Retailers and restaurants are the business world’s peanut butter and jelly. Walk into any mall or shopping center and you’ll find both, side by side, like a perfect sandwich, satisfying cravings and keeping customers coming back for more. Yet the two have largely been kept on separate plates.
But now, savvy retailers are realizing that blending them together creates a recipe for success, as they harness the power of synergy to enhance the overall shopping experience and stay ahead in the competitive market.
That may feel like an uphill battle for some retailers, especially when it comes to attracting younger generations of shoppers. With more than 87% of Gen Z shoppers preferring online shopping and the rise of new technologies like AI, brick-and-mortar retailers are looking for ways to enhance the in-store shopping experience.
In 2024, that could come in the form of blending retail and food to create a unique destination.
A New Dawn for Department Stores
Department stores used to be among the first to boast elegant restaurants within their premises, providing shoppers with a luxurious dining experience amidst their retail adventures. Some notable examples included Wanamaker’s in Philadelphia (known for its Grand Crystal Tea Room) and Marshall Field’s in Chicago (known for its Walnut Room).
Many department stores have struggled to re-imagine their offerings for the modern shopper and are posting net losses and declines in revenue. Yet some retailers are using dining to redefine the department store of the future by adopting a “shop & supper” mentality.
UK brand Fortnum & Mason developed a branch of their department store devoted to a food and drink studio. “[It’s] based on the idea that restaurants are really experiential retail for food,” chief executive Tom Athron said in a recent Stylus report. Additionally, Fortnum & Mason hosts its Supper Club series in-store, where renowned chef-authors cook, mingle, share tips, and promote their books in an exclusive ticket-only experience.
While the idea of a dining experience in a department store isn’t new, others are bringing fresh flavors to a familiar retail recipe. Penthouse Restaurant, an extension to Spain brand Wow Concept’s department store, hosts livestreams from a rotation of resident chefs, many of which are Michelin Star recipients. In the livestreams, shoppers can see the products the chefs are using and learn more about each product and where to find it in store.
Trailblazing Retail and Hospitality
Restoration Hardware is one of the trailblazers of retail and hospitality on all fronts. From design services and consulting to a clean navigable experience design, RH knows how to host a guest.
Yet it’s the brand’s rooftop restaurant experience that helps set it apart and bridges the gap between retail, restaurants, and hospitality. Since 2018, the company’s rooftop restaurant experience has grown to more than 15 locations. Offering an elevated experience, the restaurant is stylized with RH products to keep the brand experience multi-dimensional and interactive.
Luxury brands, like Maison Kitsune and Prada are infusing hospitality into their retail portfolio with the growth of Café Kitsune and the arrival of Prada Caffe. At Prada Caffe, a lounge-like, themed experience greets guests, offering a look that embraces its location within London’s esteemed Harrod’s department store. Styled by Prada with signature Prada interiors, this is another intersection where restaurant, hospitality, and retail come together to produce a new take on brand experience.
Hospitality seems to bring out our emotions much more easily than retail, which is why Chute Gerdeman Partner Ed Hofmann says retailers should look to that industry to cull ideas and inspiration.
“Restaurants, hotels, and the larger world of hospitality are better at strumming physical emotional contours than retail – they get there faster. I can’t pinpoint exactly why; perhaps there is an intimacy in food and shelter that humans relate to faster than ‘buying something,’ but the hospitality industry, when its good – and it so often is – creates much better emotionally-driven environments, naturally. Retail must think and churn about it first – it takes convincing itself. Most of my work in the last two decades starts with a view in emotional thinking – and restaurants and hotels most often are incredible grist for the mill. Any ‘selling’ is a souvenir of that intimate connection.”
– Ed Hofmann, Chute Gerdeman Partner, Design + Strategy
Driving Brand Engagement . . . to the Diner
Sometimes, you just need a bite to eat in a comfortable place to pass the time. While many brands and retailers zero in on a more traditional approach to retail and restaurant, automotive giant Tesla decided to try a new route to brand engagement.
In true 50s American spirit, Tesla is developing a branded drive-in and dine-in experience just outside Los Angeles. Guests can enjoy a burger, fries, and shake while charging their vehicles all in one stop.
Paying homage to iconic route 66, the hub serves as a place where Tesla fans and food fans alike can mutually enjoy. The new drive-and-dine experience will be open 24/7, and will feature 32 available charging stations and projected movies. The intersection of traditional QSR, hospitality, retail, and branding converge in this new experience, which will undoubtedly turn some heads in the QSR realm.
The Power of Extended Dwell Time
Dwell time is a significant retail metric when analyzing consumer behavior. In fact, research shows that there is a positive correlation between dwell time and sales, with a 1% increase in dwell time accounting for a 1.3% increase in sales.
Let’s consider a coffee shop with a promotional display showcasing specialty coffee beans. If a customer glances at the display for just 5 seconds, but the shop implements engaging signage or offers coffee samples to extend their dwell time to 10 seconds, they might be more inclined to explore the selection further, resulting in a notable 130% surge in sales of the featured beans. By tracking these changes through integrated Point-of-Sale (POS) systems, the coffee shop can accurately measure the impact of increased dwell time on sales conversion, providing tangible evidence of the effectiveness of their strategies.
For retailers that incorporate restaurants within their premises, optimizing dwell time becomes even more critical as it directly impacts both retail sales and restaurant revenue.
By encouraging customers to linger longer, perhaps by offering comfortable seating areas, ambient music, or enticing aromas from the restaurant, these establishments can increase the likelihood of customers exploring both the retail and dining offerings.
A longer dwell time not only boosts the chances of additional purchases from the retail side but also leads to increased patronage of the restaurant, resulting in higher overall revenue.
Experience is Everything
The idea behind dwell time takes a page out of the experiential retail trend book. Experiential retail focuses on creating immersive and memorable experiences for customers beyond traditional shopping transactions. By blending retail and restaurant experiences, companies enhance the overall customer experience by offering not just products but also opportunities for relaxation, socialization, and culinary enjoyment.
The presence of a restaurant within a retail environment adds another layer to the customer experience, encouraging visitors to spend more time in the space. Customers can enjoy browsing the products, sampling food or drinks, and engaging in leisurely activities, all conveniently within the same venue.
This integrated approach fosters a sense of community and connection, making the retail space more inviting and compelling.
Restaurants and retail will continue to have a symbiotic relationship. We expect to see brands upping their investments in experience. Restaurants and hospitality will undoubtedly be an inspiration cue for thousands of brands to replicate.