Department stores have been considered anchors and key drivers of customer visits since before the shopping centre was born. That is now changing. We are observing a new phenomenon—restaurants and food services are becoming the new anchors. While this applies to upgraded food courts in malls, we are also seeing many stores introduce cafés and other forms of food services within their footprint. Burberry in London, Ralph Lauren in Paris, and Kit and Ace in North America are all introducing various forms of food services to their stores—hoping to attract more and longer visits.
As of this month, the amount of money that Americans spend on food and drinks away from home exceeds what they spend on food for home! There are a number of trends driving this phenomenon, including:
- Consumers are generally spending more money on experiences rather than on ‘things,’ and a café counts as an experience.
- Retailers are experiencing a drop in store traffic as consumers shop online. Even if they come to the store, their visits are shorter.
- Many retailers want to create a community meeting place within their store so that their target customers can be around those who have similar interests.
- Food has become the new fashion, with interesting drinks (both non-alcoholic and alcoholic), farm-to-table foods, and celebrity chefs.
- New living spaces are getting smaller, especially in urban areas, so the opportunity to socialize at home becomes more limited.
While the added revenue, foot traffic, and longer visits are great reasons for retailers to open cafés within their stores, this trend presents some challenges. These include:
- If you are a great retailer, you likely do not have experience in food service—which is very different. If this area is to be more than a token gesture, the retailer must acquire these skills. This can be done through partnerships with the experts, which HBC did through their relationship with Oliver & Bonacini Restaurants. Or, they must hire great people who understand this business, which is not always an easy task and can be risky.
- The food service must reflect the store’s customer in order to be effective. Simply putting in a coffee bar and expecting results will not work. The sophistication of the food service, the atmosphere, and the price must create the ‘third place’ for that customer. This is tricky!
- Food service comes with operational issues that retailers are not used to addressing. Some of these include health and safety issues, spoilage, cleanliness, smells, and build out, e.g., sinks and venting – to name a few. These all require planning and knowledge about what it takes to run a food service operation.
So is it worth it? We give this question a qualified ‘yes.’ Retailers really need to be thinking about how their stores will become an experience beyond the products that they sell. E-commerce has made the acquisition of products more convenient, so the challenge of engaging the customer and creating reasons for them to be in the store has never been higher. Food service, when done well, has proven to be an effective tool.