How Your Brand Can Become a ‘Third Place’
If you want to eat a Sweetgreen salad for lunch, you have to get
up and move.
Founded by three Georgetown students who sought to solve their
problem of being unable to find a quick spot for a meal that also emphasized
health, local sourcing and sustainability, the chain doesn’t do delivery.
“As we establish ourselves, it’s so important that we get
someone to walk through the door because the in-store experience is so much of
who we are,” said Farryn Weiner, Sweetgreen’s vice president for marketing and
brand innovation. “When you walk into Sweetgreen at 12:30 p.m. in New York …
Jay-Z is playing, a team member is waiting for you at the line and our local
list shows where your food comes from.”
As the retail landscape becomes more fragmented and retaining
customer loyalty becomes an increasingly slippery proposition, brands are
looking to not just sell a product or service, but also to build a community
among customers. To accomplish that, companies are changing their strategies
for scouting new store locations, modifying store design and altering their
relationships with customers.
At the recent Retail West conference held at Wharton’s San
Francisco campus, representatives from Sweetgreen and Lululemon described their
efforts to make their stores into a “third place” for customers, after home and
work — a destination not just to pick up a wrench or some new yoga pants, but
also a spot to socialize, network and learn something new. The conference was
organized by Knowledge@Wharton and Momentum Event Group.
For Sweetgreen, which was founded in 2007 and now has 57 stores
in eight cities, the challenge is to scale the strong community ties that the
chain has built in the Washington, D.C., area, where it was founded. The brand
works with local farmers in each of the markets with stores, having food
shipped directly to the restaurants, where it is chopped or cooked on-site.
Sweetgreen doesn’t sell soda and removed frozen yogurt and Sriracha from its
menu because the ingredients had too much sugar. It nixed bacon because it
wasn’t an item that
could be made from scratch.
“Our founders were the customers and they spent the first few
years of the business really being on the ground in the stores, listening to
consumers,” Weiner said. “We’re rapidly growing, but we want to hold onto our
roots and stay true to ourselves and our core values as we scale.”
Sweetgreen recently launched an app that includes online
ordering, but the goal was to “use technology to enhance the [in-store]
experience, not replace it,” Weiner said.
As Sweetgreen has expanded, the company has chosen locations
that contain a high volume of the type of consumer who shares the brand’s
psychographic profile – with a lifestyle and ethos that place value on ideas
like building healthier communities and locally sourced food. But each new
location is also personalized for the area where it’s located.
“We have flexible formats for the stores – we can adapt them
based on the community we’re trying to engage with,” Weiner said. “Some stores
have outdoor seating, some are catered to families; some are built for the
digital customer.”
She added that over time, Sweetgreen has discovered the critical
aspects of opening a new store, areas where the brand can’t skimp on the
details. One example: Having local art on the walls. “It sounds super small,
but it makes such an impact on our consumer,” Weiner said.
‘Table Stakes’
The launch of any Lululemon store begins with community,
according to Mark Baxendale, senior vice president for planning and allocation
for the Vancouver-based athletic apparel brand, which has a market
capitalization of about $7.7 billion.
“As we look at new markets, we build community first; we don’t
launch a store and then market,” he said. “People’s sweaty pursuits are coming
in different forms, and we are trying to connect with all of those different
communities in [geographic] areas where we see potential. Twelve to 18 months
before we open a store, we open a showroom that creates a base for our
community support leaders to get out and meet with local leaders. If that goes
well, we look at opening a store.”
Once a store opens, the company creates a community of what it
calls “ambassadors” – three to five health and fitness professionals who
teach classes in-store. Through those ambassadors, “we gain connections to
their community,” Baxendale said. He noted that this approach has led to
top-performing stores in markets that “wouldn’t be in the top 10” for most
retailers.
The brand has also tried to choose physical store spaces with
its community-building goals in mind. For example, Lululemon’s Flatiron store
in New York also includes a 3,500 square-foot space that is open to community
workshops and events. “We’ve hosted speeches, readings, film screenings,”
Baxendale noted.
But Lululemon has also taken its share of flak for product
quality issues, including leggings that were
found to be see-through, and controversial statements by founder Chip
Wilson, who said the brand won’t
make clothes for plus-size women. The retailer made
headlines in October after it released a luxury collection that included running
tights that cost almost $300. In June, Wilson sent an
open letter saying the brand has “lost its way” and is losing market share to
competitors like Nike and Under Armour.
One of the challenges for Lululemon is recreating online, or on
mobile, the relationship it has with customers in its brick-and-mortar
locations. “We’re playing catch up in the digital space and trying to move from
having only a transactional relationship with the guests,” Baxendale noted. “In
the world of tomorrow, it’s going to be table stakes that you have a
relationship with your guest.”
Can’t-miss Moments
Sweetgreen offers online ordering through its mobile app and
over 30% of its transactions now come in that way. Indeed, a handful of Sweetgreen
locations even stopped
accepting cash earlier this year. The app has offered the opportunity for
the chain to collect data about its customers, but it can’t take the place of
in-person interaction.
Customers who feel connected to the community the brand has
built tend to visit more than those who don’t, so it’s important that each
store tell the Sweetgreen story in a way that feels natural, Weiner noted. “It
starts with food…. We believe we can teach people about the food they eat and
where it comes from.”
One of the biggest impediments to doing that was the fast-casual
assembly-line style of the restaurants. So Sweetgreen changed its model so that
the employee who greets each customer when he or she comes in remains with them
until they leave. “We’re seeing more rapid movement down the line and it gives
employees a moment to easily connect with somebody,” Weiner noted. “It helps to
increase relationships with team members and customers.”
But that model creates its own challenges, particularly in
recruiting, training and hiring. “In today’s retail environment, not only is an
employee charged with quickly and accurately serving a product … but they have
to be able to speak about the food, our sourcing and connect with you,” the
customer, Weiner said.
The Dangers of Expansion Mode
With both chains still in expansion mode, both have had to
figure out how to create intimacy at scale.
Sweetgreen learned how difficult this can be early on when the
company opened its second location near Dupont Circle in Washington. They
thought it would be slam dunk, but the store wasn’t doing well – it was on the
“wrong” side of the street for garnering foot traffic, among other issues.
The owners decided to build buzz by holding a party – which
turned into a weekly event that morphed into a block party, which was later
expanded into an annual music festival held in the D.C. area. “If you’re part
of Sweetgreen in D.C. you know our story, maybe you’ve been to the festival,”
Weiner said. Now the company is working to create the same sort of excitement
around the brand in other cities, for customers who likely haven’t heard the
Sweetgreen story.
The chain has also faced food safety issues. In September, food
safety concerns led the company to take the cautionary measure of discontinuing
the use of reusable
salad bowls aka “salad blasters,” which it sold for $6 and encouraged
customers to use each time they came to the restaurant. Two Boston locations
were temporarily
closed in recent months after inspectors found safety violations.
Baxendale noted that Lululemon, a public company, has an
obligation to its shareholders to show growth. Recently, analysts have cut the
price target for Lululemon shares on the expectation of lower earnings
due to a high volume of promotional discounts.
“But when we push that growth too quickly, that’s where we make
mistakes and we have made mistakes,” he said. “When we’re true to ourselves and
act with integrity and authenticity, we’re successful. Where we made mistakes
was thinking a location was a slam-dunk and we didn’t take the time to invest
in the community as we should have.”
http://knowledge.wharton.upenn.edu/article/can-brand-become-third-place/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2016-11-22
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