What a sandwich shop is teaching us about being agile
Monday, 3 Jul 2017
Pret’s veggie “feature” development illustrates some key concepts of agile product management. It also demonstrates the importance of making small investments early on in the development phase in order to test an idea. Though the actual product here is not a piece of software (but sandwiches and salads), Pret’s story on how they turned their veggie pop up into a growth generating permanent feature illustrates the importance of (calculated) risk taking, investing early, experimentation and iterative design.
Basware Product Management
Pret is a British sandwich shop with international outlets in the US, Asia, France and the UAE. Announcing their 2016 annual results, y-o-y sales increased by 15% to £776m. Pret attributes their growth partly to their increasing range of vegetarian and vegan options.
In 2016, responding to a customer poll about how Pret can meet the increasing demand for vegetarian dishes, it opened its first shop in London, serving only vegetarian sandwiches and salads. Though the veggie store “only” came out a second choice with customers (44%), it was enticing enough for Pret to test this idea. What was initially thought as a four-week tenure, became a permanent feature due to its success with customers. (And a second veggie only shop followed suit…)
Some key takeaways from Pret’s agile product journey:
- Responding to market trends: the brand ran a customer survey in 2015 and asked customers what they wanted: Pret has seen an increased interest in healthy eating in the market. Internal sales figures were also echoing this trend.
- Using customer insight to shape business strategy: Do people want a Pret that serves only non-meat options? (Shall Pret jump on the veggie bandwagon?) 44% of all respondents (~10,000) said yes. The brand took the results on board which also demonstrated:
- Active listening: Pret showed that they truly cared for customer feedback by turning one of their stores totally veggie.
- Calculated risk-taking: According to Clive Schlee, CEO: “We predicted our Veggie Pret shop would see sales drop by up to 30% and the project was expected to be an investment (i.e. a loss maker).” (But as it turns out, sales increased by 70% compared to the previous year.)
- Investing early: Their veggie store was something like a MVP. It was a pop up and only intended to open for a month.
- Experimentation: Pret also used their pop-up as a “playground” by introducing new recipes to customers and asking which ones they’d like to see “featured” permanently instore.
- Iterative design: Pret decided to extend the business operating for the entirety of the summer based on positive customer response. It was also to test whether demand would remain strong beyond those initial four weeks.
- What was deemed a successful implementation, led to Pret’s MVP pop-up become a permanent feature. This decision has attributed to Pret’s growth in earnings.
- Some other benefits of investing early and taking a risk: as the brand “sourced” ideas from customers during the MVP phase, new products (sandwiches and salad) were developed as a result. This has now allowed the brand to expand their offerings to install green “veggie only” fridges in their shops (Does this make vegetarian food more attractive?). The veggie fridge idea was what originally came out on top with the customer poll two years ago…
- Back to the iterative journey: veggie fridges will stay for the summer to see how customers respond…
Pret made a call when it decided to go with the veggie store “implementation” first instead of the “veggie fridge only” option. It was willing to make some (assumingly calculated) losses in order to test out ideas and concepts with their customers. As the brand’s CEO states “We could hold all the focus groups we like but there’s really only one way to find out…” Businesses should not be afraid to make some early investments in order to test out ideas and concepts; sometimes returns may not be in financial gains but insights, new ideas, customer interactions hold their own value. At the same time, neither should a business be afraid to pull the plug on something that doesn’t work. It is not so much that abandoning an idea and resulting losses (financial and non-financial) that is damaging to a company; it is more about at what point this happens.
Since May this year our Basware Marketplace Product team has been introducing “work-in-progress” features to the Preproduction environment. We actively encourage our customers to explore and play around with new features or changes to existing ones and feedback to us. With fortnightly release cycles, we can incorporate their responses early on in the development process and make them part of our iterative journey.