Analysis: What does Cineworld closure mean for Scotland's beleagured retail parks?
When Edinburgh’s Fountainpark was built in 1998, the multiplex cinema facility was a lynchpin of the entire complex.
Surrounded by chain restaurants and large warehouse-style units which have, over the years, housed a variety of leisure facilities from soft play centres to crazy golf, bowling and a high-end gym, the cinema has been a constant in an ever-changing leisure world.
Now, less than two months after it was allowed to open following an unprecedented four-month lockdown closure, the cinema, owned by US firm Cineworld, is set to close its doors again this week, alongside nine other outlets in Scotland, including small cinema The Cameo Picturehouse, on Edinburgh’s Home Street. The Imax cinema at the Glasgow Science Centre has not yet re-opened since lockdown in March.
Meanwhile, rival Odeon, which in Scotland scooped the contract to hold remote jury trials in its empty screens, said around a quarter of its 120 UK venues will move to a weekend-only model from Friday.
Cineworld, which has 127 branches in Britain, has cited the decision by Hollywood film distributors to delay the release of the latest James Bond film as the final nail in the coffin for its business. All of its US, UK and Irish cinemas are to shut indefinitely from Thursday.
Although in Scotland, cinemas have been allowed to open since August, the number of people actually attending screenings has reportedly been low. Social distancing is in place, with seats left vacant between each ticket sold, but many cinema-goers have reported that they have been to screenings alone as people steer clear of indoor entertainment amid fears that the virus may spread more easily inside.
“Although the delay of the latest 007 blockbuster prompted the decision, Bond isn’t the villain in this piece,” explains Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
“New infection spikes amid warnings that the virus spreads more quickly indoors, is keeping customers away and with no big names to lure them through the doors this winter, Cineworld has reached this difficult decision in a bid to cut costs and preserve cash.”
Yet the knock-on effect to other types of businesses which rely on cinemas for footfall could be devastating.
Chain restaurants had already suffered a turbulent year, with operators such as Byron Burger, Zizzi, Bella Italia, Pizza Hut and Pizza Express announcing rafts of closures both before and due to the pandemic.
Yet now, without the pre-and post-cinema crowd to sustain them, footfall at leisure parks such as Fountainbridge will fall. Almost one in ten units at retail parks is currently lying empty in Scotland, according to the most recent data from the Scottish Retail Consortium.
“It certainly detracts and I certainly think there will be a big impact,” says Matthew Hopkinson, head of real estate industry consultancy Didobi and the former chief executive of the Local Data Company. “People often want to watch, eat and drink all at the same time and removing part of that from the equation could be significant. The question is, are you going to drive to a retail park and go to a Nandos?
“I think if you’re a restaurant in a city or town and you’re set up next to a Cineworld and it’s closed you really are in trouble.”
Other cinemas have remained shut throughout the pandemic due to coronavirus restrictions - amid fears that customers will not return until social distancing regulations have been lifted - or have deemed it too expensive to open without.
Unions have warned that the industry may not recover from the crisis.
“Cinemas are currently able to operate safely so this decision is entirely the result of distributors choosing to delay the release of blockbusters in the hope of making extra money further down the line.,” says Philippa Childs, head of Bectu, UK's media and entertainment union.
“This is short-sighted in the extreme and if other chains follow Cineworld’s lead it’s hard to see how there will be a fully functioning industry to return to in six months’ time.”
Cineworld is insistent that the closure is temporary, saying that it hoped to rehire staff once the virus is beaten and life can return to normal - but analysts are not so sure. Indeed, the company itself warned last month that a further worsening of the pandemic could leave it on the brink of collapse.
Experts have pointed out that the firm’s $8 billion net debt left it in a difficult position in terms of refinancing, without strong ticket sales.
“Closing its theatres at least gives it a chance to preserve cash and wait for things to improve,” says Markets.com chief markets analyst Neil Wilson. “However, I fear there have been permanent behavioural shifts in consumers that will mean the market is forever smaller. It is hard to gauge right now what permanent damage is done to cinemas, but the closure of Cineworld, however temporary, is a plain indicator that it could be significant and lasting.
“The advance of over-the-top streaming services, especially Netflix with its vast Hollywood budgets and ability to make feature films, has been a critical blow to the industry and Covid has vastly compounded the problem by keeping viewers away.”
Yet others are more positive.
Al Cameron, owner of the independent Dominion Cinema in Edinburgh’s Morningside, said he was confident that cinema would survive the crisis. The privately-owned cinema, which opened 83 years ago, has been carrying out renovations to allow it to open safely, but has not yet confirmed an opening date.
He said: “We are preparing ourselves to outlast this pandemic and when the good times come again, there is a huge amount of film product - currently in post-production - we will have to entertain our customers.
“It is going to be a strong time for cinema, but we have just got to get to the sunny side of the hill.”