Channel Checks: Foodservice in London Stores
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1 Channel Checks: Foodservice in London Stores Our Channel Checks reports feature observations from our recent store tours. In this report, we look at new and innovative foodservice offerings in UK retail. 1) Foodservice offerings can increase dwell time in-store and can increase spending by 18% on average in the UK, but up to 38% in London. 2) UK consumers are growing their spending at restaurants and cafés more than they are their spending at retail. 3) Apparel retailers use known foodservice brands instore which complement their own image. 4) Department stores offer the widest choice of foodservice, with Selfridges offering 16 different eatin restaurants as well as multiple food stalls and delicatessens. 5) Grocery superstores are innovating with wine bars and sushi bars. Deborah Weinswig Managing Director, Fung Global Retail & Technology US: HK: CN:
2 Introduction Having a quality product is no longer enough for retailers to create customer loyalty and brand strength. Instead, brick-and-mortar stores are focusing on the quality of the entire in-store experience. So far, our Channel Checks reports have analyzed the ways retailers are diversifying their store experience from digitalizing the in-store experience to adding new product categories. This report covers our store tours at London retailers that have expanded their brand proposition into a foodservice and beverages offering. We begin by providing some context on foodservice in retail. Foodservice Increases Shopper Spend Shopping malls have been visibly transforming to econompass not only retail, but also entertainment, food and even education. This trend is also being mirrored in standalone stores across the UK, as retailers seek to increase dwell times and ultimately the amount customers spend. See our report The Mall is Not Dead: Part 1 for more on this topic. Foodservice offerings in retail can range from convenience offerings to experimental restaurants. Some stores we visited offer a basic café, while others had a seasonal rooftop terrace. Londoners spend 38% more when stores have a foodservice offering. Foodservice can play an effective role in encouraging shoppers to stay longer, spend longer : Brits who eat during a shopping visit dwell on average 27 minutes longer, and spend 18% more per visit, according to property management firm JLL. In London where many shoppers are more affluent and the choice of casual dining is countless stores that offer foodservice can see shoppers dwell only 10% longer, but spend 38% more on average, according to Intelligent Business Systems. Moreover, foodservice offerings allow retailers to tap a higher-growth market. UK consumers increased their spending at restaurants and cafés by 3.9% in 2016, according to the Office for National Statistics. This compared to a 1.8% rise in food retailers sales and a 3.3% increase in total retail sales. High-growth foodservice operators have seen a surge in private equity investment due to their relative immunity from the growth of online shopping and the rise in dining out as part of a shopping trip, according to Accenture Strategy s Javelin Group. Channel Checks: Foodservice in UK Retail The Fung Global Retail & Technology team visited apparel retailers, department stores and grocery stores, which have a foodservice offering. All the stores were in London; most were located around the Oxford Street area, except for Waitrose which was in King s Cross. We visited them all on a weekday. 2
3 Apparel Retailers Primark Primark launched a café in its Oxford Street/Tottenham Court Road store in late The store features the Insomnia Coffee Company, an Irish chain, which opened its first Primark shop in Brent in October The café offers coffee, pastries and sandwiches, as well as hot meals with separate breakfast and lunch menus. Source: primark.com/en/homepage Lululemon Lululemon s flagship store opened in January 2017 and hosts Neat Nutrition, a health nutrient company which provides protein shakes and coffee. As Lululemon runs fitness classes from its in-store studio, the bar is particularly popular for customers attending these, according to one retail assistant we spoke to. Primark, Oxford Street and lululemon, Regent Street 3
4 Topshop s largest store in London, on Oxford Street, offers three types of foodservice. Topshop We visited the flagship stores for fashion chain Topshop, value apparel retailer Primark and athleisure brand lululemon to see what foodservice apparel retailers are offering. Each of these retailers chose to feature external brands that align with their own brand image and values. Topshop s largest store in London, on Oxford Street, offers three types of foodservice; a Benugo café (previously Eat), a Bubbleology bar and a Lola s cupcakes stand. These on-trend, highly social-media shareable brands help promote the Topshop brand and customer engagement. Staff working here even have uniforms partnered with Topshop which change every season, according to The Caterer. Bubbleology and Lola s were busy when we visited, and the Benugo café was less busy, with a few people working on laptops as it offers free Wi-Fi. Topshop, Oxford Street 4
5 Department Stores Department stores tend to go above and beyond with the choice they offer in foodservice. We visited the flagship stores of Debenhams, John Lewis and Selfridges, all located on Oxford Street. Debenhams Debenhams offers not only a permanent restaurant and a café, but a Chi kitchen and a Patisserie Valerie. By offering permanent foodservices and temporary partnerships, Debenhams can keep up with new food trends and add seasonal interest. Source: debenhams.com/en-hk Holland and Barrett Holland and Barrett is the UK s leading health food retailer. Its foodservice offering promotes the upselling of its own products through offering a Fuel on the Move concept: customers can make protein shakes for on-the-go or choose from a pick-and-mix offering of dried fruit and nuts. Food stores use foodservice to upsell their products and increase awareness of new products. Holland and Barrett, Oxford Street 5
6 John Lewis John Lewis offers five in-store restaurants Benugo café, Rossopomodoro pizzeria, burger restaurant Ham Holy Burger, Lebanese canteen Comptoir Libanais and The Place To Eat, which is John Lewis s own restaurant with a further sushi and wine bar located in its Foodhall. Department stores have the widest array of foodservice, with Selfridges offering 16 places to sit and eat. Debenhams, Oxford Street Selfridges Selfridges offers even greater choice. There is at least one place to sit and eat on almost every floor of the department store, as it boasts an impressive 16 restaurants in the Oxford Street store. Moreover, Selfridges and its renowned food hall offered extra choice with food stalls and delicatessens. Each summer, Selfridges also opens its rooftop restaurant as an experiential dining experience with views across London. Selfridges, Oxford Street 6
7 Food and Grocery Stores It is nothing new for grocery superstores to offer in-store cafés or on-the-go meal deals. However, we observe that food stores are using new types of foodservice to upsell their instore products. We visited Holland and Barrett on Oxford Street and Waitrose at King s Cross. Waitrose The King s Cross Waitrose store is one of the retailer s largest branches in Central London. It offers a juice bar, bakery, wine bar and terrace overlooking the nearby canal. Not only do these features encourage dwell time, but the supermarket uses these features to promote new offerings and allow customers to try before buy. The store also offers a cooking school for customers to book in at lunchtime or after work hours. Waitrose, King s Cross Key Takeaways As brick-and-mortar retail becomes more focused on the quality of the experience, retailers are ramping up their foodservice offerings. Department stores have long offered cafés and restaurants, but they are offering more choice than ever, with niche or temporary foodservice offerings adding interest in-store. More apparel specialist retailers are hosting food and beverages outlets in their stores, with even value retailer Primark launching instore cafés. Grocery superstores are innovating, too, with wine bars and sushi bars. Readers may also be interested in our May 2016 report Food Service & Shopping. 7
8 Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: Hong Kong: China: Katie Marshall Research & Marketing Assistant Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: London: Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0) New York: 1359 Broadway, 18th Floor New York, NY Tel: FungGlobalRetailTech.com 8
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