Recent developments with the natural and organic foods grocer Whole Foods Market (WFM) provide a powerful lesson for building and maintaining a program or service for dads.
Stick with me as I provide the details of this story.
WFM has been a darling of investors and the envy of the natural and organic foods industry for years. Unfortunately for the company, its employees, and investors, WFM has not done well recently.
Often referred to as “whole paycheck” for its expensive products, WFM’s stock price has declined nearly 46% since its all-time high in October 2013. Some experts expect its decline to continue as growth slows amid competition from smaller, more nimble competitors, like Trader Joe’s and Sprouts, increased natural and organic food offerings by traditional grocers, like Safeway and Kroger’s, and online food ordering from the likes of Amazon. (Just last week, Amazon announced it will acquire Whole Foods.)
In response, WFM is testing a concept store in three cities with plans to roll out more soon. Called 365 by Whole Foods, it:
- Carries mostly WFM’s 365 store brand, a less expensive alternative to the myriad other natural and organic foods from other companies that it carries in a typical WFM. As a result, it has 7,000 products (SKUs) compared to 25,000 products in a WFM.
- Has a much smaller footprint at 25-30,000 square feet versus the 40-50,000 square feet of a typical WFM.
- Features that target Millenials, such as a large section of prepared meals, a juice bar, a walk-up-to-order restaurant, and a coffee and craft beer bar. It also includes the kind of rewards plan Millenials have come to expect. The plan provides discounts on many of its 365 products as a reward for frequent shopping.
I live in the Austin, Texas area where WFM was founded in the 1980s and has an ardent following. I’ve shopped at WFM on and off through the years. (When my daughters were very young, my wife and I took them to one of the original stores every Saturday morning for blueberry pancakes.) One of the 365 test stores is only a 10-minute drive from my home, so I had to check it out.
What a different, better experience than shopping in a WFM! I loved the smaller, wide-open floor concept. I also appreciated that it has shorter shelves. (I’m 5’7”, so I liked being able to easily reach the top of the shelves.) I was able to find what I needed faster. As a result, I arrived at checkout in record time. And I found a few prepared foods along the way that I had never seen in a WFM—another plus as I can tire of leftovers, and I don’t like to go out for lunch.
But the best part? I spent less than in a WFM! Even though I often purchase the store brand in some categories when I shop at a WFM, I had fewer choices of brands in some categories while in others I had only a choice of 365. That meant I had even more of an incentive or was forced to buy the less expensive brand. And, yet, I didn’t have to sacrifice quality.
As a developer of programs, products, and services, I left the store wondering why WFM didn’t test this store concept sooner. The irony is that when I moved to Austin in the early 1990s, the typical WFM was even smaller than this concept store. While WFM didn’t introduce their own store brand until many years later, they carried many fewer products. But as WFM grew, so did the size and complexity of a WFM and its offerings.
To be fair, it’s hard to argue with the success of WFM. After all, they came to dominate the natural and organic foods market. Nevertheless, WFM could have stayed ahead of changes in the industry had they done three things better:
- Focused on the most essential features valued by customers, such as quality natural and organic foods at the lowest possible cost and convenience (e.g. smaller stores make for a faster shopping experience).
- Avoided adding too many products, thus keeping the choices less complex.
- Changed more quickly to broaden their customer base in the face of increased competition as the market for natural and organic foods also broadened (e.g. across incomes and lifestyles).
Creating and maintaining an effective program or service for dads is not unlike creating and maintaining a successful business in today’s world. It requires a four-step approach that allows you to rapidly determine what’s valued by customers and the will to quickly change if necessary. It involves the following steps that forms a feedback loop:
- Build an offering that includes only the essential features valued by customers.
- Measure whether customers do, in fact, value the offering overall and its specific features.
- Learn from what you measure.
- Based on what you learn, change the offering if necessary.
When you create a program or service for dads:
- Build the program or service with the most basic features that you think or know are valued by the dads you want to serve. Avoid complexity. Don’t add features that are probably not essential. If you already have a program or service for dads, take a step back and determine whether you can strip away any features dads don’t value. Don’t worry about being perfect. Offer the program or service in its basic form and let the dads’ reactions dictate whether you should add or strip away features.
- Measure dads’ reactions to determine what they value. (If dads don’t take advantage of what you offer, that’s a good indication you need to go back to the drawing board.) Just because dads take advantage of the offering, don’t assume they value it overall or each of its features. Talk with or survey them to get their overall reaction to the program or service and each of its features.
- Learn from what you measure.
- Change the features of the product or service if necessary.
Unless you get everything right on the first try, which is unlikely, start the process over again. Build the new/revised offering, measure dads’ reactions, and learn from what you measure. Change the offering if necessary. Go through the process as many times as you need to create a program or service valued by dads.
To maintain your success:
- Keep the program or service as simple as possible. Avoid complexity.
- Continue to measure dads’ reactions to the program or service.
- If you want to add a feature(s) that you think dads will value, or they suggest you add, go ahead. But by all means integrate that feature(s) into your measurement of dads’ reactions. Don’t assume they will value a new feature(s) when they actually have the opportunity to use it!
How do you determine what’s valued by dads in a program or service?
Do you use a systematic approach to create and maintain an effective program or service for dads?
