Kingsmen's first experiential attraction to open in October

Singapore

COMMUNICATION design and production group Kingsmen Creatives is the brains and brawn behind exhibitions like the immersive, multi-sensory Bicentennial Experience and luxe-looking storefronts of high-end luxury brands.

But beyond design work for retail stores and exhibition spaces, the group is looking into operating its own experiential attractions through family entertainment centres (FECs).

"We have been designing and building for our clients for over 40 years and we wanted to move up the value chain by developing something of our own," said Andrew Cheng, group chief executive officer of Kingsmen. "FECs are an extension of our core business."

The first of such experiential attractions to be launched is the Nerf Action Xperience (NAX), which is also the first Nerf brand FEC in the world.

Last year, Kingsmen announced that its US-based subsidiary, Kingsmen Xperience, had signed a licensing agreement with Hasbro to create, build and operate the Nerf brand FEC attractions globally.

The mainboard-listed company's shift towards developing FECs is expected to ramp up its regional growth and revenue stream. However, the firm expects the expansion to contribute more to the bottom line rather than top line.

"The idea is to improve the bottom line to get better margins and use those profits to expand into different kinds of attractions and create our own intellectual properties (IPs)," said Mr Cheng.

The expansion also comes on the back of challenges faced in the retail space and the changing consumer demand.

While design work for retail stores has been one of the key areas of Kingsmen's business, Mr Cheng said that malls these days are looking for more points of differentiation to engage consumers and encourage them to spend more time there.

Consumers are also looking towards more unique experiences beyond shopping, causing more malls to see a spate of activity-based retail experiences such as fitness and entertainment centres.

Given Kingsmen's expertise in designing and building museums, galleries and theme parks, going into FECs came "pretty naturally" said Mr Cheng.

NAX is slated to open in Singapore this October, occupying over 18,000 square feet on the ground level of Marina Square and featuring multiple activity zones to build community and active play.

And it does not stop there. The FEC is also set to launch in Chongqing, China in the third quarter of 2020 and in the US in 2021.

According to Mr Cheng, Asia is a lucrative market as the region has become a "land of malls" amid the rising affluence of consumers.

"But all the malls are starting to be very similar so they are looking at unique propositions we can bring to the market," he said.

Having FECs in Asia and the US give Kingsmen a far-reaching global footprint, with the exception of Europe. The attraction business is quite different in Europe as there is more focus on concerts, museums and galleries, said Mr Cheng.

Kingsmen's business diversification plans have yet to translate to a superior bottom line.

In its latest results, the group reported a 17.7 per cent rise in revenue to S$172.8 million. But its net profit fell 39.9 per cent to S$1.8 million.

Profits were eroded by higher operating costs and employee benefits, mainly resulting from increased headcount from the new experiential attraction businesses and increased average wage.

On reasons for the increased employee remuneration, Mr Cheng said: "It is a tough business and the hours are long and odd."

He referenced employees having to work overnight at malls and at large-scale projects like Formula 1 and the The Bicentennial Experience exhibition.

"For projects like that we have to pull a team together and it's tough work. I wish the margins were better, unfortunately they are not," said Mr Cheng.

Looking ahead, Kingsmen will be focusing its efforts on the experiential attraction business, including FECs, and developing its own IPs.

"We want ultimately to be the reference point for experiential attractions. Anything that has to do with experience, come to Kingsmen and we will be the ones to develop, build and ideate for global clients," said Mr Cheng.