Urban Outfitters is on-trend with acquisition of fast-casual dining brand, say retail attorneys

Urban Outfitters’ acquisition of Pizzeria Vetri, a Philadelphia-based chain of Italian restaurants, is the latest example of a retailer finding innovative ways to bring in new customers and represents a shift in shopping habits.

Giuliano Iannaccone and Heather Ohlberg, retail attorneys at Tarter Krinsky & Drogin, consider the implications of the move for both the clothing brand and the wider retail industry, as it looks to adopt an omni-channel strategy

United States retailers are facing increasing challenges in order to attract customers to brick-and-mortar locations, as customers now more than ever are seeking entertainment and convenience during their shopping experiences.    Traditional brick-and-mortar stores are less attractive to consumers as a result of the ease and interactive nature of e-commerce. In order to gain back a competitive- edge, brick-and-mortar brands are searching for ways to distinguish themselves by providing customers with a more interactive and unique in-store experience. One such strategy is for retailers to diversify and integrate products into their business models which are typically outside of their core products in order to attract a larger demographic of consumers.

Urban Outfitters, which has been known historically as a purveyor of trendy, retro, hipster and vintage apparel, accessories and home goods, recently announced its plan to go into the pizza business by acquiring the Vetri Family Restaurants, which includes Pizzeria Vetri (celebrated, by a certain devout faction of food connoisseurs, as being the best pizza in the United States). While this partnership may seem unexpected to many, Urban Outfitters is doing what it seems do best: capitalizing on a popular trend – the fast-casual restaurant concept.

Fast-casual dining is a rapidly growing industry which caters to consumers’ desire for fast yet high quality foods in a casual, chic setting. Recent statistics show that consumer spending in the fast-casual industry outpaced spending in the retail industry, which has been plagued by slow sales and growth. In fact, the fast-casual food sector experienced record growth in sales this past year. On the other hand, Urban Outfitters’s sales in recent years have continued to disappoint.

In recognition of the need to give customers another reason to visit its store locations, Urban Outfitters has already installed cafés into some of its store locations in the hopes of attracting consumers. By acquiring a well-known growing pizza chain, Urban Outfitters may actually be setting a new trend and not just following one, the new trend being the coupling of the fast-casual food sector and the retail sector under one roof. Such structure will provide consumers with the ability to engage in the ultimate omni-channel shopping experience. Omni-channel retailing refers to the multiple ways available for a customer to shop and interact with a company, which includes retail stores, online stores, mobile applications and the use of social media. Experts have assessed that almost 92% of consumers this past holiday shopping season either purchased their items online or went online to view the products that they ultimately purchased in stores.

The installation of Pizzeria Vetri in or adjacent to Urban Outfitters stores is an opportunity for Urban Outfitters to create the ultimate omni-channel experience while combining two major industries. Customers in an Urban Outfitters store will potentially be able to experience eating a critically acclaimed slice of pizza, with a glass of Italian wine, in a Pizzeria Vetri which is located in an Urban Outfitters store, while simultaneously perusing the Urban Outfitters website, purchasing all of their merchandise on the website, and thereafter picking up their items at the store once their meal is finished. The customer leaves with not only fond memories of having a delectable dining experience, but also with a new wardrobe- and all accomplished in under an hour. This creates the ultimate convenience and satisfaction for the consumer and tremendous profit for Urban Outfitters, which is now not just thought of as a clothing purveyor but pizza extraordinaire as well.

It is likely that other retailers will follow suit and incorporate cafes, restaurants and even bars into their stores in order to boost revenues and attract customers. However, a retailer should be mindful of both legal issues and business considerations before embarking on such path. For example, retailers should consider how incorporating a new brand into their current brand may impact a consumer’s perception of its brand. Additionally, a retailer should consult with an architect in order to determine the feasibility to convert any area within a store into a restaurant area as well as determine whether the time and cost associated with such conversion are realistic in light of the expected profits. Lastly, the retailer should consult its attorney who should carefully review the applicable lease in order to determine, amongst other things,  whether a retailer’s lease for a specific space (i) prohibits the space from being used as anything other than a clothing store or (ii) prohibits the premises from selling a certain type of food or beverage.