ACTIONABLE RESEARCH ON GEN Z AND MILLENNIALS
Retail Hotels Are the Next Big Trend in Shopping

Retail Hotels Are the Next Big Trend in Shopping

After the retail party, it’s the hotel lobby. As brick-and-mortar stores start to crumble under their own weighty footprint, making retail into an experience is a growing priority—and it looks like immersive retail hotels are the next step in the trend.

Physical retail is too big for its own good. With several thousand store closings happening this year, many are quick to blame rising online retailers like Amazon—but there may be more factors at play. Bloomberg reports that the U.S. has more retail square footage per capita than any other nation, which has led too many to be “overstored,” and impractical since “sport shopping, retail therapy, and conspicuous consumption” aren’t as prevalent as they once were. Lackluster shopping experiences are also a driving factor—a concept we discussed in our predictions for 2017. Just look at the fall of the flagship store: JC Penney, Ralph Lauren, Toys R Us, and Aeropostale are just a few of the brands abandoning their flagship locations, some even taking financial hits to break leases. E-commerce and social media have made the idea of the flagship as a brand-boosting status symbol/marketing tool unnecessary. Instead, according to Ad Age, smaller more “financially prudent” locations are being favored, and some brands are turning flagships into “venues for memorable experiences.”

Experience is the word of the year for retailers. As we explored in our Experiencification trend, with in-person shopping less of a leisure pastime than it used to be, young consumers are looking for more to bring them in store, and 56% of 13-33-year-olds say they would go to stores more if there was more to do there. Retailers have been responding in a variety of ways, trying to turn brick-and-mortar shopping locations into more of an experience with everything from dance parties to cafes, photo booths to product testing. According to Fortune, more retail brands are setting up stores primarily to bond with their customer base, while e-commerce does the heavy sales lifting. Apple wants to be Gen Z’s Starbucks, reimagining stores to encourage teen hang out sessions, with educational sessions and concerts. American Eagle is experimenting with (non-alcoholic) fancy drinks to pull teens in. Now, we’re seeing the next step in the trend: retailers creating completely immersive shopping experiences with branded hotels. In these spaces, consumers are surrounded by the products and absorbing the brand’s personality while they relax, eat, hang out, and sleep. Pantone might have started this trend back in 2011, with their hotel in Brussels, which invites guests to “stay in colour” and brings the Pantone palette to life with playful design that immerses visitors with the brand’s character and aesthetic. But once a rare find, shoppable brand hotels are a growing phenomenon. Several retailers are working on plans to open their own branded respites, and bring their products to life in a new way. One expert spoke to Glossy about the concept, explaining, “[W]hat better showroom is there than an entire building where people sleep and dine? Consumers today want to experience a brand more realistically than in a shop display.” This next level brand experience is becoming a full-blown trend, and indeed it is almost impossible not to envision a hotel crafted by other beloved brands once the idea takes root. What would a Sephora Hotel look like, or an Apple Hotel have to offer? While we don’t see retail hotels replacing stores, as a marketing immersion the possibilities seem endless. Here are just four of the recent brands making it a reality: 

Muji

Minimalist home goods retailer Muji rode the less is more wave into the U.S. by expanding their e-commerce and opening an NYC outlet. Now, the Japanese brand is onto another Millennial trend: Experiencification, with a plan to open shoppable hotels where the room furniture and décor can be purchased post-check out. Muji’s hotels will debut in China and Japan, with the first opening in 2019 in Tokyo. Certain floors of the 10-story building will be set aside for people to stay, surrounded by Muji’s signature sleek products, while others will remain dedicated to retail. Another hotel will reportedly open in Shenzhen, China, with “recycled wood” finished rooms outfitted in Muji furniture and accessories. According to The Japan Times, Muji’s President sees the hotels as “a place where customers can thoroughly experience Muji product lineups”—while also attracting tourists.

West Elm

In partnership with hospitality company DDK, West Elm is debuting a series of boutique hotels in 2018, all featuring West Elm products and designs.  According to the West Elm Hotel website, “Every west elm Hotel expresses its own point of view. Our distinctly modern aesthetic, relaxed sensibility, and uncompromising quality come through in every detail to create a hotel experience that showcases the best each city has to offer.” So far, those cities are mid-tier American urban centers, including Detroit, Minneapolis, Savannah, Indianapolis, Oakland—all places where the brand has little retail presence. All with the intention of “creating exceptional customer experiences without over saturating markets with new stores.” According to the brand, the current plan is to keep the hospitality business separate from retail—but you can only imagine that staying in a hotel surrounded by West Elm décor would inspire many guests to purchase some items for their own homes. They’re not the only furniture company planning a hotel spin off: Restoration Hardware’s own concept hotel in New York City has reportedly been delayed as building plans are edited. 

Equinox

It’s not just product retailers who are stepping into the hotel space. Equinox wants to be more than just a gym, instead becoming “a 360-degree fitness- and wellness-minded lifestyle company” by launching a magazine and by opening—you guessed it—a hotel. The hotel will open in Equinox’s hometown of NYC and will hold “the largest club [they’ve] ever built” at more than 60,000 square feet. There will also be indoor and outdoor grounds and pools, 150,000 square feet of office space, an expansive spa, and “healthy and delicious fair” offered both in-room and at the hotel’s new restaurant. Equinox members will get “special privileges” but anyone can book a stay. 

Shinola

This fall, watch and handbag brand Shinola will be opening “a thoughtfully-curated hospitality experience” in their hometown of Detroit. The project, created in partnership with Bedrock, will reportedly “combine the best of two companies,” with a focus on American craftsmanship, and urban revitalization. The boutique hotel will celebrate the city via design, décor, and food. Shinola’s CEO tells Travel and Leisure, “Our brand has become increasingly elastic, which allows us to explore different categories and channels. This is an opportunity for us to open Shinola Hotel in a city and location that’s important to us.”

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