Healthcare N Illinois

Hospital or mini-mall? The growing importance of retail space in hospital settings

  

No one wants to spend time in a hospital. But if you do, it’s nice if there’s a coffee shop or a restaurant – not just a cafeteria – inside the building, a place to take a break when visiting patients. And what about the nurses, doctors, administrators and orderlies working in these buildings? Wouldn’t they like the option to take their on-site meals at a specialty restaurant instead of a standard cafeteria?

It would seem that on-site retail would be a boon to hospitals and health systems. But how many hospitals actually offer retail offerings inside their buildings, anything from those coffee shops and restaurants to gift shops and bakeries?

Not as many as you’d think, according to a new report from Colliers International.

Colliers recently released a report on the retail offerings available at hospitals across the country. The report found that most hospitals offer relatively sparse retail shops. But the report said that this is changing, as more health systems are recognizing the benefits of adding non-medical retail to their public spaces.

“The majority of hospitals are tremendously underserved when it comes to retail infrastructure,” Colliers quotes retail specialist Kathy Lin, managing partner of KHL Retail, LLC.

Why should hospitals offfer retail experiences? For one thing, they have a captive audience. As Colliers reports, many hospital workers are unable to leave the facility during their shifts. And visitors often want to stay nearby the patients they are there to see.

Hospitals, of course, do have to be strategic when it comes to opening retail locations. They need to be careful, especially, when it comes to the prices charged by their on-site retailers. Medical systems are often serving hospital workers who have modest incomes. They won’t dine at an on-site restaurant if the prices are too high.

Hospitals also have to remember their commitment to health. When opening restaurants on campus, they need to focus on healthy offerings. A typical fast-food retailer won’t work in a healthcare setting.

Colliers says that well-known chains work better at hospitals. People are usually under stress when visiting a hospital. Familiar brands offer a bit of normalcy and comfort. That’s why national chains such as Starbucks or Au Bon Pain bakery is often a good fit.

Health system operators today generally take one of two approaches to food retail, Colliers reported. They can either go with a range of individual food retailers or work with a one-stop-shop provider.

Sodexo is one of the leaders in the one-stop-shop approach. Sodexo offers a retail dining service called “Fresh Inspirations” that you might find at your local hospital.

When it comes to individual operators, hospital food service is dominated by three companies, according to Colliers: Starbucks, Au Bon Pain and Panera Bread. Interestingly, almost 30 percent of Au Bon Pain’s cafes across the United States are located in hospitals.

Gift shops have long been popular in hospitals. The leader in this sector is Lori’s Gifts, based in Carollton, Texas. The company operates 345 hospital locations across the United States.

Walgreens and CVS stores are also entering the hospital market in growing numbers. These chains typically open smaller stores inside medical settings – typically around 750 square feet – and focus mostly on prescription services and over-the-counter medications.

The Colliers report points to Northwestern Memorial Hospital in Chicago as a good example of a medical facility with plenty of busy retail offerings.

“The retail real estate strategy is centered on the needs of three key customrs: patients and visitors, hospital employees and the local neighobrhood,” Colliers quotes Gina Weldy, vice president of real estate with Northwestern Memorial HealthCare.

The hospital campus includes more than 20 food-service retailers such as Corner Bakery, Subway, Saigon Sisters and Stan’s Donuts. The hospital has its own flagship restaurant, Beatrix, which covers 10,500 square feet and is part of the Lettuce Entertain You nationwide chain.