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The line between hospitality and retail is blurring - here’s what that means

Published January 4, 2021

Better customer service starts and stops with the experience

For as long as most people can remember, bookstores have sold coffee, and gyms have sold smoothies. Although cross-industry offerings aren’t a new concept, digital innovation perpetuates the increasingly blurred line between hospitality offerings and retail offerings—and now it’s expected.

The trend looks to be spreading into a larger swath of American businesses than ever before. The grocer Whole Foods has outfitted some locations with restaurants and bars. The cafe Pret a Manger has—amid the pandemic-related shutdown of public spaces—turned to selling branded ground and whole bean coffee. 

It seems that to survive in an ever-changing economic landscape, business strategy needs to revolve around more than just a singular retail product or hospitality service. Now, it’s about the holistic experience you deliver to your customer.

Blur the line by putting experience first and product second

The saying goes, “It’s not about being first to market, it’s about being best in market.” That used to mean building the best product for your customer, but now it means building the best experience. According to SuperOffice, 2020 marked the year that customer experience became more important than price and product.

Gyms are a perfect example of a business that’s combined retail and hospitality to deliver a better customer experience.

A gym or fitness studio primarily sells their product (fitness classes, space to exercise, equipment, etc.), but, in addition, they offer hospitality (nutritionists on staff, meal plans, journaling classes, and even healthy meals delivered to your home). All of which are related to their core product.

Today, when a consumer chooses a gym membership, it’s not only about which one has better classes or the best equipment. If a consumer picks Gym X, they do so because they get the services and products that matter to them—in addition to a great workout—all under one roof.

An experience leads the decision-making process for the consumer, and the product (a gym membership, in this case) comes second. Gary Bacon, global managing partner (Retail Store Transformation Practice) at NCR VOYIX, suggests using experiences and social interactions to encourage repeat customers as much as possible.

“[Gyms have] always had the same challenge, which is that a customer pays for a membership, then the gym has to get that customer to renew,” he said. “And your likelihood of renewal goes up the more social interaction you have within that membership.”

The same principle applies to retail and hospitality.

Positive customer experiences enable repeat visits and loyalty. And since repeat customers often lead to increased profits, experience-based strategies are a theme that all merchants can take advantage of.

Leverage technology to sell your customer experience

There’s a common thread among the big brands successfully merging hospitality and retail. They’re leveraging technology and digital channels to expand and enhance their customer experience and, ultimately, their product offering.

“How do I differentiate my experience from the next retailer's experience?”

Technology is one of the best ways to introduce a new experience to customers. From apps to interactive experiences to simple websites and online publications, there are many digital ways to engage customers. Ikea Place Kit offers an interactive experience to see how furniture and products will fit in your home. Walmart introduced a cooking video series that teaches viewers how to cook (and not-so-subtly promotes Walmart products). Hilton’s loyalty app goes far beyond point collection and travel deals by allowing guests to control the entire check-in and checkout experience through their mobile app, making the experience completely frictionless.

Customer experience extends across channels

To take advantage of the blurred line between hospitality and retail, you need to create a unique online and offline experience. That means you need to create a cohesive experience at all touch points.

Bacon even gives cross-channel advice to his dad, who owns a retail store in the UK. “How do you extend that experience outside of the realm of selling whatever it is you're selling?” Bacon says, noting that every retailer should ask, “How do I differentiate my experience from the next retailer's experience?”

Prime example: Just do it

Nike has evolved from a brick-and-mortar retailer of sports apparel and shoes to a true master of cross-channel experiences. In 2011, Nike introduced the Nike Training Club app, offering workouts with expert trainers. That evolved into the introduction of Nike Master Trainers, who offer global training events and also populate the content for the Nike Training Club app (which also cross-sells their shoes and apparel). No matter how you access their products, and through whatever medium, you go to Nike when you want to feel like an athlete, not just purchase a pair of shoes.

A greater customer experience starts with the customer journey

So, how do you get to the Nike dream state, where every touch point you have with a customer is consistent, experiential and unique?

Wilson K. Lee of Profitable Restaurant Owner’s Academy says that you need to start by breaking down the customer journey and identifying your key individual touch points.

“How are customers interacting with your brand in every aspect? What is that specific experience like?” Lee said in a Forbes article. “By breaking down the journey into individual touch points, you allow your business the opportunity to craft an intentional experience for each touch point, thus making an overall great customer experience.”

Bacon reinforces Lee’s sentiment, drawing on the impact feelings can have. “A consumer won't necessarily know why they feel good about an experience, but just that they feel good,” Bacon says. “So, how do you expand beyond just selling whatever you're selling and build that into an entire journey, starting outside the store and leading all the way through the store?”

Experiences don’t stop when consumers go online

E-commerce, although more impersonal than a face-to-face interaction, can still offer a unique experience to consumers because of one inherent quality: the internet already knows a lot about you.

E-commerce can create an experience because it knows more about a customer than a human does.

When you log on to a merchant’s e-commerce site, it knows who you are and knows what you bought last week. “How do you leverage that data to build greater experiences?” Bacon asks. “I think about my own experiences walking into retail stores. I mean, how often do you pick something off the shelf, and then you check the retailer's own mobile application at checkout to ensure that the cashier of the same retailer is giving you the same promotion that e-commerce has got?” The in-store experience must be on-par, and work in tandem with, the online experience.

To capture today’s online consumers, connecting experiences across online and physical touchpoints is not only important. It’s crucial.

Retail and hospitality are just the start

Whether it’s gyms and cafes, hotels and coffee shops or retail stores and an e-commerce presence, hospitality and retail go hand in hand to enhance the consumer experience—and that’s just the start of blurring industry expectations.

C-stores selling jewelry, hotels stocking your customized exercise outfit in their gift shop and cruise lines offering a life coach on luxury escapes—the crossover is only going to increase. And, that means that the product takes a back seat to the experience. So, what experience can you offer your customers? Most important: What do they truly want when they buy from you? Chances are, it’s more than just a product.

No matter what industry, what customer you’re catering to or what market you’re operating in, the secret to connecting with your customer is the experience—above all else.

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