Lessons from retail: what can hospitality learn from the retail value chain?

When’s the last time you purchased something? The retail industry is one of the world’s most pervasive, and one that every one of us interacts with on a daily basis. That’s why global retail sales are projected to reach around $33 trillion by 2026.

There’s plenty we can learn from such a huge industry, but today we’d like to focus on something specific: the retail value chain. But what is it, and how can we apply its approach to ensuring remarkable hospitality?

What is the retail value chain?

1. Product development, aka hotel service design
2. Sourcing and procurement, aka partner management
3. Manufacturing and production, aka operational efficiency
4. Distribution and logistics, aka space and reservation management
5. Marketing and sales, aka guest acquisition and retention
6. Retail experience, aka guest experience
7. Post-sales service, aka post-stay engagement

What is the retail value chain?

The retail value chain is a series of activities or processes that a company performs to deliver a product or a service to a consumer. This includes every stop from the initial concept of whatever the product might be, all the way through to post-purchase support.

Value chains can help to identify inefficient operations, optimize processes and ensure that customers (or in our case, guests) receive an outstanding product/experience and keep coming back. Here are some of the key steps in the value chain and how they can apply to hospitality.

1. Product development, aka hotel service design

In the world of retail, products are developed by understanding market needs. Retailers may identify a gap, be inspired by other items, or develop something innovative – it all boils down to two primary motivators: providing something that people want/need and making a profit.

Hoteliers should think about their hotels in the same way. What can you offer that will truly address your guests’ needs? Begin at a room level – do your guests expect a smart TV or room service via an app? – and then go beyond and consider the rest of your property. Amenities and services throughout the hotel, from F&B to co-working, should be a key part of a hotel brand’s ‘product’.

2. Sourcing and procurement, aka partner management

Good supplier relationships are imperative for a successful retail business. They need to source and procure the materials for whatever they’re making, ensuring that the supply is reliable as well as financially favorable.

Hotels, of course, are already doing this. Everything from bath soap to bed linens to restaurant ingredients needs to be sourced from vendors. When’s the last time you negotiated your deals with them? Or shopped around for alternative partners? Inertia can end up stripping away your profit margins, so it’s always worth exploring your options whenever contracts are winding down.

Oh, and all of this applies to your tech partners, too.

3. Manufacturing and production, aka operational efficiency

The next step for retailers is to manufacture their product, whether in-house or outsourced. Hoteliers, on the other hand, don’t physically make anything – aside from food and drinks and maybe some branded merchandise. The product you’re selling is remarkable hospitality, and this can be optimized through operational gains.

Think of your team as a production line across the guest journey. Every step can be streamlined and finetuned. Website design, the arrival process, housekeeping... Optimization will not only enhance the guest experience, but also reduce costs. For more tips, check out 10 Ways to Manage Staff Shortages and 10 Tips to Improve Your Housekeeping Operation.

4. Distribution and logistics, aka space and reservation management

Once the product is made, the next step in the value chain is distribution and logistics. In other words, ensuring that the items are available when and where customers want them.

In much the same way, hoteliers need to carefully manage their space inventory. Effective inventory management (not just rooms, but tables, parking spots, co-working spaces) ensures that spaces are priced optimally and sold through channels that maximize occupancy and revenue. Direct bookings through a high-converting booking engine are ideal, but finding the right blend with OTAs will increase your reach.

5. Marketing and sales, aka guest acquisition and retention

In retail, single-product categories are unusual. Instead, customers are faced with almost endless choice, which makes it essential for brands to cut through the noise. Most hotels face the same challenge, and while there are some hospitality brands pushing the boundaries with their marketing, there’s plenty of scope for big marketing gains.

There’s an ugly phrase in marketing called ‘spray and pray’, which means a generic approach intended to garner maximum eyeballs on whatever you’re selling. Don’t do that. Invest in marketing campaigns that target the right audience, create compelling loyalty campaigns and personalize your comms so show your guests you really know them. The cost of acquiring a new customer can be up to ten times as much as generating a repeat stay.

For more tips about guest messaging and marketing, check out this guide on Perfecting Guest Communication.

6. Retail experience, aka guest experience

The actual purchasing experience is crucial for retailers. First, they need to create an environment or circumstance that encourages a customer to make a purchase. Second, it must be fast and easy to take payment, otherwise the customer will get frustrated and potentially back out of the sale.

Hoteliers must manage both digital and onsite experiences. A hotel website should be easy to navigate and represent your brand in terms of style and imagery. It should also be easy to make reservations (and buy extras), so having integrated payments is a must. The online journey continues through touchpoints like confirmation and pre-arrival emails, so make sure you give guests a cohesive experience.

And then there’s the onsite experience. From the moment a guest enters your doors to the time they check out, every interaction should be carefully crafted to leave a lasting impression. This includes everything from the ambiance of the hotel to the level of personalization in guest services. The more memorable the experience, the more likely a guest is to return.

7. Post-sales service, aka post-stay engagement

Speaking of return guests... Retailers understand that the relationship with the customer doesn’t end with the sale. Post-sales service such as customer support, returns and feedback management are critical to maintaining customer satisfaction and loyalty.

Hoteliers should focus on post-stay engagement to build long-term relationships with guests. This can include follow-up emails, surveys to gather feedback and personalized offers for future stays. Engaging with guests after their stay shows that the hotel values their feedback and is committed to continuous improvement. There are plenty of reputation management tools available, as well as sophisticated CRM (customer relationship management) solutions like Mews for Salesforce.

So there you have it. The retail value chain offers a transferable framework that hoteliers can use to enhance operations and guest experiences. Whether it’s refining service offerings, optimizing operations, or enhancing the guest experience, there’s much to learn from the world of retail.

But the inspiration doesn’t stop there. Check out these articles for more outside-the-box thinking about how to make our industry even better:

About Mews

Mews is the leading platform for the new era of hospitality. Powering over 5,000 customers across more than 85 countries, Mews Hospitality Cloud is designed to streamline operations for modern hoteliers, transform the guest experience and create more profitable businesses. Customers include Generator-Freehand, Strawberry, The Social Hub, and Airelles Collection. Mews was named Best PMS (2024) and listed among the Best Place to Work in Hotel Tech (2021, 2022, 2024) by Hotel Tech Report, as well as World's Best Hotel PMS Provider (2023) and World's Best Independent Hotel PMS Provider (2022, 2023) by World Travel Tech Awards. Mews has raised $335 million from investors including Goldman Sachs Alternatives, Kinnevik and Revaia to transform hospitality.

www.mews.com

Katie Halfhead
Senior Communications Manager
Mews

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