Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/566807
30 • September 2015 • Western Real Estate Business www.REBusinessOnline.com T he concept of retailer restaurants may have been around since the early 1900s, but it's only recently gained favor in the 21st century. What began as tea rooms and employee- style cafeterias has evolved into cof- fee bistros, power lunch spots and the perfect place to grab a drink — and maybe a new tie — after work. "For many de- cades, department stores had their own generic restau- rant, café or cofee bar," says Howard Wong, director of retail leasing at Ir- vine-based Passco Companies. "As consumers today become increasingly sophisticated, however, they continue to demand increasingly sophisticated retail experiences and food oferings. Full-service dining is quickly becom- ing the future for retailers." While retail sales fell for the third consecutive month this past February, decreasing by 0.6 percent, according to the National Retail Federation (NRF). Sadly, February's numbers were an improvement when compared to Jan- uary's and December's drops of 0.8 percent and 0.9 percent, respectively. Department store sales were hit particularly hard, declining 1.4 per- cent this past February. NRF noted consumers didn't seem interested in spending the money they had saved on lower fuel prices on retail purchas- es. Many also didn't want to venture out in cold weather. Then there are perhaps the two biggest roadblocks to a retailer's success: online shopping and the trend toward acquiring expe- riences, rather than objects. Both challenges are widely em- braced by today's most infuential de- mographic, the Millennial, who val- ues not just good times, but their time in general. "Fashion and food have been in- formally paired for some time, but certain target segments of the buying public — namely, Millennials — are seeing some of their favorite gourmet cofee brands being featured alongside their favorite fash- ions," says Derrick Moore, a principal in the Urban Retail Properties division of Avison Young's Downtown Los Angeles ofce. "Re- tailers realize that by pairing the two, they can create or in- crease the 'shopping adhesive' needed to keep shoppers in their stores a bit longer. Con- sumers will pay for convenience and ac- cess. Having these out- lets easily accessible, saves time — and time is money. Consumers will pay for the abil- ity to multi-task and have their favorite eats alongside preferred fashion brands." Perking Up Store Sales The retailer-restau- rant trend had a mod- est resurgence in Cali- fornia, where options were typically limited to cofee bars attached to Nordstrom stores. It picked up steam, however, in 1989 when the company's larg- est store at the time, a 350,000-square-foot Nordstrom fagship that included four res- taurants and a British pub, opened at San Francisco Centre. Nordstrom still holds a great deal of brand awareness when it comes to its food oferings, which range from wine bar cuisine at Blue Stove in San- ta Monica Place to cofee shop snacks at Ebar espresso bar at Paseo Nuevo Shops & Restaurants in Santa Barbara and its well-known Marketplace Café at centers like Stoneridge Shopping Center in Pleasanton. Marketplace Cafés throughout the state have built such a loyal follow- ing that its Roma tomato basil soup is now sold in a jar over the counter. Another signature item, Nordstrom's cookies, are also purchased regularly as to-go items. This brand loyalty — whether to the clothing or food — can go a long way, according to Stephanie Skrbin, a principal at Lee & Associates - LA North/Ventura. "The restaurants ofer a certain cache because of the big- ger name associated with the concept," she says. "So a cus- tomer who is very loyal to the brand won't hesitate to spend a little more at the retailer's res- taurant. A brand devotee will tend to linger longer and can even plan a day around being in the store, if they don't have to leave to eat. Whether it's there as an ame- nity or destination for the consumer, the restaurant ofers another way to generate sales for the mall and the re- tailer." Arm To Table Though Nordstrom might have set the tone, several other high-end retail- ers have realized the value of keeping customers in the store when the urge to seek out food arises. Barneys New York recently opened Freds at its Bev- erly Hills store, while Tommy Bahama has three stores in California that con- tain its restaurant and bar concept. These include its stores along South Coast Highway in Laguna Beach, at Corona del Mar Plaza in Newport Beach and at The Gardens on El Paseo in Palm Desert. Brand loyalists who have dined at Tommy Bahama have likely noticed the common theme among its mer- chandise, menus and even locations throughout coastal gateways and palm tree-lined boule- vards. This isn't a simple coincidence, according to Lo- rena Tomb, vice president of retail brokerage at JLL. "To be successful in the retail-res- taurant model, you have to be able to deliver an overall memorable shop- ping experience where the brand and ambiance created for the retail and restaurant portions are harmonious or, at the very least, complementary," she says. "If the operator is able to create the right vibe, customers will be more likely to prolong their visits and spend more on each store visit, increasing sales overall." Speaking of sales, the tropical- themed operator didn't just open up a few restaurants and call it a day. Instead, its marketing team went to work crafting a slew of unique experi- ences around the dining destinations. "Tommy Bahama has established it- FEEDING THE NEED Now that experiences are all the rage, many of today's luxury shopping center retailers are hoping to satiate this consumer need through restaurants of their own. By Nellie Day The Tommy Bahama store at The Gardens on El Paseo in Palm Desert features a restaurant offering. It is part of the retailer's plan to deliver a more memorable experience. One of the tropical-inspired menu items Tommy Bahama is known for is its arctic char. Moore Skrbin Tomb Wong