Restaurants are the new must-have at high end retailers

Shoppers visiting luxury retailers are nowadays just as likely to browse the menu of new in-house restaurants and cafes as they are for clothes.

February 16, 2016

Burberry in London and Gucci in Shanghai are among the newer movers in this field. They follow in the steps of Armani which now has restaurants and cafes in 13 cities around the world and department stores such as Harrods and Harvey Nicholls whose menus have drawn in faithful shoppers for decades.

“It’s showing how retailers have to be more proactive and engage with customers in a 3D way,” says Tim Vallance, JLL Head of UK Retail & Leisure. Since eating and drinking are (not yet) activities that can be carried out online they remain points of differentiation with online stores and ways of bringing customers into shops.

So what approaches are the different luxury retailers taking? Armani is at the more ambitious end of the spectrum, also running hotels in Milan and Dubai’s Burj Khalifa. It sees its dining rooms as part of a bigger picture. Founder Giorgio Armani says: “I’ve always wanted to create a complete Armani lifestyle that reflects my ideas and can be applied to different areas, not just fashion. Restaurants and cafés seemed a logical expansion.”

Escaping the paparazzi

Hermès and Dunhill emphasize exclusivity in their locales. Le Cafe at Maison Hermès in Tokyo has a “a private-club feel”. Japanese celebrities, including some famous Kabuki actors from the Kabukiza theater a few blocks away, reportedly like the cafe because there are no paparazzi to plague them.

As part of its aim to provide a “home from home for Alfred Dunhill’s clients”, Dunhill offers private dining in Shanghai and a cellar bar in London.

Helping customers experience the depth of the brand was a reason for Burberry to open a cafe, Thomas’s, within its Regent Street flagship store in London last summer. The eatery is named after Thomas Burberry, the English gentleman’s outfitter who invented gabardine raincoats and opened his first store in 1856.

The cafe provides “a space where our customers can spend time relaxing and enjoying the world of Burberry in a more social environment”, according to chief executive Christopher Bailey.

A modern take on an old idea

The concept of fashion and food is not new. Department stores have been offering food and drink for over a century – most famously in England after Harry Selfridge opened for business in 1909.

In Canada, the department store restaurant is going through a renaissance – with Holt Renfrew, La Maison Simons and Saks Fifth Avenue among the big names to invest more in restaurants.

In the UK, JLL’s London Luxury Quarter report picks up a pronounced focus on food. “Places need to be destinations in their own right and offer an experience beyond pure retailing,” it states. “One impact of this new found consumer expectation on the physical environment is the growth, both in quantity and in importance, of the dining sector. An engaging and appropriate gastronomic experience will increase dwell time, provide a point of difference and also give the consumer a regular reason to visit.”

Driving footfall and frequency

Behind the flair and panache of the chefs in their kitchens lie very specific commercial goals. “This has to be all about driving footfall,” says Vallance. “There isn’t a great deal of profit in selling food and coffee in comparison with selling clothes.”

Elaborating that point, Jonathan Doughy of Coverpoint, a JLL consultancy specializing in foodservice, says:  “It’s all about increasing frequency and loyalty. If you offer food and drink you are likely to attract your customers more often.”

Both Vallance and Doughty see the restaurant trend as a parallel one to that which persuaded Nike to incorporate an astroturf pitch into its Rio de Janeiro store and to start offering free running classes. Vallance predicts: “We’ll see more and more retailers mixing the number of uses under one roof.”

He believes that new generations of shoppers will steer the stores towards providing experiences as well as purchases. “These generations don’t give a damn about owning,” says Doughty. “It’s not the having that is important; they want to use things.”

Vancouver-based lululemon, for example, offers free yoga classes in many of its sports clothing shops around the world. Speaking on the BBC, a lululemon spokeswoman explained the reasoning: “It’s building a good feeling. They [the yoga students] have a good feeling connected to the brand…That might be the future of retail.”

Doughty agrees. “This is only going to increase, take more floor space and get more complicated. With the restaurants, you’ll get outstanding food offered in outstanding locations. But, in general, this will go as far as the imagination will let it go. It’s all about experience.”

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