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From Feast to Fashion: What Urban Outfitters’ Dining Foray Could Mean, in 3 Courses

Urban Outfitters is partnering with star-quality chefs to open stylish restaurants in its stores, an example of the “experience retail” trend. In reality, experience retail has existed for years. The desired experience, however, has changed, and while ushering in dining could draw new customers, it also introduces a few considerations.


 

At Urban Outfitters, the latest testing ground is the kitchen, and it could get heated.

The funky-trendy specialty chain, in one of the latest manifestations of the “experience retail” movement, is partnering with acclaimed chefs to operate chic restaurants within some of its locations. Such efforts, which combine retail with lifestyle, are designed to compete with online retailers. They also underscore retail’s need to continuously move in pace with customers and explore new concepts – even when they are not that new.

UrbanOutfitters_Toronto_700In reality, experience retail has existed since merchants began piping in music and offering fragrance samples. In the category of dining, for instance, Urban Outfitters and other specialty chains have been noodling around for a few years, taking a page from the history books of department stores. Similarly, department stores, many of which had pulled back on the idea of pairing dining rooms with designer labels, are now revisiting it: Saks Fifth Avenue recently announced a partnership with French hotelier Jean-Louis Costes, for example, and Nordstrom has consistently made dining part of its retail experience.

However, Urban Outfitters is a smaller store with a more targeted audience. In testing the kitchen, specialty retailers may feel that lunch and leggings go together like satin and suede, but adding big-name culinary to the sales floor means opening the doors to other affairs, ranging from brand positioning to product promotions.

Three courses to consider

There should be no debate that brick-and-mortar retailers need to continuously test new ways to stay fresh and relevant to shoppers.

Online retail sales, which began upsetting the traditional shopping cart in the 2000 holiday shopping season, are expected to increase this November and December by 6 percent to 8 percent, to as much as $105 billion, according to the National Retail Federation. Clearly, some of those sales will go to retailers that operate physical and digital stores, but online-only merchants ranging from Etsy to Amazon threaten to take a larger chunk.

Until a digital device can serve tapas or tacos, traditional retailers can find an edge in the kitchen – if they are prepared for the culinary outcomes. Following are three courses of action a specialty merchant may want to consider when expanding into dining.

Appeteasers: Urban Outfitters expects its restaurant partners to operate autonomously from the store – it does not involve itself with menu items and the like. The brand messages, however, could waft from the dining room to the sales floor and back. The staffs of each company should be trained to understand the brand promise and offerings of the other, because people will ask. The teams should anticipate questions about restaurant specials, store hours and store promotions. In fact, they should be prompted to tease out information on these transaction-enhancing topics and be encouraged to collaborate. Working together, they can lift revenue and boost morale.

Combo meals: If a retailer partners with a well-known chef, it is reasonable to expect the merchandising question to surface. The chef may already offer a private-label line, in which case its availability in-store should be discussed in advance. If not, the retail alignment may cause the restaurateur to consider launching products to sell at the store. All of this should be anticipated and addressed, perhaps as stages in the partnership. For example, if the retailer achieves a targeted increase in sales that can be attributed to the restaurant, the two parties can then discuss launching a line of dishware, spices or cocktail mixers exclusive to the store.

Sweet rewards: Most retailers, and increasingly more restaurants, offer loyalty programs. If both parties in a retail-restaurant partnership do so, then they should smooth out how these programs will work together. This is essential because consumers will likely expect crossover benefits and will be confused if none is offered. The program collaboration can be as straightforward as allowing customers to both earn and redeem points with either merchants, but it will take some backend data alignment. Some merchants are wary of sharing data, but my experience has been both parties benefit when they can see what their customers do outside their stores.

I’ll add one additional course of action, and that is to avoid the roast. Retailers looking to partner with celebrity chefs should keep in mind they are public figures subject to public scrutiny. If the chef suffers a public relations crisis, it will likely splash onto the sales floor. A good crisis management team will prime itself to manage such challenges.

Urban Outfitters and its parent company, URBN, plan to continue their restaurant venture. URBN in fact runs its own in-house restaurant concepts and is planning a major project outside Philadelphia that will feature two restaurants, a specialty foods market, a hotel, spa, fitness studio and a clothing store.

A culinary partnership may not be the recipe of success for all retailers, but Urban Outfitters’ efforts to advance the retail experience are necessary to stand apart.

This article originally appeared on Forbes.com, where Bryan serves as a retail contributor. You can view the original story here.

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