By Shawn Bland and Jamie Sullivan, Core States Group
Both the retail and restaurant markets have been in a constant state of evolution, responding to generational shifts, technological advancements, and now, Covid-19.
Will shopping at retail stores ever be the same (post Covid-19)? How about dining at retail stores? The incorporation of food into retail stores was on the rise pre-covid-19 (partially due to the emerging millennial generation and their experiential preferences), and is now on pause with stores closing or limiting their customer capacity.
Experiential Shopping and Dining
Just before Covid-19, we saw a 70% increase in consumer spending on experiences compared to 30 years ago[1]. With restaurant industry sales at $863 billion in 2020 pre-Covid-19[2], smaller, specialty retailers had been looking to food and beverage options as a way to increase revenue and differentiate themselves from the competition. Retailers that had created unique experiences with food and
beverage options had seen an increase not only in retail sales but in their food and beverage sales as well, which had increased from $30 billion to $42.3 billion over the past ten years.[3] As more retailers began implementing restaurants, the ability to partner with restaurant groups had become easier—the retailer has been able to focus on their side of the business[4] while the restaurants focus on food and beverage—and both sides of the business reap the financial benefits.
Pre-Covid-19, large footprint retailers like Restoration Hardware and Crate and Barrel had been implementing various types of food and beverage concepts into some of their stores while others, such as Ikea, built this concept into their footprint during inception. We were seeing smaller, nontraditional retailers like boutiques, cell phone companies, and banks experimenting with food concepts in their stores as well. [5] Lululemon opened a restaurant in one of their Chicago location which had been observed to be performing significantly better than its stores without restaurants.[6] Each of these retailers was providing a unique dining and shopping experience allowing the customer to engage the brand differently than their competition. Guests could browse with beverages while they waited for their reservation, dine on food from top celebrity chefs, experience regional food in great locations, and sometimes enjoy meals with city views. In a post-Covid-19 world, having these amenities back in full swing may help retailers recover.
Convenience Goers
Another trend that was on the rise pre-Covid-19 was the eat-on-the-run customer. This fortunately continues during these times as more drug stores, grocery stores, and c-stores are making prepared foods available in response to the pandemic. These retailers are offering more creative food options, from fresh produce and prepared foods to healthy food options and specialty beverages.[7] 23% of all c-store sales come from food, as reported by the National Association of Convenience Stores (NACS).[8]
Pre-Covid-19, restaurants were already embracing customers who preferred convenience as well, as three out of every five consumers were ordering delivery or take-out at least once a week[9] and millennials were spending most of their food budget on prepared foods.[10] During the first two weeks of April, the percentage of food delivery had increased by 19%. Younger, wealthier Americans continue to prefer ordering delivery.[11]
The Future of Shopping and Eating
While the retail, convenience and restaurant industries are continuously evolving, nothing has added pressure to evolve like Covid-19 has. Retailers and restaurateurs have created safer work environments, developed contact-free delivery methods and navigated regulation changes which have influenced every aspect of the store and the new customer experience. Knowledge sharing across markets will help to bridge the gap quickly with retailers looking to add pick-up and curbside delivery based on restaurant best practices. Some restaurants eliminated dining rooms and maintain their focus on take-out only concepts in response to safety concerns. Once we’re back to “normal”, it would be ideal for retailers and restaurant owners to adopt pre-Covid-19 trends that were on the rise (restaurants inside of retail stores and delivery and take out technologies) to help recover financially. One thing is certain, even with these implementations, tomorrow’s retail stores and restaurants are going to look a lot different with safety and convenience leading the way in design and operation.
[1] Maloney, Greg. “5 Trends Defining the Food and Beverage Industry, and Retail in General” Forbes, April, 2018, https://www.forbes.com/sites/gregmaloney/2018/04/10/five-trends-defining-the-food-and-beverage-industry-and-retail-in-general/#6f4339bc2b23 – Accessed 19 Feb. 2020.
[2] “Association Releases 2019 State of the Restaurant Industry Report” National Restaurant Association, April, 2019 https://restaurant.org/Articles/News/Association-report-analyzes-industry-trends – Accessed 19 Feb. 2020.
[3] “Food and drink sales of retail-host restaurants in the United States from 2009 to 2017” Statista, https://www.statista.com/statistics/218900/sales-of-us-retail-host-restaurants/ – Accessed 19 Feb. 2020.
[4] Judkis, Maura. “Restaurants in stores are trendy again, but their goal is as old as ever” Voraciously, May 2019, https://www.washingtonpost.com/news/voraciously/wp/2019/05/31/restaurants-in-stores-are-trendy-again-but-their-goal-is-as-old-as-ever/ – Accessed 19 Feb. 2020.
[5] Judkis, Maura. “Restaurants in stores are trendy again, but their goal is as old as ever” Voraciously, May 2019, https://www.washingtonpost.com/news/voraciously/wp/2019/05/31/restaurants-in-stores-are-trendy-again-but-their-goal-is-as-old-as-ever/ – Accessed 19 Feb. 2020.
[6] Verdon, Joan. “If You Feed Them, They Will Shop: Retailers Bet on Restaurants” Chamber of Commerce of the United States of America, https://www.uschamber.com/co/good-company/launch-pad/restaurants-in-retail-stores – Accessed 19 Feb. 2020.
[7] Johnson, Steven. “Channel Migration Blurs the Lines of Grocery and Restaurant” The Balance-Small Business, October 2019, https://www.thebalancesmb.com/restaurants-retail-grocery-merging-1326050 – Accessed 19 Feb. 2020.
[8] “Food Safety” NACS, https://www.convenience.org/Topics/Food-Safety – Accessed 19 Feb. 2020.
[9] Everett, Holly. “2019 Restaurant Industry Trends: Shaping the Future of Food” Upserve, February, 2019, https://upserve.com/restaurant-insider/restaurant-industry-trends/ – Accessed 19 Feb. 2020.
[10] Oyedele, Akin. “How Millennials Are Changing the Food Industry” Business Insider. March 2018. https://www.inc.com/business-insider/millennials-food-industry-preferences-eating-out-restaurant-prepared-meals-catering.html – Accessed 16 Sep. 2019.
[11] Rabouin, Dion. “More Americans are ordering food delivery amid coronavirus crisis” AXIOS, April 2020. https://www.axios.com/food-delivery-coronavirus-a55e0bf2-a75e-47bc-839b-470a6220d305.html – Accessed 1 June 2020.
Written by:
Shawn Bland |LinkedIn profile: linkedin.com/in/shawnbland
Director of Retail
Biography: https://core-states.com/about/shawn-bland/
D: 617.500.9244 E: sbland@core-states.com
Core States Group | www.core-states.com
9 Galen Street | Suite 117 | Watertown, MA 02472
And By:
Jamie Sullivan, PE |LinkedIn profile: https://www.linkedin.com/in/jamiesullivan/
Biography: https://core-states.com/about/jamie-sullivan/
Director of Restaurants
D: 617.576.1009 | C: 617.645.6240 | E: jsullivan@core-states.com
Core States Group | www.core-states.com
9 Galen Street | Suite 117 | Watertown, MA 02472
