Several years after its launching, the Italian-based supermarket Eataly made its name as it created excitement among consumers and the general public. This success was due to its unique business model of being partly a supermarket and partly a food court, and partly a culinary arts school. Its expansion in other states in the United States also proved a success. With this business growth, can Eataly sustain its success? Is this the start of a change in the supermarket industry? Or is it just a fad that would eventually die down?
Sunil Gupta, Michela Addis, Ruth Page
Harvard Business Publishing (515708-HTM-ENG)
Jan 26, 2015
Case questions answered:
- Would you invest in Eataly? Why or why not?
- What is the company’s value proposition? How did it create it?
- What are the economics of this business? What metrics does the company use to measure its performance?
- What changes would you suggest to Eataly’s business model as it grows from a family-run to a professionally managed business?
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Eataly: Reimagining the Grocery Store Case Answers
Eataly: Why does it work
Experiential retailing + Multi-concept spaces at upscale neighborhoods + Revenue streams = Retail + Restaurant business (Eataly)
BUSINESS MODEL: EAT, SHOP, AND LEARN
ESCAPIST
As active customers eat, they engage in participation where there is high interaction with the environment, leading to an experience of high customer immersion.
ESTHETIC
Passive customers can stroll and shop. Moreover, they participate in an experiential setting (akin to traditional Turkish bazaars), providing high customer immersion.
EDUCATIONAL
Eataly’s Culinary School engages active customers’ participation. This experience is coupled with high absorptive learning, where the customer’s attention is captured by bringing the experience to mind.
These three business units synergize to build the business, drive revenue, and delight customers.
What the company offers is not comparable to traditional supermarkets and grocery retailers. To define it simply, the company is in the business of providing an experience to their high-quality seeking customers.
Their core competency is in their ability to enchant every sense of the customer and stage the experience of merchandising.
Eataly makes for a promising investment on the grounds of differentiated value proposition, omni-channel presence, adaptiveness, operational and financial strength of the company in Italy, and the growing overseas market.
UNIQUE VALUE PROPOSITION
OBSERVATIONS
Eataly focuses on ‘experiential retail.’ The company offers a fresh value offering to the customers. It provides an opportunity to taste, try, and buy under the same roof.
The company operates under a range of segments – supermarket, high-end food court, and culinary arts school.
Its products are of good quality and are sourced from local Italian suppliers/artisans. This setup works well for customers wanting clean, fresh, and healthy food alternatives. The company gets more volume of business for their local Italian suppliers.
KEY TAKEAWAYS
The company’s diversified offerings enable it to hedge risks linked with highly competitive grocery retail. Eataly should always be wary of…
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