Thursday 28 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on May 4, 2020 - May 10, 2020

AFTER 44 days of the Movement Control Order (MCO), the government is easing the restrictions starting Monday by allowing most businesses to open their doors to customers, albeit with conditions. What does the new normal look like? While more digitalisation is on the cards, an immediate concern is the return of consumer confidence. The Edge speaks to companies, industry associations and business owners in sectors that were seen to be worst hit by the outbreak of Covid-19 and the MCO. Here is what they say.

 

Hospitality

After six weeks of a Covid-19 induced lockdown, the hospitality segment is heading into uncharted territory — hoteliers are gearing up to reopen their establishments and receive guests under the new normal, which requires a delicate balance between social distancing and personalised service, the very essence of the industry.

In so doing, Malaysian Association of Hotels (MAH) CEO Yap Lip Seng says the sector has to be confident, and focus on managing expectations.

It will also have to develop acceptable greeting gestures of welcome.

Yap says as “international travel will not be recovering anytime soon and domestic travel will be scarce”, hotels will look at diversifying beyond accommodation, and at “opportunities for merchandising and taking advantage of retail dominating the e-commerce market”.

Given how badly the industry has been battered, the challenge is to survive; breaking even is now considered sufficient as guests will have to be convinced and assured that these establishments are safe.

In the interim, MAH would like immediate and improved government assistance as hotels operate on high overheads and liabilities, Yap says, lest they are “forced to decide on closures in the next few weeks”.

Malaysian Association of Tour and Travel Agents (Matta) president Datuk Tan Kok Liang is also working to boost confidence in inbound travel.

Tour and travel agencies will look into health safety aspects by coordinating with transport service providers, places of interest, hotels and restaurants to put in place a set of health safety standards and highlighting these in promotional activities.

It will also coordinate with countries that it plans to promote to ensure safety for outbound visitors. With the support of Tourism Malaysia, Matta has planned a series of overseas sales trips after the MCO is lifted or foreign borders are opened.

Unfortunately, the cost of tour packages is likely to increase as the cost of doing business will rise owing to health safety measures to be implemented, including personal protection equipment (PPE) for frontliners.

But as the resumption date for travel is yet to be fixed by the authorities, travellers are unable to book their holidays, and airlines unable to plan their schedules. “As a chain reaction from this, travel agents are unable to plan their tour packages and promotion/sales,” Tan says.

Travel agent Tunku Iskandar Tunku Abdullah of Mitra Tours and Travel foresees a dynamic shift from working on credit to working on a cash basis, particularly for corporate clients.

He anticipates “new” rules to cover deposits, payments and refunds that will ensure all-round protection for consumers, travel agents, airlines and hotel operators. “And it is time to re-examine the need for Mavcom, as no doubt consumer protection is necessary, but the current crisis shows it lacked the will to ensure that protection,” he opines.

He also questions whether the new normal will spawn a multitude of home travel agents as more opt to work from home. “Organisations such as Matta and industry leaders have to guide travel agencies and tour operators through this ‘fog’,” he says.

 

Airlines

The airline industry has been one of the first and hardest hit by the pandemic, and it is expected to leave lasting changes on the industry. Industry experts are looking at emptier planes with fewer seats and aircrew in masks, goggles and protective suits.

But getting people to board planes again could be a huge challenge. A survey by the International Air Transport Association found that 40% of recent travellers expect to wait at least six months after the virus is contained before flying again.

Malaysia Airlines Bhd says its plan post-MCO takes into account changes in terms of travel demand, industry capacity and market environment.

“We are reviewing our product and service offerings to align them with changing customer preferences and requirements, particularly on health and safety concerns, and need for flexibility in a time of continuing uncertainty.

“We will also need to adjust our operation processes and policies according to the developing health and safety standard operating procedures from various authorities. Our priority will be to take care of our customers and ensure the health and safety of our staff,” the national carrier says in response to questions from The Edge.

The airline adds that it will continue to review its costs to align them with the changes in offerings, ensuring it can become more cost-efficient.

Still, one of the challenges it foresees is the uncertainties in the months ahead, particularly if travel restrictions remain in place in various countries that it flies to, which will affect demand.

“Also, the level of economic recovery in our various key markets, where we expect some markets will recover faster than others, as well as changes in customer behaviours moving forward as they, too, have to adjust to the new norms and circumstance,” it adds.

On the operational front, Malaysia Airlines expects continued changes to requirements by various authorities around the world as more is known about the pandemic, and conditions for lifting of travel bans, to pose a challenge. “We will need to be agile and flexible to adjust our internal processes and scale of operations accordingly,” it says.

Malaysia Airports Holdings Bhd (MAHB) group CEO Datuk Mohd Shukrie Mohd Salleh says the airport operator is accepting the reality that this is the new normal, that is, working remotely and responding with even greater agility to changing business requirements.

In fact, he sees a silver lining to the current crisis.

“With the technology available, we still can do our work effectively so even post-MCO, we can continue certain practices such as having more online meetings through video calls. It is certainly more efficient as we can cut the time required to get from one meeting to the next,” he tells The Edge.

“The Covid-19 pandemic presents a new reality for end-to-end passenger journey; the need and demand for automation, contactless self-services, virtual queues, robotics and biometrics will only become stronger in the aftermath of this crisis.”

On its part, MAHB is turning its airports into more intuitive and personalised smart airports that digitally connect passengers by eliminating inconveniences caused by physical limitations such as long waiting times and complicated procedures.

“Once the economy and Covid-19 situation recover, we plan to go full steam ahead with the infrastructure enhancement and capacity development that is needed to realise our Airports 4.0 initiative,” says Mohd Shukrie.

 

F&B

The restaurant dining experience is set to change in the era of social distancing with restaurants adopting limitations on the number of diners per table as well as on keeping a safe distance between tables.

“Friendly service, central to the whole dining-out experience, will be replaced with staff in masks with half their faces hidden. You don’t know if they are smiling or not. It strips away the dining-out experience,” says Adam Ng, owner of Marmalade and Grizzly restaurants in Kuala Lumpur.

Restaurants are expected to pivot from a “dining out” business model to a focus on online orders, which would mean tweaking and streamlining their menus to offer food that travels well. However, from a cost perspective, having to pay an average commission of 30% to 35% to food delivery platforms would mean many restaurateurs are barely making a profit on the items sold.

“It just covers your cost of goods sold, which means we have to craft our menus not just to offer food that is conducive to travel but also [take into consideration] the cost perspective. There will be less variety from each operator as menus are streamlined,” Ng explains.

With fewer diners, it would also mean there is no need for the usual number of service staff in restaurants, which would help keep costs low for restaurateurs.

It is a similar story even for big restaurant chains.

Datuk Seri Phillip Siew, chairman of the Oriental Group of Restaurants, sees its restaurants adopting a “radical takeout business model with bespoke services such as delivery and private catering options”.

Aside from investing in e-commerce and technology to cater to the takeout model, Oriental Group will be streamlining its operations to be cost effective to recover from the MCO revenue loss. It is also looking into the possibility of packaging its signature dishes for the retail market.

“All our existing team members will multitask in several roles within the organisation as part of their career progression. For example, an outlet manager will be adopting new skill sets such as marketing and public relations whereas a kitchen hand is currently undergoing technology training to take GrabFood orders, for example,” Siew explains.

He also sees the prices of premium and imported ingredients rising as supplies become scarce, leading to changes in menu and conceptual direction for many restaurants.

Meanwhile, the owner of Good Friends Cafe, a 100-seater restaurant in Subang Jaya, says having fewer tables translates into reducing its capacity by up to 50%. He sees the return of consumer confidence as a major challenge for his business.

“I don’t see things returning to normal in the immediate future. It may take six or nine months before returning to pre-MCO days,” he adds.

For restaurants that are still in business, their goal now is to survive the year, says Marmalade’s Ng.

“The new normal is not about profitability, it is about sustainability,” he explains, adding that older restaurants such as Marmalade that have built a brand with loyal customers and staff would want to keep the business going.

Siew sees further unemployment as more customers demand contactless services.

“While times are challenging, I see the pandemic as an unprecedented evolution that will require a more effective governmental support scheme for all businesses to sustain the economy. No business should fight this alone,” he says.

 

Banks

Banks will continue to adhere to safety and hygiene guidelines/measures as set out by the government even after the Movement Control Order is lifted, says the Association of Banks in Malaysia (ABM).

“Our member banks place great importance on the health and safety of their bank customers and their staff,” it says in response to a query from The Edge on whether there would be any changes in the way banks operate post-MCO.

ABM, which comprises 26 member banks, notes that consumer behaviour has evolved during the MCO.

“Bank customers are more readily embracing electronic payments (e-payments) as a means to conduct banking transactions for online shopping, bill payments and other services that are available online, which reduces the need to physically visit bank branches. Our member banks, via the online platform, are continuously engaging with their customers to offer innovative customer experience that [features] ease of use and convenience 24/7,” it says.

This has helped shape the “new normal” of lifestyle patterns with bank customers utilising technological innovation to serve their banking needs, it adds.

Given this, security and vigilance will also be high on the banks’ agenda.

“The industry will continue to emphasise the importance of vigilance to members of the public to avoid scam attempts involving the Covid-19 pandemic and the special relief measures as announced by Bank Negara Malaysia. We reiterate, when in doubt, please get in touch with your banks directly via their customer service email and telephone numbers available at the banks’ websites for information, clarification and/or verification,” ABM says.

Throughout the MCO period, banks have ensured that essential banking services remain available.

“Essential banking services such as the processing of loans, together with other banking products, are still being carried out, although remotely. Our member banks are committed to offering financing to eligible individuals and companies, including the small and medium enterprises (SMEs) during this crucial time,” ABM says.

Meanwhile, the country’s second-largest bank by assets, CIMB Group Holdings Bhd, says its employees will return to work in stages and observe a new norm of social distancing practices once the MCO is lifted, painting a picture of what things may look like for banks in the immediate future.

“In the near term, there will be a sizeable number of employees that will continue to work from home, especially for functions that can be performed in an efficient manner remotely. CIMB will scale up physical operations in a gradual manner, taking into consideration social distancing as well as health and safety measures for both employees and customers. Critical functions will continue to work under split operations at both primary and alternate sites as a precaution,” it tells The Edge.

Many aspects of social habits at the office will have to be relooked at, it says. These include a “no handshake” rule, which it had put into practice at the onset of the outbreak, and having employees maintain an appropriate distance at their workstation. Additionally, movement between buildings and floors will not be encouraged as everyone is expected to remain on their respective floors.

Virtual meetings, which staff have adapted well to, will continue even after the MCO is lifted until the situation allows for face-to-face meetings again, it says.

“One of the earlier challenges [we] faced was the need to accommodate various levels of digital literacy and make access to digital platforms an inclusive affair, group-wide. We have been on a continuous journey to learn and improve on how we can collaborate efficiently virtually,” it shares.

CIMB is continuing to encourage customers to carry out their banking needs online, where possible, via its digital platforms.

Business travel between countries that CIMB operates in will not resume anytime soon — at least, not until all countries enter a more conducive post-Covid-19 phase.

“Personal travel is discouraged but if necessary, quarantine requirements on staff who have travelled overseas will continue. In line with this, virtual meetings and collaboration will likely be the new norm for communicating with regional teams,” it says.

Face-to-face customer and internal events will still be on hold and will gradually be reintroduced once the situation becomes more conducive. “For now, we have already seen a shift to online training courses, virtual onboarding, online town halls and webinars,” it says.

Meanwhile, the group will continue with its ongoing health and safety precautions, such as the use of hand sanitisers, travel declarations, temperature screening, quarantine and visitor controls.

“Bank Negara Malaysia is developing the necessary standard operating procedures for the financial sector to ensure relevant health and safety protocols are in place to protect staff and members of the public, and CIMB will stand guided by its requirements,” it says.

 

Property & auto

For property developers with showrooms and galleries, technology will play a bigger role in reaching out to customers and potential buyers.

Mah Sing Group Bhd’s founder and group managing director Tan Sri Leong Hoy Kum says the property developer has been relying on technology during the MCO period whereby it consolidated all communications with its customers through its customer service hotline, email, social media and its MyMahSing App.

It also used online platforms to showcase its products with most of its new projects available for viewing via virtual showrooms. Its property advisers are also available to video chat with potential buyers.

“While we are using this medium to reach out to buyers during the MCO, we foresee that increased digitalisation is the way forward for the entire industry,” says Leong.

Even before the MCO, Mah Sing had already put in place certain measures in all its sales galleries and offices, such as daily contactless temperature checks using thermal scanners, encouraging mask-wearing within the premises, having hand sanitiser stations and frequent cleaning of premises, especially high contact areas.

“Looking ahead, we intend to continue practising good social distancing rules in our sales galleries and office premises even after the MCO is lifted for the safety of visitors and staff. It is important for all companies to embrace the new normal by adhering to social distancing at the workplace, exercising best hygiene practices and complying with the health control guidelines in daily operations,” says Leong.

For automotive sector players, it is the same in their showrooms and service centres.

“Yes, we are all ready to operate from Monday onwards. Our SOPs are all ready to go too,” says Datuk Francis Lee, CEO and executive director of Bermaz Auto Bhd.

He adds that Bermaz’ sales and after-sales frontliners will be using masks and all floors will have sanitiser stations. Even cars will be sanitised during and after delivery. Taking things a step further, Bermaz will also be testing all staff before they return to the workplace.

 

Retail

The thought of crowds thronging their outlets is bound to elicit mixed feelings for mall operators and retailers as they prepare to resume operations this week after more than a month of the MCO.

The joy of renewed business will be tempered by the dread of crowd control and social distancing in the new norm of Covid-19 retailing.

How then will they prepare for the new shopper experience?

“There must be a balance between personal safety and some form of normal life,” Sunway Mall & Theme Parks CEO H C Chan says, adding that until there is absolute certainty that the virus outbreak is completely suppressed, social distancing will be heightened.

Another key consideration is to determine when retail will recover, as businesses thrive on certainty, without which a lot of time and resources will be spent on contingency scenarios.

Keeping both tenants and shoppers in mind, Sunway Malls will allow its non-essential retail tenants to operate on flexi-hours.

Chan expects to see a change in the business model of malls, such as increasing the prominence of co-sharing, be it profit or risk of resources between mall operators and retailers. “The new maxim is one of shared prosperity and shared burden. Rental will be on a percentage of sales; everyone is in it together.”

Another mall operator, Tan Sri Teo Chiang Kok of 1 Utama Shopping Centre, says that in gearing up for the full opening of 1 Utama Shopping Centre, thermal scanners will be installed at the main entrances and preparations are being made to record shopper information as part of entry requirements.

As the mall has remained operational throughout the MCO to support essential service operators and serve customers, it is an early adopter of social distancing practices, says Teo, who is also a director of Bandar Utama City Centre Sdn Bhd.

The mall operator is already familiar with disinfecting and sanitising touch surfaces, mandating mask-wearing, providing sanitisers throughout the mall and managing take-away delivery procedures.

Furthermore, 1 Utama has its own 1Shop e-commerce platform and 1Pay contactless e-payment system, which proved handy during the MCO.

It will double its efforts to build up visitation to help tenants recover. But while the normalisation of operations and footfall would be welcome, Teo knows that controlling congregation density and long queues due to density control may become more trying.

Speaking from a retailer’s perspective, Retail Group Malaysia’s managing director Tan Hai Hsin says apart from social distancing and hygiene measures, retailers are expected to limit the number of visitors in their stores over the next three to four months, and keep them one meter away from the cashier’s counter.

In the longer term, shopper traffic is expected to revert to pre-Covid-19 levels, but shopper behaviour will change. “Covid-19 has forced many retailers to pay attention to online shopping platforms,” Tan observes, adding that retailing has become omni-channel and, as such, retailers will invest more in online technology, as it has become a major distribution channel.

Long queues could frustrate and turn off many shoppers, he says, cautioning retailers to expect reduced sales compared with pre-pandemic levels until customers get accustomed to the situation.

As “the fear of virus infection will stop travellers from moving around much in the next one to two years”, Tan warns retailers whose customers are mainly foreign tourists not to expect a recovery this year.

 

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