Retailers Bite into New Marketing Trend
Next time you walk into Urban Outfitters, you might be met by the smell of a juicy steak or fresh salad.
As online sales continue to grow—they are estimated to rise to 16 percent of holiday sales this year—retailers continue to seek innovative ways to attract customers to come to their physical store locations. The latest strategy to lure customers into retail stores combines a regular shopping experience with food and drinks. The rise of the “retailer-restaurant” can already be seen in some stores like Ann Taylor Loft, Nordstrom, and Tommy Bahama.
This dining experience is quite different from the standard Pizza Hut express found in Target stores, or Subway sandwich outlets found in Wal-Marts across the country. Retailers seek to create a memorable occasion by translating the feel and atmosphere of a particular store into a greater experience. Tommy Bahama’s 14th Island store has over 6,500 square feet of restaurant space features grilled steak salads ($18), scallop sliders ($12.50), and various cocktails ($12). The upscale feel of the restaurant fits the brand’s image, and the method appears to be working. These restaurants generate about 12 percent of the company’s $452 million revenue per year.
Urban Outfitters, known as a hipster chique fashion space, provides locally sourced food to their customers. As a result, menu items vary seasonally, and throughout the nation. Selections at the Westport, Connecticut store last month included a pickled beet salad ($9) and a flat iron steak ($38). Management discovered that implementing cafés more than doubled the average time that a customer spent in a store.
J.C. Penny, which recently underwent a massive rebranding campaign, and has since suffered from abysmal sales, plans to introduce coffee and juice bars in select stores. The idea was first proposed by CEO Ron Johnson in August, who believed it would help sales because customers wouldn’t have to leave J.C. Penny stores if they became hungry or thirsty.
The retail-restaurant trend has its fair share of criticism. Some customers believe retailers should stick to their core function—simply providing clothes and accessories. Some retailers worry that should a customer have a bad food-related experience, they will be less likely to return to the store. And other retailers wonder if the infrastructure and costs required to create a restaurant experience will be matched in increased profits.