On a recent trip to Los Angeles I biked up to Santa Monica. There is a lot of retail there, but one of the first stores I saw was Nordstroms. As I walked through the large glass front doors I made a judgment that I believe any true Canadian might make. That is, it is just like "The Bay". Upon a closer look there were many distinguishing brands that did differentiate Nordstroms from its less popular Canadian sister. These were higher-end brands such as Mackage and Burberry. Next as I went up to the third of four floors of the store I saw something that The Bay certainly does not have. That is a sit down fine-dining restaurant inside the store. This restaurant (pictured below) was Blue Stove. Blue Stove has a strong reputation as a lunch destination, and they offer a variety of upscale tapas (Such as "Crisp & Spicy Dark Cherry Glazed Beef") and wines inside a classy atmosphere.
This concept of in-store dining may not be as unique as I had first thought. For years in Canada we could buy meatballs at IKEA and Starbucks’ Coffee at Safeway. Blue Stove is really just an upscale extension of this concept that traditionally makes retail outlets more comfortable and increases customer’s time spent in the store. According to Craig Patterson and Retail Insider, department stores in Canada are increasingly adding these restaurants, bars and coffee shops to their in-store experience. The trend is apparent in Toronto in not only department stores (such as HBC), but also single brand stores such as Kit and Ace.
It is now important to understand the benefit of adding a fine-dining experience to stores such as Nordstroms, and how it is different from the traditional convenience options that we have seen in the recent past. More than just convenience and increased shopping time, I believe that these fine-dining restaurants create a strategic trade area. There is a mutually beneficial relationship between both businesses by creating this tight trade area. Blue Stove benefits from Nordtroms’ shoppers as they walk through the store and build up a hunger; and now that they have become a destination restaurant, Nordtroms benefits from Blue Stove customers who are only looking for a fine-dining experience at first, but fall victim to the “40% off” rack situated just outside the restaurant. Whereas for stores incorporating restaurants in the past, it has been generally the store that generates the traffic, and the restaurant is simply a convenient amenity. In addition to this, Blue Stove also adds to the environment of Nordstroms. It offers a unique value proposition to shoppers who appreciate a fine dining experience and can spend a fair amount of time in the store. In my opinion, these are very useful benefits for both businesses. However, I would propose that the class of the restaurant should correspond with that of the retail store. For example, I do not believe that Blue Stove would see the same success at a value-driven department store such as Winners, but perhaps it would fit well in The Bay as they continue to introduce more upscale brands and transform their value proposition.
In conclusion, a restaurant inside a retail store may not be a novel idea. However, it is the evolution of this idea that creates and important trend in current and future retail. Once cafeterias and coffee booths, retail stores now introduce fine-dining experiences that transform the role of an in-store restaurant.
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