Food & Beverage Tomorrow: Why are luxe brands embracing food and drink concepts?
Luxury retailers are introducing a host of food concepts to deepen engagement with customers as sales slow.
December 4, 2023 5 Minute Read
Luxury brands, seeking new ways to lift sales and engage customers amid a global slowdown in luxury sales, are launching a wide variety of new food and drink concepts in gateway U.S. markets. The focus on food comes as luxury retailers seek to establish lifestyle brands that transcend their category, identifying new niches and channels that can drive in-person traffic and deepen engagement across other physical and digital channels.
New to Luxe, but Not to Retail
Using food to lure customers is not new—it’s a strategy used by a wide spectrum of retailers across multiple industries. Capital One has more than 50 cafes in bank branches nationwide open to the public, with extra perks and discounts for clients. IKEA is as famous for its Swedish meatballs as for its furniture. Costco’s food court lures members to their stores via a heavily discounted menu that regularly generates buzz on social media.
Luxury retailers, which historically limited food offerings to drinks—think champagne or sparkling water while shopping for jewelry, for instance—are introducing concepts on a grander scale. For luxe, food and drink are paths to promoting an immersive lifestyle approach that expands the brand’s reach beyond traditional retail to a wide array of experiences, including cafes, restaurants, resorts and condominium properties.
Broad Spectrum of Concepts
Thus far, most luxury brands are mainly focused on flagship locations in high streets in gateway cities like New York, Chicago and Los Angeles, as they seek to balance exclusivity with access.
Concepts range widely, depending on the retailer’s specific aim. Some are placing cafes within existing storefronts, emphasizing speed, convenience and access. Others are introducing fine-dining establishments deep within stores to promote a more immersive brand experience. Some are even launching branded standalone locations. While these are major undertakings, in most cases, these are not envisioned as key revenue drivers, but rather as additional touch points to deepen brand engagement through immersive experiences.
Cafes are a popular choice for many luxury brands. Ralph Lauren launched Ralph’s Coffee in their New York and Chicago flagships and other destinations to casually and physically lure in younger customers to regularly engage the brand in an approachable, easily accessible way. Kith is taking a similar approach with its Kith Treats milkshake cafe concept.
On a grander scale, Tiffany & Co.’s partnered with renowned chef Daniel Boulud to launch the Blue Box Café in its reimagined New York flagship. The cafe’s name, decor and menu are inspired by the brand, incorporating Tiffany’s signature shade of blue throughout. Gucci similarly opened Gucci Osteria, featuring a contemporary Italian menu that parallels the Italian design house’s ethos.
RH is perhaps the retailer with the most ambitious undertaking thus far. The upscale furniture manufacturer has 14 fine-dining restaurants and counting embedded in flagship locations worldwide, positioned to guide customers through stores staged with RH’s furniture offerings. RH is also introducing standalone dining locations and other hospitality offerings like luxury jets, guesthouses and yachts.
Real Estate Implications
Luxury brands seeking new sites will look for those that can accommodate food and beverage requirements, with many likely increasing their space requirements depending on the concept. Store designs are likely to evolve too, with a heavy focus not only on food establishments, but also the surrounding selling areas.
Developers and landlords are poised to be eager partners with brands incorporating food and beverage concepts, as they are likely to increase foot traffic to surrounding stores, attract attention from other retailers and, if well-executed, attract foodies, too.
More Luxe Brands Jumping In
As the concept matures, more luxury brands are exploring food and hospitality concepts that tie into broader brand aspirations. Burberry is taking over a New York bar for a week as part of its Streets project. LVMH’s ambitious Beverly Hills project, rejected by voters, would have combined a luxury hotel, restaurants and retail In a new development along Rodeo Drive. Breitling is considering opening restaurants in the U.S. on the heels of the watchmaker’s two restaurants in Geneva and Seoul.
For now, expect most new activity to focus on high street locations in major markets, with most concepts designed to create exclusive immersive experiences within or adjacent to flagship locations. Luxury brands are less likely to roll these concepts out into malls and secondary markets for the foreseeable future.
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