How Retail Shopping and Eating Will Change as a Result of the Pandemic
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 before Covid-19 (partially owing 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 with 30 years ago. With restaurant industry sales at $863 billion in 2020 pre–Covid-19, 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 10 years. As more retailers began adding restaurants, the ability to partner with restaurant groups had become easier, allowing the retailers to focus on their side of the business, and the restaurants to focus on food and beverage – and both sides of the business reap the financial benefits.
Before Covid-19, large footprint retailers like Restoration Hardware and Crate & 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 from inception. We were seeing smaller, nontraditional retailers including boutiques, cell phone companies, and banks experimenting with food concepts in their stores as well. Lululemon opened a restaurant in one of their Chicago locations that had been observed to be performing significantly better than its stores without restaurants. Each of these retailers was providing a unique dining and shopping experience, allowing customers 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.
Another trend on the rise pre–Covid-19 was the eat-on-the-run customer. This fortunately continues during these times as more drugstores, 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. As reported by the National Association of Convenience Stores, 23% of all C-store sales come from food.
Pre–Covid-19, restaurants already were embracing customers who preferred convenience, as 3 out of every 5 consumers were ordering delivery or take-out at least once a week, and Millennials were spending most of their food budget on prepared foods. During the first two weeks of April, the percentage of food delivery had increased by 19%. Younger, wealthier Americans continue to prefer ordering delivery.
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 regulatory changes that 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 pickup and curbside delivery based on restaurant best practices. In response to safety concerns, some restaurants eliminated dining rooms and maintain their focus on take-out only.
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.
Shawn Bland is Director of Retail and Jamie Sullivan is Director of Restaurants at Core States Group in Watertown, Mass. Contact them at firstname.lastname@example.org or 617-500-9244; and email@example.com or 617-576-1009.
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