Experience is key for the success of physical retail


August 6, 2020 | By Rupkatha B

Experience is key for the success of physical retail, states Silvio Liedtke, CEO, Landmark Leisure. Around the world, as the physical retail environment is rethinking to stay relevant, the role of experience, entertainment and services is becoming increasingly crucial.

“Being a ‘fun’ business, we add significant value to the brick-and-mortar environment. And as a leisure and entertainment operator, our success has and always will be determined by the level of safety and fun we offer to our young guests,” Liedtke adds. “Irrespective of COVID-19, we have always followed health and safety guidelines stringently. We only had to make these guidelines more watertight along with additional measures, such as our staff wearing protective gear like face masks and gloves, operating at reduced capacity and more frequent cleaning and sanitising of the facilities.”

Since July, Landmark Leisure has reopened over 13 facilities in the UAE. “It is really heartening how our staff and guests have dealt with the safety and hygiene protocols, as our facilities reopened. We are seeing a double-digit growth in traffic week-on-week since reopening our facilities. The dwell time has increased, as our guests are spending 14% more time on each visit to our facilities, since reopening, compared to the same period last year,” Liedtke shares. “Having that said, the leisure and entertainment industry is still far away from the previous peak.”

Also read: Fun business requires a serious strategy

Collaboration to facilitate recovery

Prior to the COVID-19 pandemic, the Middle East and Africa was expected to be the fastest-growing region in overall spending in the leisure and entertainment sector, with a projected 18% CAGR increase, according to Wilkofsky Gruen Associates (WGA). The report had estimated that spending in MENA’s theme parks, amusement parks and family entertainment centres will more than double from $266 million (AED976 million) in 2018 to $609 million (AED2.23 billion) by 2023. The theme and amusement park market in the Middle East and Africa was expected to grow 33.77% from $302 million (AED1.1 billion) in 2019 to $404 million (AED1.48 billion) in 2020.

Owing to the COVID-19 outbreak, the regional leisure and entertainment industry lost an average of $6.71 billion (AED24.64 billion) per month, as businesses were temporarily closed. The industry’s recovery, thus, in many ways will now depend on a collaborative approach among stakeholders.

“Our industry has had to deal with a period of low revenue generation, coupled with relatively high fixed costs. We have suffered collectively as an industry. But the good news is our guests are starting to return to our facilities. In addition, most landlords have understood our tough situation and are willing to support us. They realise the importance of a trusted indoor leisure operator in their properties amidst considerable pent-up demand,” Liedtke observes.

Liedtke feels that, today the retail real estate developers understand that an organised, high-quality and safe indoor amusement facility is a “much-needed commodity,” which can’t be found at every corner.

Relevance and resilience are key for recovery

Prior to COVID-19, there was an issue of oversupply in the GCC leisure and entertainment market, varying in degree across the countries. Has COVID-19 complicated the situation further, prompting consolidation?

“It is probably fair to say that the speed of cannibalisation and fragmentation will reduce compared to the pre-COVID days. We may not see too many new players entering the market in the next two-three years. It is difficult to forecast what will happen to the existing leisure and entertainment operators,” Liedtke states.

As consumption behaviour has undergone massive transformation amidst job losses and reduced salaries, consumers are looking for greater value for the money spent. In this regard too, Landmark Leisure has been value-centric in its approach.

“Our ‘Funday Monday’ promotion at Fun City is still very popular. In fact, we have had to close our doors on Mondays at some of our facilities to not exceed the maximum allowed capacity. Our Play and Rides memberships are selling very well. Above all, it is great to see so many parents trusting us to let their children return to our facilities,” shares Liedtke.

Going forward, Landmark Leisure is on track with its expansion plans in the MENA region and India. Currently, two facilities at Sharjah in the UAE and Oman are at the fit-out stage. In India, one facility is being refurbished, while fit-out is on-going at two more.

“At the moment, we are not considering aggressive expansion. We will wait and watch what the ‘next normal’ entails and as new dynamics develop, we will plan our future business strategy,” observes Liedtke. “Our foremost goal is to build a sustainable business, while retaining our talent even amidst a crisis like the current one.”

The brick-and-mortar retail environment has to rethink its proposition experience is key for the success of physical retail. “As long as we are able to offer what children and adults are not able to replicate at home, we will be relevant and therein enhance the brick-and-mortar retail environment,” he concludes.

Landmark Leisure, part of the retail conglomerate Landmark Group, operates indoor entertainment facilities including Fun Block, Fun City, Fun Ville, Fun Works, Jumble and Tridom.

 

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