The COVID-19 pandemic has sent the entertainment, fitness and restaurant sectors scrambling to adapt their revenue models and maintain customer loyalty during lockdowns. Business owners in these industries are learning how to survive financially as consumers abide by stay-at-home orders, all while preparing to restore their operations and afford payroll, utilities and other needs once doors reopen. To retain as many customers and employees as possible, these firms must therefore rethink how they offer services.
The healthcare sector’s service model has also been deeply affected, with many patients avoiding health clinics and hospital visits for fear of being exposed to the virus. Doctors, dentists, nurses, therapists and other health practitioners realize patients still require support for their health concerns, and many are turning to digital technologies that offer remote care such as telehealth appointments.
This month’s Deep Dive explores how these four business sectors are adjusting to continue delivering services and receiving payments. It also examines how businesses that have not traditionally leveraged mobile and online methods are launching and managing these new payment flows, and explores the payment tools and software that can help.
Fitness and Healthcare Go Virtual
Most gyms’ and fitness centers’ operations are based on providing customers with equipment and exercise classes on-premises, but such models have evaporated as nonessential businesses see temporary closures. Wellness operations around the globe are shifting toward virtual classes, with fitness studios and individual practitioners charging per-class or weekly fees. Cloud-based workout scheduling and business management software providers are stepping in to enable these shifts. Consumers’ uptake has been strong, with software-as-a-service (SaaS) provider Mindbody reportedly handling between 125,000 to 200,000 digital classes daily between March 31 and April 7, for example.
Several spin studios have taken different approaches to maintaining revenues, with some renting out their stationary bikes for monthly fees and delivering them to consumers via U-Haul trucks. This approach allows the businesses to monetize equipment that would otherwise be gathering dust in shuttered studios. Still other fitness businesses are emulating the gift card model and offering clients discounts to purchase classes they can take once studios reopen.
Healthcare providers are also exploring digital means to continue serving customers who do not require in-person visits. These practitioners are now remotely offering care and consultation via apps, chatbots, emails, texts and video-based communications, and many are also enabling digital prescription ordering. Extending remote service is only half the battle, however, as healthcare providers must also accommodate financially strained consumers. Some clinics are thus turning to payment service providers to offer installment payment plans and adjust or suspend repayment timelines. This approach enables hospitals to keep receiving revenues for their work while easing the pressure on cash-strapped consumers.
Restaurants Deliver Dinner, Drinks and Toilet Paper
Restaurants are also adjusting to serve remote customers, and venues that previously lacked order-ahead or delivery services are turning to free software to help them accept, manage and receive payments for orders. Eateries are also designing delivery approaches to accommodate social distancing needs, with no-contact drop-offs where meals are left at customers’ doorsteps. Most are also discouraging cash tips or payments due to concerns that the virus can linger on paper.
Restaurants are also experimenting with what they deliver, as some are offering limited menus and the purchase of bulk ingredients and alcoholic products. Eateries’ supply chains differ from those of convenience and grocery stores, and they have therefore not experienced the same inventory depletions from consumer purchasing spikes. This has prompted some restaurants to allow consumers to add toilet paper, soap and pantry supplies to their delivery orders.
Some are promoting the sale of gift cards, as these products can provide immediate cash infusions to help restaurants pay their staff and also show business owners that customers will return once venues reopen. In addition, gift cards can help restaurants generate additional revenue beyond sales prices, as 80 percent of restaurant gift card holders reportedly spend more than the amount stored on the cards when using them. Other restaurants are asking for Venmo donations to support cooks, waitstaff and other employees during the COVID-19 pandemic.
Entertainment Sales Target Consumers at Home, in Their Cars and in the Future
What “dinner and a movie” looks like has changed greatly for consumers, and the shifts are not limited to how people get their meals. The entertainment industry is also pivoting its business model as movie theaters close. Film studios are forgoing theater-based releases and instead launching movies via online streaming and rental services. Drive-in venues are also seeing resurgences, with estimates projecting that these locations will constitute 60 percent of the movie theaters currently open to U.S. customers.
Other entertainment operations are also experimenting to stay in the game. One retro gaming arcade is responding by selling discount passes that can be used during the upcoming Memorial Day to Labor Day season, for example. The discounts are meant to encourage customers to buy now in the hopes that social distancing will no longer be necessary by Memorial Day, which falls on May 25.
Many Payments for Many Consumers
Businesses that are redesigning their approaches to continue service need to be able to accept many different types of payments, or they will risk locking out some consumers during their moments of need. Providing a wide array of payment options can help businesses sell to customers who may not have credit cards, allowing those shoppers to instead pay directly from their bank accounts or other methods.
One recent demonstration of the need for wider payments acceptance is in the food sector, where retailers are working to enable economically disadvantaged individuals to participate in the ease and safety of online grocery shopping. The 38 million consumers who are reliant on the Supplemental Nutrition Assistance Program (SNAP) are often unable to use these benefits to pay for groceries ordered online due to current government regulations. This forces the consumers to instead visit stores in person and shop in the aisles, which could increase their risk of exposure to the virus. Only eight states are actively engaged in pilot programs that enable SNAP to be used for digital payments. This problem has prompted some retailers to design order-for-pickup options in which customers indicate in their digital ordering applications that they want to pay with SNAP and then provide their benefit cards for staff to scan when they arrive to collect the items. Such approaches enable customers to still use online ordering even when unable to pay digitally.
Merchants may also find that enabling wider arrays of online payments allows them to cater to customer bases spread across different geographies. Fitness instructors offering online classes and entertainment businesses trying to sell worldwide need to provide purchasing options suited to the payment norms and preferences in each customer location. U.S. consumers tend to prefer paying for eCommerce with credit cards and Chinese shoppers strongly favor digital wallets, for example, so merchants selling in both markets need to enable transactions with those different payment instruments. The right payment methods can power businesses to make their customer bases more inclusive.
Companies are facing strains as the pandemic overturns their standard business operations, and the entertainment, fitness, healthcare and restaurant sectors have all been greatly affected. Innovative approaches to delivering services, maintaining loyal customers and supporting software and digital payment methods are helping these companies retain revenues while enabling them to resume their operations once it is safe to do so.
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