Retailers Need to Think Like Restaurants
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.