Eat, Stay, Shop

How New Dining Options Are Changing the American Mall Experience

Aug 01, 2019
Marketing

SMITH BRAIN TRUST  With avocado tartines and shrimp poke bowls, Crate and Barrel’s new upscale restaurant probably will make you feel hungry. The home-furnishings retailer is hoping it will also make you want to shop.

The Table at Crate is the company’s first-ever restaurant, part of a growing number of establishments that are thoughtfully mixing upscale dining and individual retail stores. High-end rivals RH and Terrain already have embraced the strategy, and Lululemon opened its first restaurant last month.

As the trend takes hold, it’s beginning to reshape some American shopping malls, says Jie Zhang, professor of marketing and the Harvey Sanders Fellow of Retail Management at the Robert H. Smith School of Business at the University of Maryland. It’s making them feel more like a destination.

Table at Crate, for example, with a James Beard-nominated chef leading the kitchen and a modern design aesthetic, has a lot of allure. Restaurants, Zhang says, have the power to draw people in, slow them down, make them linger awhile longer.

“Many shopping malls are not doing well in general, so they are looking for ways to attract shoppers and get them to stay there. They are using a variety of entertainment options, emphasizing the experiential aspect,” she says. That’s also why Lululemon offers yoga classes, she says, and why Williams-Sonoma offers cooking demonstrations.

In 2010, there were 35 million visits to malls, according to Cushman and Wakefield. By 2013, the number had fallen by half, to just 17 million. And it’s continued to decline.

But what’s happening at U.S. malls is not happening everywhere. Across Asia, many high-end, destination restaurants are located in shopping malls, which consistently helps drive people to stores, says Zhang.

American malls have always had some dining options. Luxury department stores like Nordstrom and Neiman Marcus have had restaurants, with varying price points and service levels. Nordstrom, for example, has about 200 restaurants today, ranging from the upscale full-service Bar Verde, to the more casual Cafe Nordstrom.

And, of course, there’s the food court, filled with quick-serve options that typically range from the lackluster to the awful.

“Cheesecake Factory and PF Changs have achieved great success near shopping malls, by catering to shoppers who don’t mind spending a little more money for a better dining experience,” says Zhang.

In other words, the appetite is there.

“Many shopping malls here in the U.S. are beginning to upend their restaurant offerings, inviting more interesting and more upscale food providers,” she says.

The Westfield San Francisco Centre Food Emporium was among the first shopping centers to lean away from the typical food court model, in favor of more interesting, often more healthy, cuisine. The food court has a range of options – vegan, lobster, Brazilian, Italian, Chinese, Japanese ramen, Korean barbecue.

“They invited really high-end restaurants to set up counters there. And they did. So the food is of restaurant-quality, but at a fraction of the cost. And that has attracted a lot of people, and the retail stores now benefit from that,” she says.

Foot traffic is important to mall retailers. Analysts say consumers spend more when they shop in real life. A study showed that 71% of shoppers spent more than $50 when shopping in a store, compared to 54% who did so online.

“I think this new move by Crate and Barrel is brilliant,” Zhang says.

For Crate and Barrel, Table is about increasing store traffic and bringing in repeat customers. But the restaurant also will be a showroom for the furnishings and cookware that Crate and Barrel sells. The furniture, the dinnerware, the decor – it will come from Crate and Barrel’s range. “That’s a great cross-selling opportunity,” Zhang says.

Williams-Sonoma has taken a similar, experiential approach, with food demonstrations and after-hours specialty cooking classes aimed at couples, colleagues and friends.

“This really is the direction for brick-and-mortar retailers. You can’t compete with online retailers on price or convenience. But you have the real world; use the real world.”

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About the Expert(s)

Jie Zhang is a Professor of Marketing and the Harvey Sanders Fellow of Retail Management at the Robert H. Smith School of Business at the University of Maryland. She received her Ph.D. in marketing from the Kellogg School of Management at NorthwesternUniversity. She was a faculty member at the Ross School of Business at the University of Michigan prior to joining the Smith School. Her general research interest is to apply advanced econometric and statistical models to study consumer purchase behaviors and retail strategies.

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