Gautam Sinha, founder and creative director of Nappa Dori, the luxurious handmade leather products brand, is a frequent international traveller. About three years ago, during one of his travels to Berlin, Sinha came across an interesting trend. “I was visiting the local indie stores and discovered that almost every store had a café inside it. Here, people could not just sip on coffee, but also soak in the experience and spend more time at the store. I loved that concept and thought it would be great to replicate it at our stores in India,” he recalls.
Over the next two years, Sinha and his team worked meticulously on designing the look and feel of the café at Nappa Dori, curating the menu and fixing prices. Café Dori was formally launched at Nappa Dori’s Mumbai store in 2017, taking up 2,000 sq ft of the 7,000 sq ft store. Since then, Sinha states that there has been a significant increase in footfalls at the store. “Almost 50% people come to the store for the café. So, along with providing customers a great experience, it has also made for a great business decision,” he says.
Sinha is not the only one who sees merit in having a café inside a retail store. Globally, ‘experiential stores’ or ‘concept stores’ are a huge trend. These offer a variety of services that go beyond just ‘shopping’. A customer can lounge around at the café, get a haircut at a salon or even a quick massage at the spa, all of which are a part of the larger store. Big fashion houses such as Gucci and Ralph Lauren, and even smaller stores have already taken to this trend in a big way, and Indian retailers aren’t far behind. Although at a nascent stage, brands have slowly begun experimenting with cafés in their stores, and food is gaining ground as an important ancillary business.
“Making brands experiential is about influencing buying decisions of consumers by tactfully immersing them into spaces where all or most of their senses are as deeply engaged as possible. This is why a brand like Ikea offers its customers not just their own international cuisine, but even regional favourites such as biryani in Hyderabad, so as to efficiently connect with their consumers at an emotional level,” says Ravi Wazir, hospitality and food business consultant. He adds that retailers selling anything from apparel to furnishings recognise that if they do not provide food to their shoppers, the buying process at their store may be incomplete.
Swedish retailer Ikea, which recently opened its first store in India, is often regarded as the pioneer of the in-store café trend. With its huge, out-of-town retail stores, it became important for Ikea to offer dining options to its customers. Gradually, food went on to become an important part of not just their business, but also their brand identity. Chicken meatballs with lingonberry, grilled and smoked salmon and cinnamon buns have become signature dishes at Ikea, almost as popular as their do-it-yourself range of furniture. Gerd Diewald, chief of Ikea US’ food operations, said in an interview with Fast Company, “We’ve always called the meatballs ‘the best sofa-seller,’ because it’s hard to do business with hungry customers.”
With its India foray, Ikea made its focus on food even stronger by opening a 1,000-seater restaurant at the Hyderabad store, the largest for any Ikea store. Henrik Österström, country food manager, Ikea India, said in a previous interview with Outlook Business, “Ikea is as passionate about food as Indians are, and hence, we are introducing a lot of Indian flavours into our cuisine at the Hyderabad store.” The company expects about 10% of its revenue to come in from the food business.
In India, this trend was first picked up by departmental store formats such as Big Bazaar, Foodhall and Central from Future Group, notes Anurag Mathur, leader, retail and consumer goods practice at PricewaterhouseCoopers (PwC).
“Big Bazaar always believes in the need to offer touch and feel of our line of products. Newer categories of products need to be experienced rather than described. More importantly, we appreciate shoppers spending as much time as possible at the store. All three objectives were being met for us by introducing a café concept, which we first tested in 2004,” says Sadashiv Nayak, CEO, Future Retail. Over the years, the café has been adapted to various shapes and forms to ensure they have some representation of food at the store.
Swasti Aggarwal, food strategist, Foodhall, says that it has evolved its in-store cafés into full-fledged restaurants across most stores. “It is a great way to make the atmosphere personal and allow guests to relax, while making shopping in Foodhall an experience, rather than just a household chore. We expect at least 25-30% of our business to come from the café and all other live food products such as breads, dips and pastries that we sell,” she adds.
Over the past two years, as consumer experience has been a significant driver of store traffic and also a rationale for driving footfall, several players have resorted to having in-house cafés. Take for instance Good Earth — Anita Lal’s luxury lifestyle brand — which is known for its focus on creating a unique shopping experience for its customers, be it by choosing the right fragrance for the stores or the genre of music that is played. Taking this effort forward, the brand began tying up with partners to introduce cafés within its stores across key metro cities about a decade ago. These include Latitude 28 in New Delhi, Fresh Pressery café in Bengaluru and Latitude 13 in Chennai. The cafés offer discerning customers the choice to indulge in a well-curated meal as they browse through the diverse products at the store.
“Good Earth played an integral part in shaping this movement of in-store cafés and paved the way for a new retail environment. For instance, in Delhi, their collaboration with Latitude café blends food and retail seamlessly,” says Raul Rai, co-founder of contemporary lifestyle brand, Nicobar. The design studio is an offshoot from Good Earth, and is led by Rai and Simran Lal, who is also the CEO of the company.
At their flagship store at The Chanakya mall, Rai and Simran also introduced the café concept, NicoCaara, in 2018. It has a live kitchen that makes the space an interactive experience, with a bar seamlessly connecting the two spaces of food and retail. “We have often seen people sit at the bar in the retail space enjoying an avocado toast or orange almond cake, while sipping an espresso,” says Rai.
Similarly, Fabindia opened up Fabcafé in March 2017, as part of a holistic shopping and lifestyle experience. Rebekah Blank, health food expert, Fabcafé, says, “The core value of Fabindia is to celebrate India, while that of Fabcafé is to celebrate Indian food. The menu is inspired by traditional dishes which have been given a contemporary twist.” These cafés are located inside Fabindia’s 10,000 sq ft experience centres in Delhi and Mumbai. Also joining the bandwagon is Reliance Retail, with its new multi-brand store, Project Eve, housing Café Noir and Bounce salon at its Bengaluru and Mumbai outlets.
Mathur believes that such cafés offer retailers the opportunity to keep customers “in store” and engaged for long periods of time. However, beyond plain marketing, it also “increases the ability to drive footfall and hence customer acquisition at lower cost than advertising-based acquisition,” he explains. Wazir adds that in-store cafés also enable retailers to tap into alternate streams of revenue. It will most likely result in higher revenue for the store — both directly from the sale of food as well as indirectly from the increased sales of its other goods, he believes.
Sure enough, brands are already seeing the benefits. Sinha says that Nappa Dori is sometimes better known as Café Dori. Blank, meanwhile, states that since its launch, Fabindia’s loyal customer base has loved the idea of Fabcafé, and this has helped increase footfalls along with people spending more time at the store. At Nicobar, Rai says that almost 70% walk-ins are for the café. Nayak adds that, for Big Bazaar, the café was not a separate line of business, but an enhancement of their existing offering. “How we build it as an experience has really been our thought,” he adds.
However, brands need to ensure that a café is an extension of the value proposition, and not just a follow-the-fad approach, just like how NicoCaara captures and reflects a modern Indian way of living and ties in with Nicobar’s philosophy. “Using Nicobar’s tropical-inspired brand as a springboard, NicoCaara is a place to sit back and lounge over a small-plate menu, and hence has a perfect fit to the experience we want to create at Nicobar stores,” says Rai. They also use crockery retailed by them at the café, thereby connecting it to the store.
At Nappa Dori, Sinha shares a similar experience. The brand is known for its colourful, custom trunks, printed leather laptop sleeves and messenger bags. Sinha made sure that the café reflects this aptly. “Our café, retail space and atelier emphasise the aspect of tailoring products to your need. The atelier even has DIY and custom-made sections, where you can choose the leather and the buckle, and get a belt made while you have a cup of coffee. This is something that has not been done before,” he says. The menu is curated keeping in mind the customer base that frequents the store. “We have a pan-European menu, where we have bits of nuances from everywhere — a nice English breakfast, and croissants from France. It is not sales-driven, but is made to encourage people to experience our world,” says Sinha.
To better understand the needs of the customers, Fabcafé relies on their feedback forms. “Feedback forms have helped us gauge customer perceptions and preferences. We keep trying to change the menu based on what people like. This summer, the drink menu changed, a lot of coolers were introduced. Opening the café in Mumbai helped us realise that the menu needed more vegetarian dishes,” explains Blank.
Such specifically curated menus have led to the cafés developing a customer base by themselves. “Fabcafé has a bunch of regular customers that visit the restaurant specifically. In fact, one customer comes in every day, drinks the kombucha with all his meals and has tried everything on the menu! We’ve noticed foreigners, and visitors who also keep coming back because they trust the quality of the food,” says Blank.
Her views are echoed by Sinha and Rai, who agree that there are people coming in especially for the café. “People eat in groups but don’t always shop in groups. We have the opportunity to expose larger groups of people to the brand, and while not everyone may convert to being a shopper, it allows us to have a larger brand awareness among the audience,” explains Rai.
While the trend of in-store cafés is becoming popular, there are a few things that retailers need to be cautious of. For one, retailers whose core business is not food need to understand the sensitivity of managing a short shelf-life business that has significant supply and consistency challenges. “It is a business that needs to be micro-managed, given the lack of consistent quality suppliers on a pan-India basis, and a poor experience on the food front can be highly damaging,” says Mathur.
Sinha admits that running a kitchen is tough and requires a lot of investment. “It can ruin your brand if you don’t do a good job. A lot of people will burn their fingers and a lot of people will still try it. Retailers need to be careful of that,” says Sinha. To work around such challenges, NicoCaara has put in place a centralised kitchen. Most of their food is produced in the main kitchen, which allows them to not only maintain consistency, but also reduce capital expenditure on equipment.
Mathur adds that return-on-investment from food is currently lower in the Indian market as compared to apparel, and needs to be managed carefully to deliver optimally. Other challenges include the cost of dedicated manpower and electricity, thus increasing the break-even point. Further, a café requires adhering to certain licensing norms which are often ambiguous and difficult to comply with. “From the business viewpoint, it is cumbersome to curate and carry an inventory of food which is perishable and thus has a higher wastage, unlike its other product categories which are mostly non-perishable and have a higher shelf life,” points out Wazir.
Retailers, however, see the challenges being outweighed by the benefits. With an increasing number of retailers opting for an in-store café, the pressure is on for all those who don’t have one to soon arrange for some sort of interactive food engagement with their consumers in the fear that they may be left behind.
Brands are also trying out other means to enhance the shopping experience. Take for example Fabindia’s Experiential Centres, which have wellness centres that allow customers to opt for tea-tasting sessions before buying Organic India products, and design studios where you can consult experts before buying home décor products. Similarly, Nicobar’s 3,200 sq ft store in Bengaluru has a large table, where customers can choose to relax and read from their well-crafted collection of books. “We also hold various events, ranging from yoga brunches to events centered around styling, food and even travel,” says Rai. Nappa Dori is also planning to introduce a space in their store that can be used by third parties to come in and curate a particular experience.
Sinha says, “Retail is so fragile at this time that people need to be experimental and innovate to retain the customer. With online purchases taking precedence you want to retain them in your store and not let them walk away”. In the face of fierce competition from e-commerce players, such experiential or ‘concept’ stores give people more reason to visit a store. Aggarwal adds that at Foodhall’s newest store, they plan to add a coffee bean roaster and a kitchen garden, so that customers can get the freshest produce and herbs. “We will continue to do whatever new things we can to enhance customer experience, and keep them excited about food,” she says.
Retailers are now looking at the in-store cafés as a place where customers would like to escape to, without leaving the stores. “We don’t want you to rush in and out, but to find your pace, relax and soak in the island vibes,” states Rai.