Global

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  • Industry: Food, Drink & Consumer Goods
  • Type: Business and industry issue
  • Date: 6/12/2013

Would you like some pineapple cheesecake with that jacket? 

Cheesecake with jacket
Offering food and drink to persuade customers to stop, look and spend is one tactic that cannot be replicated online. So why food? “It’s all about engaging customers,” says Cate Trotter, founder of retail research firm Insider Trends. “Visitors who are ‘passing through’ need to be encouraged to stop, look and spend. Recent figures from PathIntelligence show that for every 1% uplift in dwell time, there is generally a 1.3% increase in sales.”

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.


“With competition becoming fiercer – especially from e-commerce – retailers need to be innovative and flexible about their formats and business models as they strive to attract customers to their stores, and keep them there for longer”

- 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.

 

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