The retail and hospitality connection: value chain lessons and trends worth borrowing

Key takeaways

• Retail's value chain gives hoteliers a framework for running operations as one connected system instead of disconnected functions.
• Hospitality and retail share more than ever: customer experience, transferable skills, converging tech and the same labor pressures.
• Unsold rooms, covers and spa slots can't be marked down tomorrow – perishable inventory makes revenue management essential.
• Winning a new guest costs up to 10x more than bringing one back, so post-stay engagement beats broad acquisition every time.
• A connected hospitality operating system like Mews ties every stage of the guest value chain together.

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? 

Unpacking industry roles

Retail and hospitality have always shared DNA – both run on service, both live or die by the guest experience – but the lines between them are blurring faster than ever. Luxury retailers are hiring from hotel groups. Hotels are opening concept stores. The skills, the tech stack and the operational pressures increasingly look the same.

Where do hospitality and retail overlap?

Both sectors are built around curated, in-person experience. The shared ground sits in four places:

• Customer experience as the product. A boutique hotel and a flagship store are both selling a moment, not just a room or a handbag. Louis Vuitton, Gucci and Selfridges have all publicly recruited from hotel groups to bring concierge-style service onto the shop floor – greeting clients by name, managing appointment books and tracking preferences across visits.
• Transferable skills. A front-of-house manager who can read a room, recover a service failure and upsell a suite can do the same on a shop floor. Clienteling, visual merchandising and inventory management map almost one-to-one onto guest relations, room presentation and F&B service.
• Converging tech stacks. Both industries are moving from fragmented point solutions to connected platforms that handle payments, CRM, loyalty and operations in one place. 
• Shared headwinds. Labor shortages, rising guest expectations and pressure to personalize at scale without adding headcount – the operational pain points look nearly identical across both sectors.

How do retail and hospitality differ?

The split shows up in three operational realities:

• Inventory behaves differently. Unsold jeans can be marked down next season. An unsold hotel room tonight is gone forever – the same goes for a 7pm dinner cover or a Tuesday spa slot. Perishability is why hospitality leans so heavily on dynamic pricing and revenue management.
• Service is real-time and high-touch. Retail can scale through self-check-out, e-Commerce and 24/7 online sales. Hospitality is fundamentally an in-person business – the guest is on the property for hours or days, and every touchpoint is a chance to win or lose them.
• Roles reflect the difference. Retail organizes around sales associates, store managers and visual merchandisers. Hospitality organizes around hotel managers, front office teams, F&B leads and event planners – roles defined by the length and depth of the guest relationship, not the speed of the transaction.

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.

Build a hotel that runs like the best retailers

The retail value chain works because it treats every stage – sourcing, operations, distribution, the customer moment, the follow-up – as one connected system. Most hotels still run those stages on disconnected tools, which is where the gains get lost.

Mews connects those stages in one hospitality operating system: a booking engine that converts like a best-in-class retail check-out, integrated payments that make upsells frictionless, POS integrations that unify every guest purchase on one folio and a CRM layer through Mews for Salesforce that helps turn post-stay data into repeat bookings.

Book a demo to see what a connected hotel operation looks like in practice.

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: 

• Lessons from the air  
• Lessons from Taylor Swift  
• Lessons from Eurovision
• Lessons from gaming 
• Lessons from athletics