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 bricks-and-mortar stores ever be the same post COVID-19? How about dining at stores? The incorporation of food into stores was on the rise pre-COVID (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 the pandemic, we saw a 70 percent increase in consumer spending on experiences compared to 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 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, while the restaurants focus on food and beverage—and both sides of the business reap the financial benefits.
Pre-COVID, 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, non-traditional retailers like boutiques, cell phone companies, and banks experimenting with food concepts in their stores as well. Lululemon opened a restaurant in one of its Chicago locations, which 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 the customer to engage with 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 that was on the rise pre-COVID 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. Twenty-three percent of all c-store sales come from food, as reported by the National Association of Convenience Stores (NACS).
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 and millennials were spending most of their food budget on prepared foods. During the first two weeks of April, food delivery had increased by 19 percent. 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 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.
Shawn Bland serves as director of retail and Jamie Sullivan as director of restaurants with Core States Group, a Watertown, Mass.-based architectural, engineering and brand management firm.