Winners and Losers: Stay-at-home vs Step-out-of-home economies

If you think about it, many of the investments that have gone into service-based B2C businesses make bets on one of two broad possibilities: Whether the consumer will step out of home – or stay in it.

Take an example.

Malls have sprouted across India in the belief that they can tempt Indians out of their homes to spend time with family and friends, and entertain themselves.

E-commerce companies, on the other hand, are betting that consumers would be happy to avoid the mess of traffic (and parking), and order stuff seated comfortably at home.

You see the conflict?

Malls are part of the ‘Step-out-of-home’ economy; e-commerce companies are batting for the ‘Stay-at-home’ movement.

#Coronavirus or COVID-19 (C 19) has come in like a hurricane on the side of the Stay-at-home players.

At this stage, we don’t know how much worse the situation will get before it gets better.

In the meanwhile, who will gain and who will lose? (Note: Some of the gains may not be financial in the short-term.)

Context to remember: The Indian economy has been doing poorly anyway even before the virus hit our shores.

Within that gloomy context, there will be (relative) #winners and #losers:

Losers: The Step-out-of-home team

#Movie halls: There are some 9,000 movie screens in India of which about 2,400 are multiplex screens, the rest being single screens of the old kind. #COVID-19 has affected attendance at theatres and the Delhi government has had all the 150 screens shuttered till March 31. Kerala and J&K, too, have suspended the operation of theatres.

#Malls: Since movie halls are anchor tenants at malls and drive traffic, the hit they have taken is affecting footfalls to malls. Families like to make an outing of a movie, followed by a meal and maybe a little shopping. That’s gone for now.

#Cab aggregators: #Ola and #Uber have been impacted, especially in tech centres like Bengaluru and Hyderabad where some large companies have advised employees to work from home temporarily. They may return soon, but the entertainment segment – cab rides in the evenings – will be hit for longer.

#Airlines: As on March 6, as per info given to the Lok Sabha, Indian carriers had cancelled 92 international flights. Since then, the entry of foreigners into India has been stopped. The international sector has been virtually decimated. Domestically, #Indigo yesterday reported a 15-20 per cent decline in seat bookings compared to a week ago. That will get worse.

#Hotels: Travel body PATA claims that tourism employs 4.2 crore Indians, thus making up 8.1 per cent of the total employment in the country. I dread to imagine how many will lose their jobs if the panic continues. The one saving grace: Summer holidays are approaching.

#Retail: The most impacted are the lifestyle outlets in malls. Day-to-day shopping of FMCG presumably continues as before (there is no data available). The purchase of durables as well as discretionary spending had anyway slowed down even pre-Coronavirus.

#Restaurants: According to the National Restaurant Association of India (NRAI), the banquet segment is the worst hit, followed by restaurants in malls. The delivery segment is the least impacted.

#Salons: When I had a haircut yesterday at my regular South Delhi salon, my hairdresser said that business – especially with female customers - had gone through the floor. It’s logical: If you are going out less, why get your hair done? I mention salons merely because it is an example of collateral damage.

#Live Events/Sports/Conferences: This is best exemplified by #IPL, India’s biggest cricket extravaganza, the opening of which has been moved from March 29 to April 15. Even when it is played, it may be to empty stadiums. Theatre, music events and conferences have either been cancelled or are playing to half-empty halls.

The winners: The Stay-at-home economy

#Food delivery: The restaurant business is split between banquets, in-dining and home delivery. According to NRAI, the home delivery segment is the least affected. So, while restaurants are hurting, businesses like #Swiggy and #Zomato are not. The two between them have about 50 million regular customers, but daily orders are stuck at between 3.2-3.4 million. Maybe the virus scare will help take sales to the next level?

#Television and #OTT: The TV business has been hammered by the economic slowdown compounded by the constant meddling by TRAI (Telecom Regulatory Authority of India). Barring the issue of IPL, a stay-at-home environment ought to be good for home entertainment of all sorts.

At a broad level, the competition is for consumer time – and if the consumer is going out less, she is staying in more. TV is the natural comforter - whether this will translate into more advertising is moot. Also, will Netflix and Amazon see a bump in subscriptions?

#E-commerce: Like the food delivery businesses, e-commerce sales will see an uptick. Stuck at home, what is the second most likely thing you will do after entertainment? Buy a little something to soothe your soul :) Within e-commerce, the biggest gainers will be the likes of #BigBasket and #Grofers who offer groceries.

Social media/Gaming: Like salons among the ‘losers’, social media/gaming is the odd one out on the ‘winners’ list. Indians should logically be spending even more time on social media and gaming – and online - if other out-of-home entertainment options are curtailed.

The situation is still evolving and much is still unclear. But if we divide services by whether the consumer consumes them at home or outside, we can get a better handle on which way the business battle will swing.

(The author is co-founder, afaqs!, and curator, vdonxt asia and Digipub World.)