Can fresh foods revive department stores?

Discussion
Photo: David Jones
Aug 31, 2016

The department store model could use some fresh ideas. For an upscale department store chain in Australia, one of the ideas they’re trying out is fresh food.

David Jones will soon test an upscale grocery store featuring fresh selections and prepared meals in one of its locations, the Daily Mail reported. The retailer intends for the supermarket to compete at the opposite end of the spectrum from fast-growing, low-price chains such as Aldi. David Jones is also revamping its food courts and, at one location, a new in-store restaurant will open, overseen by a celebrity chef.

Recent news about U.S. department stores has not been promising and mall traffic overall has been heading south.

Making a department store a grocery destination, then, could get people in the door with more frequency than even an in-store restaurant. But upmarket groceries, as David Jones describes stocking, have proven to be a thorny issue recently in the U.S.

A few big luxury department stores have made expensive, high-end groceries available on their websites, which led to viral internet mockery when discovered. The fact that the Neiman Marcus website sells tamales for $92, publicized by GQ, was followed up with a Huffington Post article making fun of items such as a $410 pork roast from Neiman Marcus and a $47.95 24-pack of latkes from Saks.

It’s hard to imagine that such products, at such prices, would bring customers in the retailers’ brick-and-mortar stores for regular shopping trips. But the foodie movement these days seems to be eclipsing any fashion trend out there.

Referencing the popularity of dining out in Australia, Ian Moir, CEO of David Jones parent, Woolworths Holdings, told the Daily Mail, “If you think about it, food is fashion.”

DISCUSSION QUESTIONS: Could fresh or gourmet food be positioned as a traffic driver or differential for department stores in the U.S.? Do you see operators using food in the same way they have used fashion?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"I don’t believe fresh or gourmet food is a sustainable differentiator for department stores overall."
"The fresh food line of business is to battle for scraps in the pool of piraña that are the $1.5 trillion annual food industry (prepared and grocery)."
"Offering food in department stores is the norm in many other countries but will be a new venture in the US."

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18 Comments on "Can fresh foods revive department stores?"


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Tom Dougherty
Guest

Harrods in London has had this as a market place for ever — and it is a busy floor bustling with interesting fresh foods and a myriad of prepared and exotic meals. But … the store is IN London.

Daily marketing for fresh groceries is part and parcel of city life. Can this translate to American anchor mall stores? I surely doubt it.

When you live in the suburbs even a grocery store on the wrong side of the road on the drive home is too much of an inconvenience. Good luck with this flawed idea.

Richard Layman
Guest
5 years 8 months ago
Center city vs. suburban location is key. Just as supermarket chains have had a very difficult time creating formats for resurging center cities that are different from the automobile-centric suburbs, department stores have been spending their last 50 years abandoning center cities, where a food-centric offering in department stores fits the demographic, and spatial and mobility patterns that are unique. For what it’s worth, I remember Hudson’s (Detroit/Dayton-Hudson Corp.) doing this kind of stuff back in the early 1980s I think in mall stores (I can’t remember if the downtown store had closed by then, probably), and Macy’s in NYC was known for this back then too, even if we Midwesterners hadn’t heard of Harrods. Similarly, a suburban non-department store anchored shopping center created maybe one of the first distinctive food courts in Southfield or West Bloomfield Township in the late 1970s, called “Tally Hall” long predating today’s explosion of food halls. But it failed after a number of years of wild success, in the face of improving specialty market and restaurant options closer to… Read more »
Dick Seesel
BrainTrust

I agree with Tom that the European “food hall” model (at Harrods and elsewhere) does not lend itself to American department stores. Not enough downtown anchors and too many options to make this work.

Ryan Mathews
BrainTrust

Fresh food works well in department stores outside the U.S. The problem here is that the department store format is less and less appealing over time, no matter what departments you put in it. And if I think of department stores such as KDV in Berlin which has one of the most amazing food retailing experiences you’ll ever see in any kind of a store, I’m hard pressed to think of an American department store chain that could pull off half as effective a presentation. Mark me skeptical.

Joan Treistman
BrainTrust

Destination cities that draw tourists can use gourmet food as another example of what the city has to offer. Locals may want to shop for some food in a store offering fine food from time to time. But it’s not likely to be the daily or even regular source for nearby consumers. The prices are noticeably high and typically the selections are very limited. I’m thinking of Brookfield Place food court in lower Manhattan as an example. I don’t believe fresh or gourmet food is a sustainable differentiator for department stores overall. In fact, I think fresh and gourmet food becomes part of the store’s interior design. It’s a section of the store that is interesting and attractive — perhaps something to sample but often just to observe.

Bob Amster
BrainTrust

First, the image displayed with this discussion topic is a restaurant, not a fresh food market. Even restaurants are a tricky question in department stores because one has to devote more time to eat a meal in a nice restaurant, and time is a luxury for the vast majority of the population. Fresh foods, if prepared and ready to serve (or be consumed on premise), may add another incentive to shop, or just eat, in a department store.

Lee Peterson
BrainTrust

Didn’t Macy’s at 34th Street have food in the basement before? You know, the area that they changed to attract Millennials? Although I believe retail will have to provide amenities like this at all levels in the future (see also: UO Spaces), it seems like department stores have been down this road before. Maybe if they would stop grasping at straws, like Millennial shops, and stick to what made them successful in the first place (exceptional service, great atmosphere, unique product) they’d be WAY better off.

Gene Detroyer
BrainTrust

So I asked my wife what she thought. She is a foodie. She mentioned Harrods in London and Bon Marche in Paris, but said they are different. For department stores here, her quote, “It’s a stupid idea.” In clearer language, “I can get anything I want without making a special trip to a department store.”

Peter Charness
BrainTrust

Not only is high-end food not a department store draw here in the U.S., I doubt that U.S. department stores can manage the logistics needed for fresh food and I doubt a customer would want to buy it there in any case. So the alternative is to offer expensive (or is that exclusive) long shelf life products that hardly feel like something that a mass-market department store customer wants to buy. Even if you go downmarket to say Target and grocery it doesn’t seem to work. Harrods is a completely different experience set in a different shopping culture.

John Karolefski
BrainTrust

Fresh or gourmet food in U.S. department stores? Sure. But if it’s successful, I imagine Publix and Wegmans would start selling three-piece suits and summer dresses. Hey, maybe we would eventually see the birth of a new hybrid channel called defoodment stores.

Richard Layman
Guest
5 years 8 months ago

But … another way to think of this is as a differentiator and repositioning tool. Those of us of a certain age still have fond memories of department store restaurants. And obviously we eat every day but we don’t buy apparel every day. Nothing prevents department stores, at least at certain locations, from linking and expanding housewares, kitchens, demonstrations and fresh food. Macy’s could have been “Williams-Sonoma” with demonstrations etc. a long time ago. The explosion of food halls in Orange County, Cal. especially show that such can be destinations and innovative in their own right, and are great “refresheners.”

That doesn’t mean a traditional department store company could pull it off.

Shawn Harris
BrainTrust
Shawn Harris
Senior Director, Global Retail and Hospitality Strategy & Business Development, Turing.ai
5 years 8 months ago

The U.S. is over-retailed, simply too much square footage. Given the competitive environment, we see retailers closing stores due to this fact. However, on the other hand department stores are adding these food attractions and generally expanding SKUs to try to garner a greater share of wallet. In the eyes of the consumer, all of these retailers are starting to look the same with little to no real differentiation. This lands us back at the perception of being over-retailed. Food alone as a product or service is not the answer.

Lyle Bunn (Ph.D. Hon)
Guest

With retail locations being a destination, fresh food makes sense in the way that food courts and cafes build and hold mall traffic or a McDonald’s adds to a Walmart visit. Where the lunch counter of Woolworth’s or restaurant at Sears were themselves a destination, the fresh food line of business is to battle for scraps in the pool of piraña that are the $1.5 trillion annual food industry (prepared and grocery). Retailers should sink their teeth into other traffic generation and conversion investments.

Camille P. Schuster, PhD.
BrainTrust

If department stores understand their customers well enough to know whether and what kind of fresh food would appeal to them and if it would encourage more visits to the store as the best way to create a positive store experience, then go for it. If the store is jumping on the bandwagon and trying to offer trendy fresh food, then they are entering an expensive new venture that will not be successful. Offering food in department stores is the norm in many other countries but will be a new venture in the US.

Steve Montgomery
BrainTrust

I agree that much of this concept’s likely failure is due to the department store being located in an urban destination city vs the rest of the world. Even in a destination city it requires a destination department store for success.

Why? Let’s see. Malls, where most non-urban department stores are located, are dying. Department stores themselves are in deep trouble. Food availability has significantly grown and is available online, in mass merchants, club stores, not to mention supermarkets, who are growing their ready-to-eat food offering. I don’t see Macy’s in Vernon Hills ever being a viable dinner or even lunch alternative.

Craig Sundstrom
Guest

It’s easy to dismiss this with a quick “no!” accompanied either by a laugh or a head shake, but let’s discuss it for a minute. First, there’s nothing new in the idea. Harrod’s has long been known for its Food Halls, while the Emporium (SF) and Strawbridges (Philly) had similar offerings on this shore. So that gives you an idea of the kind of environment where it can work: high foot-traffic downtown stores with abundant residential areas nearby. How many of these are there left in the U.S.? Hardly a promising concept to revive an entire chain.

Brian Kelly
Guest
5 years 8 months ago

What? Food is going to save the department store? What is in your brownies?

The answer is No and No.

No way, any more than appliances or paint will save department stores. We are talking about categories in which the shopping behavior places convenience very high. And regional malls are not convenient. They are the supreme time suck.

There is no skill set existing within any department store to manage the venture. Look at Target. Cornell came out of food and Target is struggling. Department stores are supposedly adept at Fashion and they now all are clueless! Hello, center core is calling. Or this week its J Crew…

OK so after 50% of all existing department stores are shuttered; what will the new assortment look like? The Food Hall in Knightsbridge is not headed to State Street or Woodfield mall.

Great idea. I love your out of the box thinking. Next?

Or as we say, “retail ain’t for sissies!”

Brian Numainville
BrainTrust

Nope. I don’t think this has traction at all in U.S. department stores given that they have enough of an issue getting traffic at dying mall locations in many cases. Offering food at the department store is just not going to make any difference, even if one could pull it off both in offering and value.

wpDiscuz
Braintrust
"I don’t believe fresh or gourmet food is a sustainable differentiator for department stores overall."
"The fresh food line of business is to battle for scraps in the pool of piraña that are the $1.5 trillion annual food industry (prepared and grocery)."
"Offering food in department stores is the norm in many other countries but will be a new venture in the US."

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