Richard Samarasinghe, Head of Strategy, Harrison
This week, The O2 has attributed its strong performance to what it is coining ‘social spending’. With a multifaceted space which spans retail, hospitality and leisure, the team at The O2 attributes the fact you can socialise and, essentially, spend a day there doing different things is why it is outperforming the industry averages.
You can gather from their statistics the correlation between being able to eat, shop and enjoy some entertainment and spending. For example, 43% of consumers that begin their visit at Outlet Shopping at The O2 go on to dine within the destination’s Entertainment District, and 34% of consumers who visit The O2 to enjoy the destination’s attractions and leisure offering then go on to spend on F&B.
However, if you cast your mind back a few years, isn’t this what our high streets used to offer? Somewhere to shop, dine, grab a coffee, watch a film, and ultimately socialise with friends, neighbours and family? The term ‘ladies who lunch’ was coined to describe wealthy women who would meet during the week to lunch, shop and generally socialise together. The real question is, why are people opting to head to a location like The O2, Westfield or out-of-town hubs vs their local high street, and what can we do to draw them back?
What it essentially comes back to is the experiences people are seeking, how to best achieve these, and how to stretch every pound and penny as far as it can go. People are still fighting against cost pressures, with the latest figures from KPMG1 showing four-in-ten consumers have cut back on non-essential spending. Meaning, when people do decide to invest in a day out, operators and venues need to create a sense of value driven by the experience of the day.
Multifaceted spaces offer the ease of multiple experiences in one location, reducing time pressures and the cost of potentially having to travel in between. They often cater to different age groups, whether those visiting are families, teens and young adults, or a more mature market. For the operators, while there is competition, they essentially have a relatively captive audience and market to be able to draw in. In addition, there is the opportunity to capitalise on impulse purchases, with consumers more willing to add to the day’s activities because there is a good offer, and they are already there.
This doesn’t mean that we should give up on the high street; hospitality, leisure and retail need to come together to reframe the occasion and use it to create a different type of experience. Creating a ‘one-stop-shop’ destination on the high street is possible, with many examples being seen in former department store buildings. You can see these popping up globally, from Chelsea Market in New York which brings together artisan stalls, cafés, bars and dining spots, to Swingers in the West End of London – formerly the BHS department store and now home to crazy golf and street food.
For other high streets, they could be reframed as the perfect space for independents and individuals to stake their spot and create a name for themselves. Rather than all-day dining coupled with big and bold activities, the high street can instead offer a more intimate and refined experience. Think brasseries, specialist coffee shops and cafés, independent clothing boutiques. With this, collectively the high street is still offering an experience – the chance to partake in ‘social spending’ by shopping, having lunch and / or dinner with friends and family, perhaps visiting the cinema – but packaged up in a very different way. It can be used to attract tourism, too, offering a more local experience on the doorstep of their hotel or apartment.
The final piece of the puzzle is restaurants which can capture the spirit of social spending on their own. The key here for operators is understanding your target audience, what they are looking for and how it can be packaged up in an engaging way.
For example, we work with Hickory’s Smokehouse2 – a restaurant group which encapsulates the warm and welcoming spirit of southern American hospitality, bringing it to UK diners coupled with authentic southern BBQ. Alongside the exceptional food, the Hickory’s Smokehouse team have created a truly immersive experience – a space which encourages people to be social and spend time there, just like in the smokehouses of America. Each Hickory’s, for example, has its own cinema room where kids are treated to popcorn and a kid-friendly blockbuster film, as well as extensive outside areas for kids to play with the ‘yard games’, allowing the parents and adults to relax and spend time with their friends and family.
While Social Spending may be a phrase The O2 is coining, it’s by no means something only they can achieve. For businesses around the UK – and globally – it is a case of treating each space and opportunity as something unique, re-defining the experience the high street can offer, and tailoring it to different occasions and audiences.