Successful Strategies from Brands That Are Growing Into New Markets, Part II: How to Pick the Right Time to Expand
How do you expand into a new market without alienating the one at home? And when is a market “ready” for an injection of Northwest flavor?
In today’s world, and especially in the Northwest, consumers are more often looking beyond chain restaurants and big box stores and instead turning to brands that feel local, unique, authentic—companies that for cultural, regional, or environmental reasons seem like they belong here (wherever “here” is).
In response, we’re seeing a trend where brands grow more slowly, deliberately, carefully researching and testing each market before making their first forays.
There’s no perfect calculus to determine exactly if and how a new location will succeed.
And while there’s no prevailing strategy for determining the perfect time to expand into a new market, we’ve observed several trends among modern PacNW brands that make timing an expansion a lot less risky.
Trend 1: Ask the fans.
A couple examples of where this has worked.
First: Pagliacci Pizza, which is a brand in Seattle that’s been around for 35 years. In that time they’ve opened 24 locations —that’s about 0.7 new restaurants per year. Granted, Pagliacci Pizza can’t compete with global conglomerates like Pizza Hut, Domino’s, or even Papa Murphy’s in terms of numbers, but the Seattle-based fast-food chain is not—unlike our friend Walter White—in the empire business.
Pagliacci maintains a close relationship with its fans on social media, they had the opportunity to solicit direct feedback about new locations and remodels. As a result, the brand seems to have been able to keep up a steady trend of growth, with no signs of stopping or slowing down.
Second: Voodoo Donut, who we all know and love. As they contemplated expansion they used local PR and word-of-mouth to determine a new location’s viability—1,250 miles away in Denver, Colorado.
Buzz is at the core of their growth strategy. Tourists flock to its downtown location, forming long lines at all hours of the day and night, to sample our city’s well-kept weirdness. These visitors then fly back home, telling everyone about the quirky donut shop they went to in Portland, sometimes even bringing back samples.
(If you’ve ever flown out of the PDX airport, you’ve seen them—the pink boxes gingerly placed on the baggage conveyor belt … the knowing looks between TSA agents, who have actually asked me to share my donuts with them.)
Over the years, Voodoo has developed into an almost-underground phenomenon. It’s one of those local spots that has to be brought up in every conversation about Portland. And unsurprisingly, more and more people want to try it.
So by the time Voodoo decided to open a Denver location, an interested customer base had already established itself. Portland expats, friends and family members ensure that—most likely—Denver’s Voodoo location will have a line out the door when it opens (any day now).
Trend 2: Become the Poster Child for Your Product Category
Stumptown Coffee’s ascension to nearly national brand has been subtler, and has everything to do with the reputation of its city. Unlike Voodoo, which capitalizes on Portland’s perceived slacker/outsider culture, Stumptown embodies the region’s hand-crafted, hipster vibe. It’s the kind of coffee you drink cold and black because you actually want to taste the coffee’s flavor, because it was brewed by people who care about and understand coffee more than you ever will, because you want to show the people around you that you know what good coffee is even if you can’t really tell why it’s good.
My take: Stumptown is fortunate (read: smart) enough to benefit from the region’s reputation, and has used that association to propel itself into other markets and bring Northwest uber-coffee to the masses who want to be part of that tribe or to be perceived as knowing what “good” coffee is.
Talking about this topic the other day, Andy Askren mentioned to me that he was recently flying through Chicago, when a friend pointed out a Stumptown location in the O’Hare Airport. Chicago isn’t a city known for its coffee, but it’s filling the gap with Stumptown. Thanks to its success locally, “Portland coffee” and Stumptown Coffee are now interchangeable for those outside the region, and Stumptown’s path to domination—paved by Portland cred—is clear.
Trend 3: Test the Waters
These days, brands have the option of opening up pilot shops or pop-up shops to experiment in new neighborhoods. Beyond getting a sense for the market’s response to their brand, these tests also allow brands to begin generating buzz, and build a fan base ahead of an actual full-scale launch.
What do you think—is there a local brand you’d like to see expand outside of Portland in the near future? What’s the secret to a successful expansion outside your home territory? Share your thoughts with us in the comments.
Come back soon for Part III in our series: How to Build Fans in a New Market.