Relevancy in Points of Differentiation

The Today Show ran a story yesterday highlighting Whole Foods and Coldwater Creek as retailers that have taken steps to differentiate their retail experiences by adding spa services to their stores in select markets. And for these retailers, it seems to make sense.

After watching the segment, I looked into the Whole Foods Spa and found that the services are offered at the grocer’s Preston Road store in Dallas, Texas; and that this location was chosen as the test-store for spa services. And, as I read this, I was reminded of the Wal-Mart store in Plano, Texas, which offers higher-end products and foods to better serve the Plano market.

Well, it turns out that the Whole Foods store in Dallas and the Wal-Mart store in Plano are in essentially the same market – they are less than ten miles from one another.

This is a great example of making points of differentiation meaningful to the markets served. Both Whole Foods and Wal-Mart understand this market’s specific needs and preferences, and each has taken steps to address them in crafting their in-store experiences. John Flemming, Executive Vice President and Chief Marketing Officer for Wal-Mart is quoted as saying "With the opening of this store, Wal-Mart is adopting an active approach to understanding and meeting customer needs, particularly those of the selective female shopper.” It’s this “selective female shopper” that Whole Foods also seems to be targeting with its spa services and free-concierge shoppers.

As differentiation gains traction in financial services, executives and marketers must remember that relevancy can be the difference between success and failure. It’s critical that differentiation strategies be rooted in a solid understanding of your target market’s needs and preferences, and your competition’s position, messages and points of differentiation.

It’s also important to point out that in this case, Whole Foods and Wal-Mart have recognized an opportunity within one market to enhance their traditional in-store experience. The retailers understand where to draw the line – and that the initiatives of offering spa services and higher-end products may be received well in this market, but probably won’t be in every other market they serve. Financial institutions with a larger footprint can do the same.

Whether it’s offering spa services or investment services, financial institutions pursuing a differentiation strategy must be relevant to their target market – and this starts with understanding the market you serve.