Kohl’s backs off in-store cafes
Through a special arrangement, what follows is an excerpt of an article from FierceRetail, an e-newsletter and website covering the latest retail technology news and analysis.
Kohl’s is abandoning its recent in-store cafe concept and will be closing the two test locations in the next few weeks.
The retailer debuted the Kohl’s Cafe in two stores in September in Menomonee Falls and Delafield, WI, near its headquarters. The idea was the product of customer input, but the cafes were simply not successful, according to the Milwaukee Business Journal.
“Kohl’s is committed to innovating and testing new ideas to put our customers first and deliver an easy, convenient shopping experience,” said Jen Johnson, VP of corporate communications. “Although Kohl’s received positive customer feedback, the pilots did not provide the business benefits needed to warrant further testing.”
Retailers are exploring ways to create better in-store experiences that transcend traditional merchandising, and cafes have been popping in stores nationally.
Target at a few stores has been testing a more upscale Freshii cafe, with artisan style pizza, fresh salads and pressed juices. At the time the test was announced last fall, Target noted that about 40 percent of Target customers go to the cafe while shopping.
In Chicago, Restoration Hardware last fall opened The Gallery, a lifestyle store including a cafe and wine menu from Chicago restaurateur Brendan Sodikoff. Urban Outfitters has been working with acclaimed chefs like Marc Vetri, Michael Symon and Illan Hall to open eateries inside some locations as part of an overall effort to create “lifestyle experience” stores. Uniqlo’s new flagships also serve coffee.
- Kohl’s backs off in-store cafes – Fierce Retail
- Kohl’s nixes in-store coffee shop concept, Kohl’s Café – Milwaukee Business Journal
- Target testing cafe concepts – Fierce Retail
- Restoration Hardware opens lifestyle shop in Chicago’s Three Arts Club – Fierce Retail
- Uniqlo partners with MoMA, adds Starbucks – Fierce Retail
- Urban Outfitters to add more in-store restaurants – Fierce Retail
Discussion Questions
DISCUSSION QUESTIONS:
Has a cup of coffee become a more important part of the shopping experience over the years? Do cafes and eateries not make sense for some stores and channels?
Poll
BrainTrust
Chris Petersen, PhD.
President, Integrated Marketing Solutions
Max Goldberg
President, Max Goldberg & Associates
The most important thing that stores can do right now … fail rapidly!
There is a great line by Bezos that Amazon is a “culture of failure.” Innovation and disruption require testing a lot of ideas. The more rapidly concepts can be tested, the quicker you can find one that works. Most retailers simply aren’t testing enough ideas quickly enough.
So kudos to Kohl’s for testing a new concept, especially one suggested by consumers.
However, coffee in-store is probably not the best way that Kohl’s can improve the customer experience in their stores. Consumers can get great coffee a lot of places, and they like the “third place” where they can retreat and reflect.
Kohl’s and other retailers need to do more testing on how to personalize their shopping experience in ways that consumers can’t find elsewhere, especially on the web.
Retailers want to offer a better experience for customers, but they need to factor ROI into the equation. Some retail environments don’t lend themselves to a cafe — consumers want to get in, shop and get out. Do the square footage and personnel requirements justify opening a cafe? Will customers who say they want a cafe actually use it?
This idea of food and apparel does not seem to work. Many department stores have restaurants, but they are self-contained so food smells do not get into the clothes. Riverside Markets sold food and apparel, but they placed perfume between the two. This was really a small town solution. The draw of Starbucks appears to have taken away the need for a cafe within a store.
I’m surprised Kohls didn’t try harder. I’ve heard the cafe at their corporate office has employed some talented chefs. Target, Safeway and Albertsons just put in a default Starbucks. Not much thought in that. Hy-Vee, Whole Foods, Mariano’s and H-E-B Central Market are excellent restaurant competitors. IKEA is the one that really intrigues me. I’d never expect one there and they seems quite popular. Try it. If it doesn’t work, replace it with a Starbucks. Don’t go cheap putting in an also-ran like Caribou, put in a Starbucks.
Some of the success of in-store cafes has a lot to do with brand image. Restoration Hardware in Chicago is a showroom destination and on the Gold Coast it makes perfect sense to have a restaurant and coffee/wine bar. I’ve been for an afternoon outing, even when not in any type of shopping mode.
I see Target being successful in serving more food because they have established with the customer base that coffee and quick snacks can be efficient and helpful, especially when the kiddos are tagging along.
My guess is that Kohl’s, being a basket-based department store, never really had a customer base that would appreciate coffee during or before/after the shopping experience. That said, I liked what Kohl’s did to update the kitchen supplies area, and it may have made more business sense to test a weekly coffee station set up by Keurig or another brand to surprise and delight shoppers who are actually browsing in that area of the store.
The short answer to both questions appears to be yes. I base my conclusion on the fact that more and more retailers are adding cafes to their in-store experience.
While there have been restaurants in upscale department stores for year we now find cafes and smaller dining venues in everything from car dealerships to supermarkets. I have to assume that they have achieved the retailers’ goals or they wouldn’t be there.
I have no empirical knowledge but they seem to be expected and do better in locations that are positioned to be more upscale.
First of all, this is a generationally-biased question.
Millennials are fond of coffee, for example, but not fond of shopping in boxy department stores, so a latte is not going to win the battle for their hearts and minds.
Older shoppers may welcome an opportunity to sit down and rest, but that extends the shopping trip.
Again, we have to be careful about recognizing the difference between what people say and what they do. If I ask somebody, “Would it be nice to have an in-store cafe featuring gourmet coffees and teas and fresh-baked pastries?” The answer will probably be yes, but that doesn’t mean that same person will want to extend their shopping trip by 20 or 30 minutes.
So I guess like in almost all things, the answer to the first question depends on what store and what customer demographics you are asking about.
As to the second question the answer isn’t so much that they don’t make any sense — as in there would be no demand — but rather that they don’t make enough sense.
Do I need an espresso when I’m battling crowds at Walmart? Could Aldi help its image by adding a staffed coffee bar or would shoppers think that prices would be rising shortly? Is my local ACE hardware store somehow demeaned because lots of retired guys can’t sit around and nurse a cup of java?
I think the answer is a clear no.
This question is very well covered by Chris, Anne and Ryan. I can only add that the retailer has to be very aware of its demographics. Retailers establish a certain position in the marketplace and with that comes a certain type of consumer. Not all are the same. Be very aware of your demographic and play to it.
Does opening a coffee shop qualify as innovation? I think that is the question that retailers need to pose internally when debating this type of idea. An engagement device, such as a cafe, seems to be check-box innovation with a small amount of PR value and limited long-term value at the store level. If the cafe concept was a savior for a retailer then Woolworths would still be in business. Retailers should focus their efforts, space and money on beneficial innovations that have a long-term impact on improving the customer shopping experience.
I shop the Kohl’s Menomonee Falls store often (disclosure: I worked for the company from 1982-2006), so I saw the coffee concept firsthand. The lack of a seating area was a handicap and a typical Kohl’s store doesn’t have space to burn at the same time that it is expanding its beauty departments. So the typical Kohl’s shopper making the rounds of the store (with an armful or cart full of merchandise to check out) may not find it easy to balance a cup of coffee while checking her cell phone for the latest coupons.
Kohl’s has other ways to make customers linger and to make the in-store experience more compelling — and it has bigger fish to fry in terms of growth opportunities like Off/Aisle and Fila outlets.
I hate to say I told you so but I did. I never understood why Kohl’s thought these cafes were a good idea.
Little to no seating meant people would be bringing their food and drink onto the selling floor. This would create a lot of hand-juggling if the shopper actually wanted to pick up or try on a product, and lots of spills when the juggling failed.
If you’re going to offer a cafe (something that some retailers have done forever, including department stores), good heavens, include adequate seating areas. Otherwise, forget about it. There’s no discernible value.
On the plus side, Kohl’s did recognize the failure quickly and ended the experiment. I still think it was a distraction, but at least it was a short-term one.
For apparel I don’t see the positive linkages. When you are shopping for clothing you are maximizing the time on browsing, selection and trying on — you can’t carry the coffee with you while shopping even with a shopping cart. In the case of Kohl’s stores, I think they are better off having a local food truck parking in front on weekends that services the surrounding area so people can grab a drink or bite before or after shopping.
I agree with Anne and her logic. Kohl’s is the store for easy in and out. Who wants to hang out in a Kohl’s?
“Fun” in shopping all depends upon the mindset of your shoppers. Its not the same for all trips.
As we like to say, “retail ain’t for sissies!”
Kudos for testing a new customer experience. This may not have hit the mark but Kohl’s and other retailers should continue to experiment. One size does not fit all. Cafes and eateries are not the right customer experience for all customers at all retailers.
Cafes and eateries make sense for retailers, so long as they fit with context and brand position. The context of a Kohl’s shopping experience and the expectations/needs of their core shopper differs than that of a Nordstrom, Target or Restoration Hardware customer. The experiment and decision by Kohl’s to pull back on the cafe concept is a smart reflection of the company better understanding its core shopper.
I agree with Steve Petersen’s ethos of “fail fast” in order to out-innovate Amazon. And the cafe in Kohl’s is a good test, but what needs to happen next is that another test should be right behind it after it is shelved. If the cafe failed that is fine — but what is next? A Blue Apron-esque prepared food for dinner plans after shopping? A candy shop to placate ride-along youngsters? (Who knows? These could be more failures.)
Kohl’s needs to follow this bold step with another rather than acting, failing and then running away with their tail between their legs. Eateries make sense for some stores but not Kohl’s in this case.
On a recent visit to London’s Shoreditch area, we observed that all the new stores/concepts had some form of coffee bar/food service, along with several other experience-oriented offerings within their spaces. This is a direct answer to the consumer driven mantra, “we don’t have to go to stores anymore, we have to WANT to go to stores.”
Not sure that a coffee shop is the answer every time, but it’s certainly a good start/try. Since Kohl’s execution looks good on the surface, the “failure” has to have been deeper, like product, associates, clarity or convenience. Or they just didn’t give it enough time.
Better customer experience is a BIG deal now. I would not have given up so quickly on what looks to be a good idea, rather, I’d dig deeper and try to solve the ailments. And besides, what are you losing by letting word of mouth get out?
Cafes and restaurants inside supermarkets are a good combination. That is where the food is. Eateries inside other stores like apparel and home improvement do not mix that well for obvious reasons.
I think the Kohl’s experiment failed for one big reason: People mainly shop there to save 10 bucks — NOT to immediately turn around and spend on pricy coffee and snacks the same 10 bucks they just saved on sale merchandise.
The in-store cafe concept makes especially good sense at really big ticket item retailers’ stores. People usually need to discuss among themselves the options and finances of a major purchase such as a computer, big screen TV , kayak, dishwasher or bedroom set. This is where offering a relaxing cafe sit-down space slightly away from the sales floor for couples or families to hash things over is very smart. As a retailer you want them to stay IN your store while they are discussing and deciding the issue.
The customer experience is the most important part of shopping these days. It would be interesting to know how the customers rated the experience of simply having the coffee option available.
Now don’t get me wrong, I am not saying that the retailer should do something unprofitable to create a great customer experience. They simply have to do the right thing.
For my 2 cents.
There are actually coffee cup holders that can be added to shopping carts. Allows customers to enjoy a cup while shopping. This might have done something to counteract the lack of seating.
This would seem to be a big advantage for mall/downtown based retailers, since there are usually a number of eating places around already, providing the service without a retailer having to engage in something they don’t normally “do” and aren’t necessarily good at. (The Kohl’s example pictured above seems particularly uninviting, more reminiscent of some old Sears snack bar rather than a cafe). OTOH, Nordstrom has long had restaurants in their stores, so it’s not undoable.
I think adding a cafe in a store primarily known for retail is a difficult challenge. I don’t think customers look for a cup of coffee as an addition to the shopping experience unless the shopping is over an extensive period of time.
I would imagine that a store like Kohl’s is not a place that consumers would expect to buy a cup of coffee. Therefore, consumers probably enter already with coffee or with zero intention of purchasing some.
However, regardless of the cafe outcome, Kohl’s went the right direction by implementing a few test cafes before rolling out in a larger fashion. Better in-store experiences mean different things for different customers, and it would appear that Kohl’s customers don’t feel the need to buy coffee.
My thoughts went immediately to those of Lee Peterson, who wrote:
Since Kohl’s execution looks good on the surface, the “failure” has to have been deeper, like product, associates, clarity or convenience.
And I add, how much did they publicize the existence of these “amenities” and give it a chance to catch on? Surely they didn’t think that people would find their way there by chance!
Honestly, I think Kohl’s gave up too soon on this idea. Was it fully “percolated” before pouring into it? Perhaps not. But adding something to attract, retain and please shoppers is still essential to retail … perhaps now more than ever.