Insights

Retailers Need to Think Like Restaurants

BY CSA STAFF

At the Converse Store on the Third Street Promenade in Santa Monica, “customization maestros” help sneaker fans manufacture their dream shoe.

Browsing iPads, shoppers choose among 150 graphics, including those created by local artists. There is a wide selection of grommets, patches and lettering, along with swap out drawstrings of various designs and color. But all those choices aren’t sent off to a manufacturing plant, with the final product assembled in some distant factory. It’s all made in front of the buyer, inside the store.

You know, kind of like a burrito at Chipotle, a stone-fired pizza at a trendy bistro or a soy latte inside a Starbucks — light foam, one raw sugar, please.

The point is this: Made-to-order, personalized products aren’t the norm in the retail world, but in the restaurant and food service worlds, they have always been the rule. Restaurants, in essence, are manufacturers. They are a place where raw materials are assembled in made-to-order lines, and transformed into customized products in real-time. Retailers on the other hand, operate as warehouses for goods manufactured and assembled somewhere else.

Successful restaurants have always been obsessed with three things:

1. Quality of product, and that’s meant manufacturing a quality product on site.

2. Service, from the front of the restaurant where the valet parks the car to the final delivery of the bill.

3. Finally, atmosphere, by creating a distinct and welcoming environment.

These core attributes of the restaurant world — quality, service and atmosphere — are lacking the most in the retail world these days. This is especially true within mall and big-box stores. Over the last four decades in order to cut costs and compete, these fundamentals have been neglected. It’s time for the pendulum to swing in the other direction, and for retailers to adopt the mindset of restaurateurs. There’s plenty of upside, as some retailers experimenting with on-site customization have found.

Perhaps, without even realizing it, some retail brands have adopted the operational model of restaurants. Nordstrom has experimented with the 3D printing of shoes in select stores. A Japanese stationary store allows shoppers to create a customized notebook on the spot.

At independent, high-end lifestyle retailers on-site assembly has long been the norm: Surf shops created personalized boards, sanded and assembled with distinct fins on site, and skateboard stores let shoppers pick out trucks and wheels and create tailored board designs. It’s no coincidence retailers innovating with on-site customization also happen to be those we have long defined as Third Wave retailers.

These are retail spaces shoppers don’t just go to buy but to be seen, and to experience consumer culture as a lifestyle, not merely a transaction. By combining such needs with growing desire for co-creation experiences retailers can create more high-touch points along the path to purchase.

To Think like a Restaurateur:

• Find higher margins. Even though labor costs are higher in the restaurant industry, one of the biggest potential gains for retailers who adopt such strategies is actually higher margins. Consider the experiment at Levi’s with made-to-order jeans initiatives at its Manhattan meatpacking district store, which includes a complete basement sewing room. At the brand’s San Francisco store, on-site tailors hem, or cut and sew jeans. Just as a custom drink at Starbucks sells at a premium compared to old-school drip coffee, such custom Levi’s, branded as Lot No. 1, sell for a top-shelf price, $750 a pair.

• Renew the path to purchase. Beyond the benefits of higher price points, on-site assembly and manufacturing creates an entirely different path to purchase for shoppers, one more likely to build brand loyalty. Such purchases represent the chance to have more meaningful experiences. For starters, they force retailers to create radically different service environments and atmospheres. Again, perhaps without even knowing it, stores are acting more like restaurants. Having a greeter or a maître d, who always greets people, having an attractive environment, from the interior to the exterior and overall designs aimed at expanding decision and dwell times—not contract them to get a customer out as quickly as possible.

• Differentiate the store. Despite such a high execution bar, such efforts operate as differentiators for retailers — something desperately needed in the marketplace today. Such offerings stand in stark contrast to the banal atmosphere of big-box stores, and in that way bring vitality, drama and energy back to the store environment.

In an Amazon world, with consumers literally on autopilot using the retail behemoth’s Dash buttons to purchase regular necessities, retailers must exploit all possible means of setting their brands apart from mass-market norms. Shoppers are no longer enamored with shopping as entertainment — at least not for anything that can be delivered to the front door with less hassle.

• Increase touch-points. By adopting the restaurant mindset, something happens by default: Since the on-site customization model is labor-intensive by its very nature, it requires high-touch interactions with the shopper. There are perhaps, as many as six to seven touch-points on a shopper’s path to a personalized product sale; this is now the requirement of execution.

• It’s all about the food and the coffee, too.Simply offering some kind of sustenance within the store environment, be it coffee, tea, snacks or a flute of champagne during a new store opening—increases dwell times and affinity for any environment. By doing so, it keeps shoppers out of what we’ve come to call the Amazon “necessity zone mindset”, (this shopper mindset says, I can just go do that online). But food offerings inside the store create a reason to go and deliver an emotionally satisfying experience, one that’s impossible for online to rival.

By co-opting the operational model of restaurants, and rejecting the longstanding operational model (warehousing of goods) of stores, retailers have much to gain, especially among a new generation of consumers who value experiences above mere commodity acquisition. For that they always have Amazon.


Lee Peterson is executive VP, brand, strategy & design at WD Partners, a customer experience expert with offices worldwide.

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A.Elliot says:
Aug-30-2016 12:34 am

Great Article
Lee, as always a thought provoking piece. Totally agree that the experiential side of the physical store environment has been neglected for too long. But wanted to get your thoughts on what percentage of retailers can truly make this switch? Moving to a lower volume, higher cost operational model has to be based on your brands personalized value to the shopper. How many retail brands in the mainstream truly have that value proposition?

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SLIDESHOW

Chain Store Age announces SPECS/2017 Advisory Board

BY Katherine Boccaccio
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Chain Store Age announced the selection of the Advisory Board for SPECS/2017, the annual retail event for store innovation produced by CSA and attended by retail and food-service executives involved in the planning, design, construction and maintenance of stores and restaurants nationwide.

Now in its 53rd year, SPECS will host its 2017 conference in Orlando, Florida, at the Gaylord Palms, March 12-14. The event will focus on what’s next, and what is shaping the future of retail.

The SPECS Advisory Board, which is comprised of 45 industry leaders both from leading retail companies and key supplier organizations, will advise and direct the educational program for the 2017 conference. The packed slate of workshops, roundtables and panel presentations cover a wide range of emerging and evolving issues – and the Board, as industry insiders, play a key role in the planning and creation of each.

Five veteran members were selected as Executive Advisory Board members, charged with team leadership and overall program direction: Sara Craven, corporate design and construction regional director, Avis Budget Group; Richard Elkins, director of construction services, Firehouse Subs; Craig Hale, associate, HFA; Lisa Smola-Hollo, construction project manager, ULTA Beauty; and Kent Swank, senior director of construction, The Home Depot.

Following is a listing of the SPECS/2017 Advisory Board.

Bob Almond, chairman, NEST;

Aaron Ancello, VP and regional facilities manager, TD Bank;

James Beale, managing partner, National Glazing Solutions, LLC;

Dan Beeman, senior director of construction, architecture and design, The Hertz Corp.;

Sonja Berry, COO, Energy Design Service Systems;

Dan Bilancia, business development manager, Johnson Controls/York;

Jayson Burgess, director of construction, Smashburger;

Jennifer Chambers, Versashield architectural sales manager, Halex Corp.;

Sara Craven, corporate design and construction regional director, Avis Budget Group;

Dave Crawford, senior VP store design and construction, DSW Designer Shoe Warehouse;

David DiCarlo, Midwest regional director of construction, rue21;

Greg DuChane, director, retail-restaurant national accounts, Trane;

Richard Elkins, director of construction services, Firehouse Subs;

Bridget Farrell, senior manager of architecture and building design, J.C. Penney;

Mike Gordon, facilities maintenance manager, Fogo de Chao;

Craig Hale, AIA, CDP, associate, HFA;

Steve Hearon, president, BrandPoint Services;

Al Hellaby, senior project manager, Wegmans Food Markets;

Tom Helwig, director of construction, Target;

George Holz, retail design/construction/facilities executive;

Bob Jensen, director of construction, Family Dollar;

Lisa Johnson, VP, Interstate Signcrafters;

Bob Keingstein, president, Boss Facility Services;

Lori Koeppe, operations coordinator, The Buckle;

Robin Baskin Ladner, VP of sales, Global Facility Management and Construction;

Sally Lee, market segment manager – retail, LEDVANCE, Sylvania Products;

Dave Magill, senior VP of program management, Ferrandino & Son;

Steve Miller, senior manager, major accounts group, Bose Professional Systems;

Bob Moore, president, Retail Contractors Association;

Kevin Nolen, director of retail expansion and facilities, Z Gallerie;

Alan Norton, senior manager of health and wellness innovations, Wal-Mart Stores;

Jim Pagano, executive VP, Boston Barricade Co.;

Randy Pannell, VP of construction, Hudson’s Bay Co./Saks Fifth Avenue Division;

Lisa Ploss, president, ProCoat;

Kristen Roodvoets, senior manager retail store planning and development, Alex and Ani;

Mike Rose, CEO, Academy Service Group;

Eric Russell, director of construction, L Brands/Bath & Body Works;

Amy Short, senior interior designer, Ashley HomeStores;

Lisa Smola-Hollo, construction project manager, ULTA Beauty;

Kent Swank, senior director of construction, The Home Depot;

Parke Wellman, divisional VP of store environment, Helzberg Diamond Shops;

Wendy Whetton, senior facilities project manager, Harbor Freight Tools;

Fran Windsor, senior VP, legal and new store development, Fresh Thyme Farmers Market;

Tracy Scanlan Zaslow, senior director of design and construction, Luxury Brand Holdings; and

Melissa Zimmerman, senior manager, StoreCare, Walgreen Co.

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SUPPLY CHAIN

Amazon continues to expand Texas fulfillment network

BY Marianne Wilson

Amazon announced plans to open a fulfillment center in Coppell, Texas. It will be the Internet giant’s eighth center in the Lone Star State.

“Our ability to expand Texas operations within three short years is the result of two things: incredible customers and an outstanding workforce in the state,” said Akash Chauhan, Amazon’s VP of North American operations.

Amazon employees at the one-million-sq.-ft. Coppell fulfillment center will pick, pack and ship larger customer items, such as big screen televisions, kayaks, and patio furniture.

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