In a bid to entice shoppers to spend more time in brick-and-mortar stores, retailers are providing an extra layer of service in the forms of restaurants and cafés. This approach has been welcomed by the post pandemic consumers who have pent up demand for experiences and socialising face-to-face.
For retailers, hospitality within stores increases footfall as well as time spent in store, which leads to longer browsing time of products, and ultimately higher conversion. It’s a win-win situation; and all this is done by simply enhancing customers’ shopping experience.
Millennials in particular are willing to shop in store as long as they get an experience in return. Since they are a crucial group of shoppers due to their high earning potential, retailers should focus on their needs by de-emphasising merchandising and implementing services such as hospitality.
Jim Joseph, global president of Cohn & Wolfe and NYU professor, urges retailers to change with the generations. He says, “Millennials don’t necessarily want to go shopping in the traditional sense of browsing through stores. They don’t want to use their time that way, anymore. They’d rather participate in an experience that’s adding more value to their lives.”
Waterstones had popularised the idea of coffee shops in-store. It was very much on brand as books and a hot brew (for many readers) go hand in hand. Jurgen Ketel, managing director EMEA of brand loyalty firm Givex, agrees that hospitality experiences should be relevant to what the brand trades. He believes hospitality partners should be carefully selected and have the same target audience, business goals, and values in order to earn and maintain consumer interest.
Brown’s is a great example because Managing Director, Paul Brennan, attributes a third of the footfall of the flagship Brook Street store to the branded restaurant. Therefore, RH chairman and CEO, Gary Friedman’s, claim that “hospitality lifts the overall revenue” is proven by businesses like Brown’s.
Pret a Manger also entered the scene this year by launching a “shop in shop” concession in 4 Tesco stores across the UK. With turnover-based rent model, the partnership with Tesco has been fruitful for both stakeholders. Furthermore, lockdown easing has caused demand for online retail drop: food sales online declined by 5.6% in April 2021 from 2020; and non-food online sales declined by 9.8% in the same time. Thus, the fresh presence of businesses such as Pasta Evangelists in places like Harrods is necessary by retailers and the consumers.
Pop-up cafés and restaurants are also effective in bringing in large number of shoppers through the doors since consumers are attracted to exclusivity- they feel like they must have the experience before it’s gone forever. Perhaps this is one of the reasons Harrod’s Fendi café has such lengthy queues.
Though the margins on the Fendi café sales is not high, consumers have to walk to the back of the store through many designer products before reaching the café. Therefore, the merchandise receives visibility and retailers are able to sell to consumers who didn’t intend on purchasing as they inevitably spend more time browsing.
Having relaxed from the hospitality, consumers will spend more time browsing leisurely and enjoying their shopping experience.