#55: Lessons from Top Consumer Brands
Think both inside and outside the box
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A brand is a story. The best brands make you feel a connection through the story they tell.
In You Are What You Buy (Part II), we spoke on how what you buy says a lot about you. Most products are commoditized, so many brands sell roughly the same thing through differentiated marketing and storytelling. So, when we make a purchase, we signal support for one brand’s story and values over another’s.
But besides the story itself, a brand is also defined by its product innovation and operational excellence. Great brands get it all right. Let’s dive into a few examples where a consumer brand thought creatively to establish itself as a category leader.
Grocery stores are a tough business to run. Operating at low single-digit margins, you need tremendous sales volume to simply break even.
Some grocery stores have taken the boutique market approach, selling only locally sourced items and premium brands at steep prices. They have the opposite problem when compared to the chain supermarkets, having a higher margin but with lower unit volume. There are only so many $12 peanut butter jars you can sell when a $2.50 version exists at your local Trader Joe’s that is more or less the same thing.
And then there’s Erewhon, which found a way to achieve grocery store unicorn status with a high margin and high sales volume.
Erewhon benefits from the fast-growing wellness market as a tailwind, with the US health & wellness market expected to reach $2T by 2033. But what really sets them apart is the prestige and exclusivity they’ve cultivated. From the lighting to the curated assortment to the logo font, Erewhon makes you feel healthier and that you’re somewhere exclusive. The high prices create an air of prestige that signals only people of a certain status can shop there. Even if you don’t buy anything, you walk out feeling calmer.
They’ve built their premium brand image not only through their top-of-the-line produce and packaged goods, but also through their celebrity and brand partnerships. There was the viral Hailey Bieber smoothie that sold for $20, and plenty of other celebrities (like Sabrina Carpenter) have snagged a spot on Erewhon’s smoothie menu. To add to the allure, it was announced that Erewhon will open in Kith’s first members club located in the heart of West Village. Now, Kith isn’t the first premium brand Erewhon has struck a deal with; they partnered with Balenciaga on a clothing line.
At the end of the day, Erewhon is a grocery store that has most of what you need to stock your pantry. Yet, they found a way to embed their grocery store into content and culture. Erewhon operates their business like a luxury DTC (direct-to-consumer) brand would in the way of evoking exclusivity and health through their branding. Whether it’s a brand partnership or the next viral item on the shelf, Erewhon offers a masterclass in how to develop brand equity. They understand that people view their purchase habits as extensions of their identity and weave this aspirational persona into its own identity. It’s genuine innovation in the grocery store model.
Key lesson: Erewhon took a successful playbook from another industry and applied it to their own. Look at how other industries win and adapt their playbooks to your brand.
Acne is a major insecurity for teenagers and adults. Whenever I get a pimple, I scrub with Neutrogena gel, but it never disappears right away. All I can think is, “how can I hide this blemish on my face? I can’t be seen like this!”
Enter Starface. What looks like the sticker on a 3rd grader’s gold-star exam has become a viral and widely used acne solution for Gen Z and Gen Alpha. With over 3M followers and 42M likes on TikTok, Starface has solidified itself in the mainstream of the younger generation.
Starface is a clear example of innovating on form factor. Traditional acne solutions come in the form of gels, scrubs, or medication (anyone remember Accutane?). These topicals don’t solve the problem that everyone faces when they wake up in the morning and see a pimple in the bathroom mirror. Getting rid of pimples always takes too much time.
Starface turned pimple patches into a fashion statement. Their vibrant colors and playful shapes help people cover up pimples in style. Acne has always been something that people try to hide. With Starface stickers (hydrocolloid or salicylic acid), your pimple can go from an eyesore to an accessory, while its being treated with the necessary acne solution.
From a business model perspective, Starface is well positioned to leverage word of mouth and capitalize on network effects. The more people that wear Starface pimple patches, the more socially acceptable their product becomes. If a few kids in 10th grade math class start wearing Starface stickers, the whole class will be wearing them before long.
I should give credit to the Mighty Patch from Hero Cosmetics which was the first mainstream pimple patch. However, Mighty Patch lags because you can still see the neutral-colored patch on one’s skin. This suggests insecurity about acne. This subtle version may work better for professionals who don’t want a bright blue star on their face. The true innovation is Starface turning acne insecurities into confidence.
Key lesson: You don’t need to create an entirely new product category to succeed. Just create a better format of an existing product. Bonus points if you can turn someone’s insecurity into confidence.