Amid a challenging economic climate, luxury brands seek new ways to prove value to and win over young shoppers. By serving food and drink alongside products, retailers are turning stores into places where consumers can linger, connect, and spend.

Coach’s coffee strategy is a prime example.

Last week, Coach opened its fourth Coach Coffee Shop at the Woodbury Common Premium Outlets in Central Valley, New York.

• Each café is physically tied to a store, offering drinks and desserts based on the brand’s iconic designs.
• Coach Coffee Shops also sell exclusive merch, which accounts for 30% of their revenue, Leigh Manheim Levine, president of Coach North America, told CNBC.

While coffee attracts customers, longer dwell time leads to more product discovery and higher conversion. Stores with a coffee shop have seen double- or triple-digit sales increases across the board, according to Marcus Sanders, Coach’s vice president of global food and beverage, as reported by CNBC.

At the same time, coffee provides an accessible entry point for younger shoppers.

• Nearly 70% of Coach’s new customers last year were Gen Z and millennials, according to the company.
• But 34% of Gen Zers and 37% of millennials said they’re likely to cut back on luxury spending, based on February data from Deloitte and SAP.

For these consumers, a $6 latte is a way to engage with the brand without the price tag of a $700 bag—keeping them connected to Coach until they’re ready for a larger purchase.

From brand to destination

Some 80% of US retail executives expect consumers to prioritize experiences over goods this year, per November 2024 data from Deloitte. By reimagining stores as experiential destinations, brands meet consumers’ expectations for in-store shopping and create powerful sales drivers.

• 35% of global shoppers cite store atmosphere as their reason for choosing physical retail, found a Criteo report.
• 77% of US adults say branded in-store experiences prompted them to make an immediate purchase in-store, and 75% say those experiences influenced them to choose that brand over competitors, according to February data from Quad and The Harris Poll.

With its new coffee shops, Coach is joining in on a well-established trend.

• Ralph Lauren has over 40 Ralph’s Coffee locations worldwide and will add a new Polo Bar in London in 2028.
• RH has expanded into fine dining and hotels, and department stores like Nordstrom and Bloomingdale’s have added restaurants and bars to their layouts.

“If [consumers] are shopping at physical shops, often that’s because it’s a social event, they’re meeting up with friends. So, I really think that food and drink element is another really great way to draw people in,” said our analyst Carina Perkins on “Behind the Numbers.”

The bottom line: Experiential hospitality strengthens loyalty, differentiates physical retail, and drives measurable ROI. In an environment where younger consumers are cautious about big-ticket purchases but hungry for experiences, offering affordable luxuries could be a winning strategy.

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