Devoting over half the floorspace of a flagship store to a restaurant serving cocktails and pineapple cheesecake, when you’re best known for casual beachwear, sounds risky but Tommy Bahama’s diversification has been a financial boon. Some 12% of the Oxford Industries owned company’s US$452m annual revenue derives from food and drink purchased by consumers in-store. The company’s 14 retail and restaurant outlets generate US$2,000 in sales per square foot, two-and-a-half times as much as its retail-only stores.
- Mark Larson, Global Head of Retail, KPMG International.
That’s why Tommy Bahama was so keen to promote the concept in its 13,000 square-foot store on Manhattan’s iconic Fifth Avenue. There is nothing new about retailers selling food and drink to bolster revenues.
Upscale US fashion retailer Nordstrom has been blurring formats in this way for years and is now using a new contemporary diner concept called Sixth & Pine in a slew of outlets and opening espresso bars. Four other major US retailers are weighing up whether to offer food in store.
“Ingvar Kamprad, the IKEA founder, situated a café between the store’s showroom and marketplace because he felt hungry people were not good customers,” says Trotter. The popularity of farmers’ markets, and global reach of such TV formats as MasterChef (in 35 countries) have convinced many retailers that customers’ culinary adventures can help them compete with online shopping.