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Tapping into the restaurant playbook

10/6/2016

At the Converse store on the Third Street Promenade in Santa Monica, “customization maestros” help sneaker fans manufacture their dream shoe.


Shoppers, browsing the featured iPads, 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 a distant factory. Instead, 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: quality of product, meaning manufacturing a quality product on site; service, from the front of the restaurant where the valet parks the car to the final delivery of the bill; and 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 where these fundamentals have, for the past four decades, been neglected in order to cut costs and compete.


It’s time for the pendulum to swing in the other direction, and for retailers to adopt the mind-set 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; skateboard stores let shoppers pick out trucks and wheels and create custom-tailored board designs.


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, retailers should:


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 are higher margins. Levi’s, with made-to-order jeans initiatives at its Manhattan Meatpacking District store, includes a complete basement sewing room. The custom Levi’s 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.


Differentiate the store. 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 touchpoints. By adopting the restaurant mind-set, something happens by default: Since the on-site customization model is labor-intensive by nature, it requires high-touch interactions with the shopper. There are as many as six to seven touchpoints 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 — coffee, tea, snacks or a flute of champagne during a new store opening — increases dwell times and affinity for any environment. It also keeps shoppers out of what we’ve come to call the Amazon “necessity zone mind-set,” (this shopper mind-set says, “I can just go do that online”). 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 long-standing 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.


Lee Peterson is executive VP, brand, strategy and design at WD Partners, a customer experience expert with offices worldwide.


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