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As the National Retail Federation predicts that online sales will account for 16 percent of the $586 billion U.S. consumers are expected to spend this holiday season, many retailers are considering adding food and drink options to their brick-and-mortar stores in order to draw in customers.
According to Bloomberg, food has become an opportunity for retailers as “U.S. consumers show more interest in farmer’s markets and amid the popularity of such cooking shows as cable network Bravo’s ‘Top Chef.’”
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But food offerings are not new to the shopping experience. In the 1900s, U.S. department stores often ran restaurants like Macy’s (NYSE:M) Walnut Room in Chicago, and fast food chains, like McDonald’s (NYSE:MCD), have long been part of Wal-Mart’s (NYSE:WMT) big-box stores. Now, with online shopping’s increasing popularity, other retailers are using a wide array of dining concepts to attract customers.
Oxford Industries’ (NYSE:OXM) Tommy Bahama, with its namesake restaurants incorporated into 13 of its retail locations, has shown restaurant-stores to be successful. As company chief executive officer Terry Pillow told Bloomberg, they generate “two-and-a-half times the sales per square foot of the apparel chain’s regular locations.” Urban Outfitters (NASDAQ:URBN) has pioneered restaurant-stores as well. Two of the company’s Terrain home-and-garden stores have begun to offer locally sourced menus, which according to the company have doubled the amount of time customers spend in those locations.
For J.C. Penney (NYSE:JCP), whose struggles to attract customers are well-documented, including food in stores is seen as another strategy to bring back customers lost during its pricing changes. During the company’s earnings conference call in August, chief executive Ron Johnson stated that the retailer planned to replace cash registers with coffee and juice bars. The stands may keep customers browsing longer as “no one has to leave the store if they want to refresh,” he said.
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