While it’s easy to see COVID-19 simply as a disruptive anomaly, a more interesting perspective would be to view it as a supercharged catalyst for changes that would have taken place regardless. Nowhere is this more apparent than the damage it’s done to the travel and retail sectors.
For the latter, we’ve long been inundated with forecasts about the coming retail apocalypse, and only now when that decades-long evolution has been compressed into a matter of months do we consider adaptive measures. Given this rapid transition to contactless everything, what are you going to do with your hotel’s gift shop?
Before we officially entered the present era of Covid-safe minimalistic operations, for many of the properties we helped asset manage, our top-level analyses showed that the gift shop wasn’t worth the cost of maintaining it. While sales volumes were often above variable costs (barely), the hoteliers we worked with never fully integrated the opportunity costs involved with what else that space could be used for and how the gift shop amplified the guest experience.
Imagine converting a gift shop near the lobby entrance into a small café or a grab-and-go sundry. Which would generate more sales volume? And more importantly, which would be of more everyday utility to your visitors, be they overnight guests, event attendees or locals?
Alternatively, many have tried to make something special out of their gift shops by stocking products from regional producers that can’t be found elsewhere. The goal here is a noble one – to service the demand for ‘authentically local’ experiences. Yet, few consider the amount of time needed to set up these partnerships and maintain inventory levels relative to the number of customers who pass by.
Add to this that there will undoubtedly be fewer people entering your gift shop during these turbulent times of depressed occupancy and it makes the entire effort moot. While I am in no way condemning the promotion of local goods, I ask you to think broader. In order to get greater customer volume, you need something special to draw them in.
But do you notice the pattern here? It’s all about the holistic experience you provide. The modern gift shop is not an independent sales vertical for tchotchkes and touristy trinkets; it exists as part of an ecosystem of revenue generators, all of them working in harmony to amplify the onsite journey.
If there’s another consequence of Covid and the retail apocalypse, it’s that it has catalyzed our entrance into the experiential age. Storefronts are no longer places mainly for transactions – all that can occur online via Amazon, eBay or Shopify. And indeed, many would now prefer online purchases because it’s far more convenient and it’s contactless. Rather, physical shops are places where customers can discover new merchandise, interact with brands and educate themselves about how certain products will benefit their well-beings.
With this in mind, what if the future of your gift shop was not a ‘shop’ but instead an ‘experience’? In this new model, no inventory is kept within sight nor can visitors even walk out with an item. Think of it like an Ikea showroom where you provide a guided journey from kiosk to kiosk to show the best of what a specific product can do (with one-way markers on the floor to promote physical distancing). There’s no cash register, only a single, knowledgeable clerk with an iPad to facilitate touchless payments. If a guest purchases an item, it can delivered to their room in a safe and contactless manner within 24 hours or shipped worldwide for an extra fee.
Next, consider the ‘gift’ aspect. A store designed for immediate transactions is more or less one set up for people to treat themselves in that moment. Suppose you have a couple staying at your hotel and the husband sneaks off during his wife’s spa appointment to peruse your wares. On top of having an item sent to the room, you could coordinate sanitized gift wrapping and a specific time of delivery to better fulfill the ‘surprise and delight’ factor. And if you are able to gift wrap an onsite souvenir, there’s definitely a way to do it for those back home.
Above all, when you think about transforming this space into a showroom, if nothing else, you are adding another point of entertainment so there’s more to differentiate your onsite experience from other properties and to make the guest’s journey more memorable to thereby cajole return visits and positive word of mouth. This is a base level of the ‘halo effect’ or synergy that can be manifest if done right.
As we continue to adjust to the rigors imposed by the pandemic, the gift shop is but one more operation that you need to rethink from the ground up. Ruminate about what a ‘gift experience’ can be that’s true to your brand and your locality, and you may just find a viable profit-maker in the next normal.
