the aggregators,” confirms Binder Grewal, a Punjab-based MSME transporter.

Apart from infrastructure, logistics is another weak link in India’s manufacturing chain. If the current crisis can propel the supply-chain players to adopt new technologies, as well as consolidate their operations, it will enable the country to woo private investments. This may prove to be a key step in India’s ability to compete with China, and emerge as an alternative ‘factory to the world’. It is an opportunity that lurks within adversity, and we need to grab it with both hands.

Entertainment: A new picture-in-picture concept

Most of us get the big picture. But there are a few surprises in store for you. If you dare to go to a cinema hall, the experience will be unique. PVR Pictures will be the first major distributor to release nine Hollywood titles in theatres only. They inc­lude The True History of Kelly Gang, The Personal History of David Copperfield, and The Wild Goose Chase. “We are thrilled that we will do this when the theatres open, and in this difficult environment,” says Sanjeev Kumar, JMD, PVR Group.

Outside the theatre, you will face fibre­-glass shields at the box office, and the various points of sale. Employees will be clad in PPE gears with face masks, gloves, and face shields. Inside, social-distancing norms will segregate your group of family and friends from the others. The halls will seem a bit empty, especially on the first weekend of the releases. “We have ascertained various scenarios, and we have thoroughly worked out our plans,” exp­lains Alok Tandon, CEO, INOX Leisure.

Most action will happen in-house, i.e. in your living rooms and bedrooms. The OTT platforms will be the new winners in the new-normal atmosphere. Big movies that were postponed due to the lockdown were premiered on OTTs. Bollywood sup­erstar Amitabh Bachchan, whose stardom has lasted 51 years, was amazed that his new film, Gulabo Sitabo, made a digital debut on Amazon Prime. He said he was “honoured” to be part of “another challenge” in his career.

The same will happen with Vidya Balan-starrer Shakuntala Devi, a biopic on the math whiz. More content, not just movies but also serials will be created for OTTs. The revenue-share model between OTTs, theatres, and TV channels will get a further boost. “People will need to collaborate to exist. A chunk of viewers will switch to OTTs, but TV will remain a more relatable option for the majority. There will be less panic as equal importance is given to curation and creation,” explains Shailia Kejriwal, CEO (Special Projects), Zee Entertainment.

If you are an addict of live performances, technology will help to find new solutions. “Computer graphics, virtual reality, and AI will play important roles in the finished content, and the manner in which performances are exhibited,” says Amit Behl, Chairperson, Outreach Committee, CINTAA.

This is happening even in movies and web shows. Ali Hussein, CEO, Eros Now, explains, “We shot A Viral Wedding and Metro Park–Quarantine Edition, during the lockdown. We used technology and innovation to shoot, and put them together at the post-production stages. The crew needs to evolve to adopt technologies like virtual sets.” The actor-couple, Rasika Dugal and Mukul Chadda, co-wrote and acted in a short film, Banana Bread, which was shot on mobile phones at their residence.

At the end of the day, the various platforms, and genre of content, will co-exist. According to Behl, viewers will veer towards cinema halls because of the “wow” factor. “Theatres also offer a more collective experience,” feels Neeraj Roy, Founder and CEO, Hungama Digital Media. OTTs and TV channels are more personal, intimate and emotional, as well as secure. Mobile streaming provides the flexibility to watch on-the-go. As Roy puts it diplomatically, “Every platform has its USPs.”

Finally, it will be a case of consumer segmentation, and an in-depth analysis of viewer behaviour. Different kinds of content and platforms will appeal to different categories, and at different times. Humans cannot avoid the urge to assimilate different experiences. “What works for us is to understand how to retain the customers,” says Nachiket Pantvaidya, CEO, ALT Balaji, and Group CEO, Balaji Telefilms. This is an insight that’s possibly true for all platforms and content creators.


By Lola Nayar, Jyotika Sood & Lachmi Deb Roy

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