Supreme, Wegmans and the benefits of resisting greed for your own good
By: Greg Dickens
Tags: Finance, Marketing, Business, Startup, Entrepreneurship

At first glance they have nothing in common: a streetwear brand worn by hypebeasts around the world and a regional supermarket that started in Upstate New York.

But Supreme and Wegmans both inspire fanatical loyalty. And the way they do this is not complicated — they share value.

Supreme shares value with their customers, while Wegmans shares value with its employees. And by doing this, both have created businesses that are hugely successful and have kept up impressive growth without watering down their brands.

But why is it that others are not able to take inspiration from these examples?

One word: greed.

Companies agonize over optimizing pricing to get the absolute maximum that customers are willing to pay for a product at a given time. Think about airlines that are constantly changing prices to get the maximum from each individual passenger depending on how desperate they are to get somewhere.

While at the same time, when it comes to employees, most companies are trying to optimize for something different. They want to pay as little as possible while still being competitive enough in the marketplace that they won’t lose all of their employees.

But here’s the difference:

Supreme could raise their prices, but they don’t

Wegmans doesn’t have to offer such a good salary and benefits package to be “on market” for a supermarket, but they do it anyway

If you are building a business you would be wise to keep their examples in mind and resist greed for your own good.

Supreme “drops” leave value for their customers (and the resellers)

For those who are not familiar with the brand Supreme, it is an apparel company that sells in small batches of very limited editions called “drops” that create massive lines at their stores. These drops operate on a first-come, first-served basis and all of the most in-demand products are quick to sell out.

This has created a whole second-hand ecosystem of re-sellers who make a business out of waiting in these lines and getting the best stuff. They can then immediately re-sell the items at markups sometimes greater than 1000%.

Yes, that is not a typo — some items really do resell for 1000%.

For somebody who’s not reselling and just goes to the drops to shop for themselves, they feel like they got a great deal and it’s true: Supreme sold them something that is now worth multiples of what they just paid! And since they are so excited about this great deal, they will share their experience on social media and generate even more hype for the next drop.

Now here’s where the greed kicks in for any normal company. Most executives would look at that secondary market and say:

That 1000% markup is money that we are leaving on the table. We should raise our prices and capture that revenue for ourselves!

But you know what happens when you take that value from the resellers and put it in your own pocket?

Your products no longer sell-out immediately

You lose the long lines at your stores for the drops that create exclusivity

And you become just any other brand

Supreme shares a lot of value with customers, so they feel like they’re always getting a good deal. And this in turn creates more demand and a bigger reseller market with higher second-hand prices.

As long as this cycle is feeding itself Supreme knows they will always have a line outside their stores.

Of course there are now other brands like H&M trying to copy the drop strategy, but most won’t be successful because they just won’t be willing to give away so much value.

Or in the words of one Supreme reseller:

“If you are flash-dropping crap, it’s still crap.”

The key is not really the drop, it’s about sharing value.

Wegmans (actually) values its employees

Wegmans doesn’t have the global reach that Supreme does, but their customers are just as fanatically loyal.

In fact, Business Insider just reported how Wegmans is America’s favorite grocery store and that thousands of people call them every year begging them to open a store in their area.

And when asked about the secret to their success, Wegmans has a simple response that they gave in this Forbes article:

It is our employees, and the incredible service they provide our customers, that set us apart. We hire the best, and we invest in training and development,

There are no shortage of companies out there who talk about putting employees first because their employees then take good care of customers. But usually this is nothing more than talk while their behavior demonstrates something very different.

But for Wegmans, investing in their people is actually a cornerstone of their strategy and pays off in loyalty from employees and in turn, loyalty from customers.

In the same Forbes article, you can see just some of the tangible ways that they invest in people including structured development programs and scholarships that help people go from a part-time cashier in high school to a senior manager with college paid for along the way by Wegmans.

Again, it’s easy to see how other retailers will envy the success of Wegmans. But most will never be able to replicate it, because they just aren’t willing to share as much value with their employees.

It’s not a zero-sum game

If there is one thing to learn from Supreme and from Wegmans it’s that running a business is not a zero-sum game.

If your prices are low, you are giving value to your customers that will pay you back in other ways.

And if you are paying your employees above market rates they will pay you back with loyalty and great service.

Often when I’m looking at pricing with the startups that I mentor, we will do lots of analysis and try to optimize the best that we can.

This is still a worthwhile exercise, but always keep this in mind: Leaving some value on the table can be a good thing.

This story is published in The Startup, Medium’s largest entrepreneurship publication followed by +442,678 people.

Subscribe to receive our top stories here.