Retailers are facing a major shift in sales channels. Traditional big-box and superstore outlets are not seeing new-store openings as often as they once were, and new consumer demands are causing those retailers to explore different options, ranging from innovative temporary pop-up shops, to smaller-format boutiques, and new partnerships that are causing retailers to re-think their traditional methods.
Partnerships between retail brands and hotels are gaining traction, and these innovative partnerships are bringing a new level of convenience to an audience of shoppers who are increasingly rejecting the shopping mall and big box experience. In one of several examples, Virgin Hotels’ partnership with The Gap allows guests of the hotel chain to order from gap.com, and have items delivered to their hotel rooms within three hours.
“Partnerships like these are a great innovation for the hospitality industry,” said Chris Rivett, travel expert at HotelsCombined. “It’s a win-win. Retailers gain a new sales channel without having to invest in bricks and mortar, and the hotels themselves add a new element to their concierge service.”
Gaining a competitive edge in the hospitality industry – especially with increasing competition from sharing platforms like AirBnB – requires those hospitality brands to focus more on developing a personalized, local experience. “Those hotels are in a position to provide a personal experience in a way that sharing platforms could never match,” said Rivett. “Adding a desirable retail brand to the service menu adds to the guest’s overall experience, and these sorts of innovations almost always translate to increased loyalty, especially when the retail brand fits in well with the hotel theme.”
In Stockholm, the historic Haymarket hotel has also entered into retail partnerships. The concept fits in well with the hotel brand, which is a repurposed department store where Greta Garbo once worked in the 1920s. Making the process easy is the hotel’s partnership with HotelEtail, which facilitates strategic partnerships between retailers and hotel brands. In the case of the Haymarket, not only did the alliance drive a new revenue channel and add to the customer experience, it reinforced the retail history of the hotel.
The value of these partnerships is on the increase. In the J.D. Powers annual Hotel Loyalty Program Satisfaction Study, it was found that third-party partnerships represent one of the most important aspects of a hotel loyalty program. The study showed that travelers are increasingly looking for more than just a comfortable room, and those hotel brands which partner with third parties gained the greatest benefit.
The study, which examined hotel loyalty programs, determined that satisfaction is higher when guests can redeem those rewards for dining, product purchases, and special events.
Retail and hotel partnerships became popular with the development of large hotel-resort casinos in Las Vegas, where the theme of “retail therapy” dominates and big casino brands like The Venetian host dozens of high-end retail brands within their walls. Guests at the Venetian can take a gondola ride through the “grand canal” (complete with a singing gondolier), as they float past some of the best retail luxury brands in the business.
But most hotel brands don’t have the floor space of those casino resorts, and the concierge-type retail services allow traditional hotels to get in on the same type of retail action that fuels the shopping frenzies of those who have just won big in baccarat. “The big casinos make good use of their vast floor space by leasing it out to luxury retail brands,” said Rivett. “But that’s a very unique proposition, and for most mid-tier retailers, doing so would defeat the purpose of such alliances, which is to open up new channels and to avoid the expense of additional leaseholds. With these new partnerships, we’re seeing mid-tier, luxury, and boutique hotels gaining a foothold in retail.”
Traditional retailers have faced a unique combination of challenges over the past few years, including a shocking number of store closings, rising real estate costs, and competition from born-in-the-cloud online shops. Expansion into strategic partnerships in the hospitality industry may just give those retailers the competitive edge they’re looking for.