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ID number: 084120

Project paper

- Eataly: more than a grocery


store -

Hand-in date:
07.05.2015

Campus:
BI Oslo

Examination code and name:


LE3756 Experience Economy: Staging and Designing
experiences

Programme:
Department of Innovation and Economic Organisation
Index
•   Summary
•   Introduction
•   The Case
o   Value proposition
o   Customer
o   Customer Relationship
o   Channel
o   Key Partner
o   Key Resources
o   Revenue Stream
o   Cost Structure
•   Research Question
•   Theoretical Framework
o   The 4 Realms
o   Expereiece in Retailing
o   User-Serviscape Relationship
o   Where it Lead?
•   Methods
•   Results
•   Discussion and Conclusion
•   References
Summary

The paper will try to apply the theoretical methods developed in the experience
economy field to retailing, analysing what insurgent players are trying to do in
order to transform a low commitment activity such as grocery shopping in a more
entertaining and meaningful experience.

After a quick review of the main changes happened in retail, the paper will give
an overall view of Eataly, the Italian-based grocery chain which is trying to
challenge the incumbent business model through experience.
Later, after that the research question is presented, the paper will focus itself on
the analysis of the firm’s value proposition applying several theoretical
frameworks; among them the Pine and Gilmore’s “4 Experience Realms” (1999)
and the User-Environment Relationship model developed by Bitner (1992).

The last par t of the paper will be focused on the qualitative and quantitative
method that should be use to analyse the research question and the discussion of
the expected results.
INTRODUCTION

Retail industry represents the nexus between producers and to end consumers; in
fact it allows to industrial firms to reach the market, provide services and develop
two-way information's transfer. Among distributors, grocery stores cover a
leading role thanks to their key importance in the distribution of fast moving
consumer goods and they faced in the years, in order to adapt themselves to the
evolution of consumers.
The most dramatic breakthrough in the field have been the introduction of the
self-service paradigm in its operations during the first decades od the 20th century;
in fact with this innovation, offered for the first time by the Piggy Wiggly in the
1916, consumers gained more freedom and power thanks to the ability to collect
the goods they wanted by themselves rather than having to consult the store
employees. This new business model helped distribution channels to jump on a
new path of modernization and industrialization: the new role of costumers, in fact
encouraged firms to embrace a stronger standardization of the offering and invest
the released resourced (less costs of personnel) in newer and more valuable
efforts.
However since the introduction of self-service the competitive arena underwent
several other changes, elicit by two-fold reason. Firstly the evolution has been
spurred by the industry's dynamics (push): the core services provided by standard
stores (e.g. assortment and informative/logistics services) aimed to help the
costumer to reduce the costs of the shopping expeditions (e.g. stocking costs,
research costs, transports and alternatives evaluation) have started to be flaked by
additional services not entirely entwined to the selling function. This support role
has increased its importance in the recent decades thanks to the increase of intra-
type. In fact retailers started using this services to differentiate themselves from
the competitors and help customer in the easing of the shopping expeditions, more
and more characterized by time pressure and other difficulties.
The second reason for this modification of the competitive arena has to be
searched in the customer behaviour itself (pull, to the demand side). The so-called
postmodern customer seeks emotions and is immune to traditional marketing
techniques; it has to be conquered through new and meaningful value
propositions, he doesn’t need good or service, he needs experiences (Giampaolo
Fabris 2003). Shopping became itself moment consumption, hence producers and
retailers have to compete and collaborate in order to develop an appealing
proposition for evolved consumer.
All this changes in customers behaviour gave more importance than ever to the
role of physical store and the management of the experience staged inside them.
Store became the physical expression of the firm’s values, allowing retailers and
producers to communicate in a more subtle way with customers. Stores became
the final seller, the most critical touch-points, the key relationship platform in the
development of loyalty and affiliation with consumers.
Grocery stores in particular is emerging as one of the most thrilling field thanks to
its key role in the daily routines and its ability to leverage its servicescape to
develop unique experience. The surging importance of experience in the fields is a
dramatic change for the incumbent practice since the best performers and lead to
the creation of a gap between the offering of FMCG and consumers' needs,
opening a chance for the entrance of new in the arena.
In fact new firms entered in the arena with innovative ideas and business models;
between them Eataly gained a rapid approval among customers and retail experts
(e.g. World Retail Award: Best New Retail Concept 2014). This firm represents a
new view of retailing which strive to provide to its customer everything needed to
foster education and love for the Italian food culture.
Founded in 2000 by Oscar Farinetti, Eataly is an Italian grocery chain aiming to
offer a full experience in the Italian food culture; goal achieved through the
development of a well-balanced combination of retail, catering and culinary
classes. In fact, according to the founder, the firm's mission is to elicit consumers’
food perception of quality and blends the richness of Italian traditional dishes with
modern retail business models (Farinetti, 2008). Revenues of the conglomerated
group goes beyond €300 million and the growth estimates are bright.

THE CASE: EATALY


In order to have an overall glance of company the company business model and
its key characteristics, the firm will be analysed though the Ostenwalder model
(2009).

Value proposition
As underlined above the core business of the retail chain is food; the firm provide
a deep selection of Italian certified foods, gathered through a dense external
network of local producers, supported by a company owned set of suppliers
(developed by the founder in the past). The assortment of the firm isn't wide as the
one provided by other competitors (e.g. Carrefour, Walmart, Metro) in view of its
focus on top quality product. As a matter of fact the intrinsic value of its product
portfolio is guaranteed by the several certification required to the suppliers such as
the "DOC" and DOCG certifications (i.e. "Controlled designation of origin" is a
quality assurance label for Italian food products, modelled after the French AOC).
This meticulous selection of products and suppliers aim to satisfy the customer's
desire to explore, taste and learn everything about renowned Italian food culture.
The core proposition is supported by two other important services provided in-
store: restaurants and culinary classes. Concerning the catering, the firm's stores
usually provide an array of 2 to 6 restaurants in each store, in which customers
can eat dishes prepared with the same ingredients sold in the retail space.
According to the most recent data, catering counts for the 30% of revenue of the
firm.
On the other hand, food classes try to entertain and educated Eataly's customers
through interactive course on several topics (e.g. wine tasting, bakery, cake
decoration, etiquette and food matching). Important guests from the food industry
such as well-known chefs or sommeliers characterize most of the courses. The
company offers a tailored set of classes for kids or for elderly people for free.
These side activities are considered a key asset by the company, which based its
value proposition on concepts as retailtainment and edutainment.

Customers
The customer base targeted by the company is quite wide; in fact the company
could consider a potential customer all food lovers. However the company
considers the most important target the so-called DINKS (e.g. Double Incomes
No kids), for their reduced price-sensitiveness and their soaring seek of new
experiences. Families could be considered a secondary target, thanks to the free
initiative for kids and elderly people. Another thriving target for Eataly are
tourists; in fact its combination of modern retail and entertainment are a strongly
appreciated by tourists (the Eataly's store in Manhattan counted more visitors than
the MOMA Museum during 2014).
By the way it is critical in the analysis of this company, understand the difference
between its customer base and business model from the average grocery store’s
one. The company’s does not target every day shopper, but customers looking for
something new and different, customers looking for a leisure activity.

Customer Relationship
Concerning the stores services Eataly mixes self-service and full service paradigm
according to the value and complexity of the goods sold. In fact low involvement
products are arranged in aisles in the same way average supermarkets, while
higher involvement goods such as wine, a full committed staff supports cured
meats. Restaurants and food classes have their own trained personnel.

Channels
The firm reach its customers base through the company owned stores. Since its
first opening in 2007, in Turin, Eataly opened 16 more points of sale in Italy and
15 abroad (USA, Japan, Turkey and United Arab Emirates). Next openings are
planned in Munich, London, Los Angeles and Toronto forthcoming years. Thanks
to its direct connection with the customer, Eataly can control and develop its value
proposition and the customer's journey experience.

Key Partners
A critical asset in the development of this unique value proposition it’s the strong
involvement of Slow Food in the development of the food assortment and
definition of best practices. Slow Food is a world-renowned non-profit
organisation, founded by Carlo Petrini in 1986, which strives to preserve
traditional and regional cuisine and encourages farming of the local ecosystem.
Slow Food supports the development of coherent strategy of retail chain thanks to
its own members in Eataly's the strategy team.
Another key partner for Eataly is Coop, a national cooperative which operates the
largest supermarket chain in Italy, which helps the firm the management of
logistics and supports the safeguard of food culture and biodiversity offered by
Italian local producers.

Key resources
Huge efforts have been made by the company to develop the unique set of
resources needed to realise its value proposition. Among the physical resources a
leading role is covered by the historical buildings chosen to stage its proposition;
in fact most of them are constructions of big size (between 7,000 m2 and
16,000 m2), set in important Italian and foreign cities (e.g. Rome, Milan, New
York, Dubai etc.) and are characterized by strong historical value. Another
important resource is the dense network of local producers, developed during
several years by the company, supported in the process by Slow Food and COOP.
On the other hand, important intellectual resources are the brand and its surging
resonance in the western countries, strongly entangled with the "made in Italy"
movement and premium positioning; its managers and the strong partnerships
develop with Slow Food and COOP (which recently became one of the
shareholder of the company) and food industry stars such as Joe Bastianich and
Mario Batali which endorse the initiatives and store of the firm.

Revenue Stream
Eataly varies itself from the average grocery store chains thanks to its own unique
revenue model; in fact the Italian gourmet food seller develop a synthesis between
mass-consumption driven retailers and specialty store. The first ones go for a
revenue stream based on the sale of a big quantity of cheap products to a wide
customers base, while the latter promote a big quantity of premium products to a
small customers base. Eataly blends the two revenue models, focusing itself on
the sale o a small quantity of premium products to a big customer base (Exhibit
1). This system both lowers the inter-type competition with the competitors’
formats and gives to Eataly a unique spotlight.

Cost Structure
The firms manages main costs are related to the management of the assortment
(e.g. logistics and warehousing), maintenance of the stores and the management of
the services and operation carried out (e.g. sales assistants, restaurant staff, chefs
and staff committed to production of in-house food such as bakery and brewery).
Since the array of the products sold is characterized by high quality level, hence
premium prices, the company tries to reduce prices to end consumers offering
seasonal and local products (cheaper and more healthy); this strategy is supported
by a constant education of the customer in order to teach what to buy and when
(e.g. wheels of food, Exhibit 2).
RESESARCH QUESTION:
The paper will try to understand how Eataly provide authenticity through its
unique servicescape in retail store area, highlighting which dimensions of the
value proposition influence the most the customer experience and the outcomes of
this process on the customer’s image of the brand.

THEORETICHAL FRAMEWORK

Boswijk, Peelen and Olthof (2005) say that experience economy is about more
than just the embellishment of products and service; it is about putting people in
the leading role, party as consumers or customers. The quest for modern firms is
to achieve this goal establishing an essential connection with people and what
they need, making their lives more enjoyable, fuller and meaningful. Experience
is, according to them, a new form of value creation, which finds its roots in the
ability of creating tailored drama and entertainment for the customer.
Firms nowadays have to keep in mind that customers of the modern age differ
from the past ones for several reasons; their attention shifted from the material
product and service (...) to immaterial processes where the transmission of
symbolic meanings exercises a determinant role in respect to the product/service
itself (Holbrook 2000; Pine and Gilmore 1999; Schmitt 1999). Consumption
became a way of self-expression and customers strive authentic and meaningful
experiences to self-actualize themselves. In facts, as the basic needs described by
Maslow or Alderfer have been generally satisfied in western countries, customers
focus their efforts in the satisfaction of higher needs such as belonging and
esteem. In this quest for meaningful experiences authenticity has clearly a leading
role: the LUCs experience pyramid, often compared and used in pair with
Maslow's one, put authenticity as one of the pillars upon which experience can
grow (Tarssanen & Kylänen 2006) and the Turin based company leverage this
concept in the development of the value proposition.
Idiosyncratically to customer's evolution, successful firms started to develop
deeper and more unique propositions to satisfy the demand. Indeed industry
leaders nowadays are defending their positioning engaging customers in a
memorable event, distinct from the mere economic offering. This strategy is an
imperative for every firm, which want to avoid commodization of its offering due
to the increasing number of competitors and propositions. Customers became
guests and the firm becomes the stager of a truly customer-centric program (Pine
and Gilmore 1999).
In order to embed these concepts in their proposition retailers have to completely
reengineered their points of sale and their operations, a process which can take
long time and imply several incremental steps to reach, especially for incumbent
players influenced by the previous business models and the sunk investments
made (e.g. infrastructures, customer management and training). This resilience to
change is far less developed in insurgent companies which leverage their
flexibility and freedom to produce in a rush meaningful experiences for their
customers or, as Walt Disney preferred to call them, "guests".

Experience in Retailing
The demand-supply dynamic in retail cannot be fully understood without taking in
consideration to the so-called "Wheel of Retailing" theory. This approach
highlights that breakthrough innovators enters in the arena usually providing a
cheaper way to buy for customer compared to the existing formats (inter-type
competition). Later, when the advantages of this business model are clear to most
of the players of the arena, starts a imitation process which force the initially
insurgent firms to increase the value of its format's proposition through new
services and support in order to differentiate itself from the copycats (starts a
strong intra-type competition)(Sandro Castaldo, 2008). Modern retailing is facing
this struggle more than ever and this trading-up dynamic, combined with seek of
experience, is producing dramatic changes in the arena. The status quo of retail-
chain have been for decades the one proposed by distribution juggernauts such as
Walmart and Carrefour, firms which based their success on their ability to develop
a cost efficient-operation which allowed more and more customers to enjoy huge
assortments at cheap prices. Over time stores became "non-places", transition
areas were people satisfy very pragmatic tasks; price and speed became key
drivers of the shopping expeditions and services delivered by retail chain became
more and more commodized. Nowadays, shopping of fast moving consumer
goods (FMCG) is considered by most of people more a need rather than a desire;
something bothering that no one can get rid of.
However insurgent players are trying to overturn this situation leveraging
experience to build valuable propositions. This value gap is considered the spot
which new retail firms, like Eataly, are trying to fill.
In order to entirely get what Eataly is trying to build it is necessary to know which
is firm's experience proposition and how the experiencescape is designed. Firstly
the paper will describe the overall of experience Eataly is providing through the
use of Pine and Gilmore's “4 Realms of Experience”. Later the paper will focus
itself on the description on how the relationship between servicescape and the user
applying the Bitner’s model (and the addition made by Rosenbaum and Massiah).
Finally it will analyse how it lead to authenticity and conclusively to a meaningful
experience.

The 4 Realms of Experience


One of the main touchstone in the analysis of the experience is the work made by
Pine and Gilmore with their paper about the "Four Real of Experience" (1999) in
which the two scholars identify, thanks to 2 drivers, a clear taxonomy to define
the experience staged by firms. The first driver, or dimension, taken in
consideration by the two scholars is customer’s participation; in fact customers
can be considered passive to the performance offered by the firm (e.g. listen a
classic music concert), or in opposite situation be a key active part in the
development of the performance (e.g. watch a sport match at the stadium). Clearly
the two authors underline that this dichotomy is not binary, but developed on a
spectrum of possibilities. The second driver taken in consideration by Pine and
Gilmore is the connection with the performance; the marketers explain that the
customer could feel absorbed by the performance or, on the other hand, immersed
in it. The combination of these two dimensions give birth to the four realms:
aesthetic, entertainment, educational and escapism (Exhibit 3). Leading
companies have to achieve the best mix of them in other to reach the so-called
sweet spot, the perfect balance of these 4 realms.
Applying this model to Eataly clearly underlines that it is a multiple souls
company: as a matter of fact the company strives to achieve the sweet spot
counterbalancing several service with different characteristics. Giving the guests
the freedom to chose the level of participation and connection according to their
preferences is an hard task, but the firm is able to guarantee a more customized
experience thanks to the wide set of different activities offered by the company
(e.g. shop, eat, learn) and the decision to build its point of sale with an open-space
design1 in mind. This is an imperative for the firms striving to provide services to
huge and heterogeneous customer base such as the one of grocery stores.
But lets focus on the realms the company emphasizes the most in its value
proposition: Aesthetic and Education.
The Aesthetic realm is characterized a strong level of Immersion and low level of
participation in the development of the experience, quoting the description given
by Pine and Gilmore in 1999 "customers or participants are immersed in an
activity or environment, but they themselves have little or no effect on it". Indeed
Eataly elicits its customers, shopping in its store, to visit and get lost in its halls
which resemble museum consecrated to food; the way product are exhibited in the
store are more similar to the an art gallery rather than supermarket. Each angle of
the store is developed through sophisticated technique of decoration and visual
merchandising in order to resemble traditional store of Italian history (e.g. winery,
bakery delicatessen and so on, Exhibit 4) and the guests of the shops often spend
time walking around this "corners", feeling like they were taken back in the past.
This way of experiencing the store is characterized by a low level of participation
since the customer doesn’t heavily influence the performance. In fact visitors are
not forced to interact with the staff or other visitors2, but are turned loose to watch
employees prepare bread and bakery or watch chefs cooking for the guests dining
in the stores' restaurants. Customers are still immersed in the environment but
have a little affect most of this activities.
The second soul Eataly offers to its customers trough its activities is embedded in
the Educational Realm. According to the work of Pine and Gilmore in this realm
firms tend to involve customers in a more active participation, even if they are still
outside the event than immersed in the action. In fact this second soul is strongly
taken in consideration by the company and probably is a key driver in their
differentiation process. Customers which want to have an higher participation
could trigger it taking advantage of the trained personnel to have information
about the provenance and properties of the food; the work force in shopping areas

1
The concept of open-space have been developed for the first time by Foxall
(1969), a point of sale in which the provider offers a wide array of choices to the
consumer in the definition of the shopping expedition; customers with are looking
for a low commitment experience can "opt out" all the not necessary activities
(e.g. time pressure issues), while customers which want to have a 360° experience
about the firm can experience the full proposition.
are skilled helper, with a strong knowledge about their category (e.g. how to mix
ingredients, cook particular dishes). Moreover, chefs and of the personnel
committed to the in-store production of goods (e.g. bread, beer etc.) offer to share
their knowledge in the daily culinary classes provided in-store, transferring their
food knowledge to the interested customers. It is important to underlines that
Eataly's customers often look for interaction with the in store personnel while
customers of other markets avoid it because of the low training of store staff
which is able to give only basic information about the products. This is a key
advantage over the competitor since, as Rosenbaum underlines, employee-
customer support seems to be a “type of glue” that adheres customers to
establishments when customers actively desire it (2009).
The education of the customer, which beyond doubt involve a more active
participation of the customers, is so important for firm's vision of retailing that
many areas of the store are covered with stories, faces and information about the
food offered in the store (exhibit 5.1; 5.2).

These souls of Eataly work seamlessly together in order to develop a unique


experience around one theme: food at its finest. This process goes beyond the
freshness and quality of foods, they are the props to an experience of authenticity
and the importance of food has on our society. Feuerbach, a pillar of German
Philosophy, once said "We are what we eat" and Eataly is trying to build a
meaningful proposition around this concept, underlining which are the functional
and social effects of fine dining on our wellness. Even if most of the products sold
by Eataly are present in other stores (mostly specialty stores), the way that the
firm gathers them and stages their exhibition give them an extra value, eliciting
customer to learn and buy those products. The company applies what George
Ritzer states, putting all its efforts in the use of ambience, emotion, sound and
activity to get customers interested in the merchandise and in a mood to buy.

Environment-User Relationship
In order make it's several souls work smoothly Eataly has built points of sale as
the perfect stage for the provision of a worthwhile experience, taking care of each
piece in the development of the environment-user relationship. As a matter of fact
during the last decades several experts highlighted that a pleasant perception about
the environment positively influence its shopping experience. Psychologists
suggest that customers react in two general forms of behaviour: approach and
avoidance (Mehrabian and Russell 1974). Approach behaviours include all
positive conduct such as desire to stay, explore, and affiliate while avoidance
opposite behaviours to the one previously described (Mehrabian and Russell
1974). In that sense, the environment can be viewed as a form of nonverbal
communication (Broadbent, Bunt, and Jencks 1980; Rapport 1982), imparting
meaning through what Ruesch and Kees (1956) called "object language". This
subtle language constantly influences the customer and its experience influencing
the beliefs and categorization of the organization, the service provided and the
goods sold (Bitner, 1992).
One of the most renowned scholars who studied the influence of environment on
customer's behaviour is Bitner (1992), who developed a model adequate to
consider most of the variable influencing the user-environment relationship:
ambient condition; spatial layout and functionality; signs and artefacts (exhibit 9).
Furthermore several other scholars as Mark S. Rosenbaum, Carolyn Massiah
(2011) tried to implement new features to this model, focusing their attention on
the social dimension, which influence this relationship (Bitner model was
concentrated on the physical dimension).
In its work Bitner underlined that the perception of servicescape is influenced buy
the so-called environmental dimensions: ambient conditions, space/function, signs
and artefacts. In the following paragraphs those dimensions will be analysed one
by one and applied to the Eataly's store in order to evaluate the actual situation. In
order to wholly apply the theoretical model to the firm after the description of
each dimension, the paper will be outline how the company is working on the
described dimension.

Ambient conditions:
They include background characteristics of the environment such as temperature,
lighting, noise, music, and scent. As a general rule, ambient conditions affect the
five senses. Overall, holistic perception of the servicescape is especially
noticeable when they are extreme and when they conflict with expectation.
The control over the five senses is key driver in grocery stores' experience since
most of them are involved during the shopping expedition; unquestionably most
of the product sold are characterized by unique flavour and customers often look
for a touch and feel experience in order to better evaluate the quality of the
product (e.g. test the maturity of vegetables and the freshness of meat and fish).
Eataly leverages senses in several ways, especially touch, sight and hearing.
Customers can engage products with all their senses, getting caught by their
fragrance spread in the store and evaluating their quality and through touch and
sight.
Lighting is strongly taken in consideration by firm's store designers which
develop stores leveraging the possibility to exploit direct sunlight in order to
provide a warmer and more cheerful ambient (Exhibit 6 underline the strong use
of windows and glass in the store structure); the use of direct sunlight, could seem
a marginal characteristic, but is a strong point of difference against average
hyper/supermarkets which most of the customer notice.
Music is considered too a key factor in the stage of the experience: most of
Eataly's store offer during the evening our live music and several stores are
equipped with pianofortes where store customers can play by themselves3.
All these little tunings help the company to catch the customer’s attention in a
more subtle way, accessing to their deeper "self", memories and raw feeling. As
underlined by Jason Ankeny in one of its article, Eataly's stores are able to
transport the dizzying sensory delights of an old-world Italian marketplace to the
largest central business district in the U.S ("Chow Bella"Entrepreneur.com, Inc.,
November 2014).

Spatial layout and functionality:


Since stores environments are purposeful environments spatial layout and
functionality of the physical surroundings are particularly important. Spatial
layout refers to the ways in which machinery, equipment, and furnishings are
arranged, the size and shape of those items, and the spatial relationships among
them. Functionality refers to the ability of the same items to facilitate performance
and the accomplishment of goals. The effect of spatial layout and functionality is
highly salient to customers in self-service, such as the one proposed by grocery
stores, environments where they must perform on their own and cannot always
rely on assistance.

3
Store personnel controls that this chance wont have negative effect on the other
customers, stopping annoying customers
Eataly’s layout is very different by the usual grocery store for various reasons.
Firstly the surface covered by the point of sale it's huge size (between 7,000 m2
and 16,000 m2), and the layout have to take in consideration the need of every
service and goods: restaurants and in store production site (e.g. brewery and
bakery) have different need from the shop and thematised corners; moreover
goods as wine or fish have special needs (e.g. light, temperature and so on) which
have to be taken in consideration in the development of the stage.
Second reason is the importance of layout in Eataly's way of differentiate itself
from the competitors: in fact the firm's points of sale are completely different
from average grocery stores. Side activities such as restaurants aren't isolated
areas, but simply overflow into the aisles, with no clear demarcations or
boundaries (Diamond, David, “Eataly: A Big, Beautiful Mess”. Progressive
Grocer. November 2010, Vol. 89 Issue 10, p10). Kitchen and production sites are
taken from the shadow and put at the centre of the stage, under the spotlight, in
order to entertain the guests in shop. Moreover aisles’ layout is not developed
according the idea of a fixed path that the customer have to follow during its
shopping expedition, unlike other average store Eataly motivates guest to decide
their path and get lost inside the store.

Signs, symbols, and artefacts:


Many items in the physical environment serve as explicit or implicit signals that
communicate about the place to its users (Becker 1977). They can be used as
labels (e.g. name of company, name of department), for directional purposes (e.g.,
entrances, exits), and to communicate rules of behaviour (e.g., no smoking,
children must be accompanied by an adult). Signage can play an important part in
communicating firm image.
Other environmental objects may communicate less directly than signs, giving
implicit cues to users about the meaning of the place and norms and expectations
for behaviour in the place. Quality of materials used in construction, artwork,
presence of certificates and photographs on walls, floor coverings, and personal
objects displayed in the environment can all communicate symbolic meaning and
create an overall aesthetic impression.
Eataly's management is conscious that in order a develop an experience that goes
beyond mere food as to strongly leverages this tools in its proposition; moreover
grocery store have been characterized by a strong use of sign and symbols since
the beginning in order to guide the customers during shopping.
Eataly’s points of sale do not use explicit communication alike other grocery
store, differing on purpose and the way they presented. Directional purpose labels
are dropped in order to reinforce the idea of exploration of the store; customers
are caught by their spur-of-the-moment desires and can understand which area of
the store are visiting thanks to other more subtle signal (analysed later). On the
other hand Eataly use direct communication in order to give deep information
about the product sold; indeed each product is supplement by information about
its origin, certifications and tips for the suggested use (Exhibit 7). In addition to
this card information the store is filled up with tips and tricks to buy the right
thing in the right season: several "wheels of food" suggest the seasonal product to
buy and its benefits (Exhibit 2). This mix of shopping and education help
customer to better understand the importance of food and breed a more amusing
journey through the shop.
Even if direct communication has an important role in Eataly's proposition is the
indirect one that could be considered the key driver of the experience. This type of
communication is beyond doubt embedded on macro and the micro-level of the
stage design. On the macro level the selection of historical buildings as points of
sales underlines the will to provide a premium service to the consumer, as well is
a driver of connection between the firm and the local environment (as already said
each store of the company include in its assortment local products). This premium
feeling is reinforced by the interior architecture, which favour quality of
exhibition over economical efficient solutions.
Artefacts and signage are used on the micro-level too, giving to each corner of the
store a unique flavour of authenticity and tradition. The unique arrangement of
product helps customer to quickly understand the zone they are visiting and the
use of traditional tools screams authenticity in every direction. Giving the
customers a more direct view of what is fair and health food is a key mission of
the company and that is communicated by integrating unique elements in the store
architecture; for example the olive oil area can present the visitors could exhibits a
real tree taken the plantation (Exhibit 8) or, by the same token, the in-store
brewery can be use as a stage to display the company-made beer (exhibit 9). As
the CEO stresses in most of its interviews all this efforts are made with the aim of
building a place that harked back to old-style markets such as the bazaars of
Istanbul or the fish markets of Sicily (2009).

Even if the use of the Bitner model used till now could easily explain by great part
the reason that could be behind Eataly's success it is necessary to take in
consideration also the social dimension studied by Mark S. Rosenbaum, Carolyn
Massiah in their work (2011). However the following paragraph will be focus
only on customer to customer interaction and density role, since employees’ role
and the other topics analysed by Rosenbaum’s work have been analysed in the
previous parts of the paper.
The social dimension is greatly important since as Nichols states in its work
stresses that customer-to-customer interactions (CCI) possess the ability to
enhance customer’s satisfaction and neutralize negative experiences. Social
interaction has a two-way relationship with the experiencescape: in fact as Bennett
and Bennett (1970) underlined all social interactions are influenced by the
physical container in which it occurs. On the other hand it is also true that the
nature of social interaction in terms of the duration of interaction could influence
the standard script (i.e. and the actual progression of events) designed by the
provider of the experience (Bennet and Bennet).
A key aspect related to CCI is crowing, in fact several authors studied crowding
and its negative effects on shopping expedition (e.g. too many people inside a
shop could lead potential customer to avoid shopping or reduce the time spent in
the store). Anyhow the effect of customer to customer relationship and crowding
have to be studied according to the type of consumer, which could make him
perceive this process positively, or negatively depending on its personal
characteristic (Bitner).
Eataly tries to leverage customer to customer interaction in several ways: seating
arrangements are used as possibilities of interaction in its restaurants, while social
events and culinary classes are used to make customers interact among them and
with employees. This process based on the idea of third place, concept deeply
rooted in the Italian society, is paying back and several experts are noticing the
idea of club around this brand. For example James Scarpa, writer for Nation
Restaurant, underlines in on of its article the social dynamic that goes on it, the
kind of culinary Facebook notion where people like to be seen and to see others,
where people go to enjoy themselves and being with others. It is important to keep
in mind that that Eataly, thank to its open space design, isn’t forcing all customers
to interact, giving them the ability to choose between the single services or the full
optional immersion.

Where does it lead?


The design of the service scape is the first step in the development of a
meaningful experience; in fact as Dewey highlights in its work how high and low4
sensory perceptions are the first step on the path leading to the creation of
meaning (Exhibit 9). Senses are the tools people use to discern our world
(Boswijk, Peelen, Olthof, 2005) and help the customer to development of
emotions. Researches suggest that emotional responses to the environment may be
transferred to objects within the environment (Maslow and Mintz 1956; Mintz
1956; Obermiller and Bitner 1984) and Eataly takes this process strongly in
consideration in its value proposition. The servicescape is designed to influence
the perception of the goods sold and vice versa, eliciting a self-sustaining virtuous
circle in the customer’s mind. In fact Eataly aims to exploit the service scape in
order to tell the origins of its product, the faces and stories behind them, giving
new importance to the legacy of the artisanal work.
Authenticity is key tool to add value to food due to the strong relationship
between the origins of the product (local knowledge and environmental
conditions) and the quality of the product itself. However authenticity goes over
and above that trying to guide the customer towards an experience able to enrich
the horizon of the mere shopping activity by itself.
Clearly the firm doesn’t trick itself comparing its value proposition to life-
changing experiences, such as watching the northern lights or descending the
Grand Canyon, but undoubtedly underlines the uniqueness of its shopping
experience compared to the one provided by the competitors.

METHODS
Given the complexity and the breath of the research question, the analysis had to
combine several quantitative and qualitative methods. Since the research is
focused on a new company/format and the comparison the competitors it is
necessary to get primary data. The first step in this direction should be making in-

4
High senses are related to the intellect and spatial orientation while Low senses
are related to physicality and feeling of intimacy
depth-interviews to better frame the topic; the interviews should involve
customers and employees able to provide, through the use of techniques such as
ZMET or the mood-boards, a clearer picture of what food shopping food is today.
Moreover these interviews could help to develop insights about Eataly and how
the shopping experience is overall perceived by these informants in its stores.
After the gathering and analysis of the interviews (highlighting means-ends
chains, association networks around the brand etc.) the researcher should address
its effort into the development of a survey. This quantitative technique helps to
test the insights received by the interviews on a larger population, quantifying the
effect of each environmental and social dimension of the experiencescape and
understanding the relationship between the dimensions and the firm’s ability to
express authenticity. The survey should be hand out to a sample of at least 300
firm’s customers to have statistical significance and should involve customers
shopping in the same store, in order to have clear and precise results. The survey,
in order to answer the research question, should be focused on the following 4
topics:
•   Focus 1: Customer's evaluation of the shopping experience in an
average grocery store + evaluation of the average authenticity: asking
the to evaluate the overall performance of the overall perceived of
servicescape and (later) the performances of each dimension analysed by
Bitner, Rosenbaum and Massiah models (e.g. Ambient Condition: light,
noise, music, odour etc.; Space/Function: layout, furnishing, equipment;
Signs and Artefacts: signage, decor etc.).
•   Focus 2: evaluation of Eataly's performance + evaluation of
authenticity: the survey aske the same questions made to evaluate the
average shopping experience to Eataly, in order to have a direct
comparison of Eataly against the typical competitors.
•   Focus 3: Eataly's and competitors link to a set of adjectives/nouns: the
informants have been asked to associate to each word (e.g. authentic,
healthy, fair, good, tasty, cheap, convenient etc.) to the name of a grocery
store.
•   Focus 4: Demographical details of the informants: gender, age, work
etc.
Most of these data will be gathered from the informants through the use of Likert
scales (Focus 1 and 2), while data for the Focus 3 will be gathered through the so-
called side-by-side comparison (exhibit 8). Data for demographical details have
been gathered through to a set of multiple choices questions.
Focus 1 and Focus 2 will be used to develop a factor analysis in order to
synthetize the most important driver of a good customer experience and then
evaluate Eataly's performance according to this driver. This comparison will be
the first step to understand if the company have been able to outperform the
competitors.
Focus 3 on the other hand will be at the base of a "principal component analysis"
which will be able to describe Eataly’s positioning compared to the one of the
competitors. The outcome will be an orthogonal map of the firms positioning
according to the set of adjectives analysed; this effort will help to understand if
the experience staged by the company elicit the right feelings into the customer
(i.e. authenticity, fair and high quality food etc.).
Demographical data will be combined with in order to describe the sample and
clusters.
Finally through the use of “multiple regression” (data from Focus 3) techniques
the researcher will be able link and quantify the effect of servicescape dimensions
on the feel of authenticity.

Experimental methods would also be appropriate for assessing the impact of


design dimensions on consumers and employees, but it needed the support of the
firm in order to develop in lab or in store experiments.

RESULTS
The paper wouldn’t require the genuine gather of the data

The discussion of the results and conclusion are based on the confirmation of the
assumption made in the previous part of the work
DISCUSSION AND CONCLUSION
“Food, especially in a recession era, has established itself as an affordable luxury,
supplanting things like travel, consumer electronics and even cars,” Kamp says
and Eataly exploited this surging trend in the development of format able to mix
the modern techniques of retailing with the deep culture of Italian artisans.
The connections established between the several frameworks discussed helped to
develop a wide-breath analysis of how the retail field is evolving and how grocery
chains are reacting to these changes. The results of the paper highlighted that, as
the world economics is fully entering the experience economy, even low
commitment good are getting attention and their value proposition are becoming
deeper and more meaningful.
The paper underlined how the mix of genres could be a key for retailers in the
pursuit of customer’s attention and furthermore develop a more loyal and
customer base. In this new context it is the “hybrid” business models, which best
manage to profit from the different elements (functional and experiential) in a
single winning formula, in an integrated solution (Wind, Mahajan 2002).
Eataly, managing environmental and social dimensions, has been able to develop
a unique offering for the modern consumers, going beyond the mere sale of food
and leveraging emotional and psychological needs. As the results confirm the
tailored use of environmental and social dimension helped the company to provide
authenticity in the mind of the customer.
The work attempted to clarify the source of Eataly’s success in the retail industry,
analysing the most important drivers of value for the customer and comparing the
firm’s performances to the ones its competitors. In this case the Bitner model
demonstrated itself as good frame to understand the importance of the store
atmosphere and the effects that creates on the customers, leading them to positive
feeling about the products, the service and the company itself.
In other words, the dimensions of the servicescape acted as a package, similar to a
product's package, by conveying a total image and suggesting the potential usage
and relative quality of the service (Solomon1985). Moreover the paper
emphasized how the design of the servicescape helped Eataly influencing people
on how categorize the organization, transforming an activity usually considered
boring into a leisure activity, into an experience.
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Magazine’s articles
•   Ankeny Jason, "Chow Bella" by Entrepreneur.com Inc. , November 2014
•   Diamond David, "Eataly: A Big, Beautiful Mess" Progressive Grocer.
Nov2010, Vol. 89 Issue 10, p10
•   Scarpa James, "Out of the shadows: Kitchen equipment takes center stage"
nation's restaurant news, february 7, 2011 (lebhar-friedman inc)