Starbucks, formerly the shining star of retail development, is trying a new program to reclaim mind share of their millions of coffee customers, many of which were wooed away by cheap cups of McCafe. Starbucks plans to remind customers that there’s no substitute for quality.
The strategy that made Starbucks famous was a focus on the retail environment. Rather than selling coffee in the traditional wam-bam-thank-you-ma’am fashion of most coffee shops, Starbucks created a retail environment where customers felt comfortable sitting and enjoying a cup of joe, or latte. Eventually the stores become a destination for meeting friends and kicking back over coffee. Spend more time, drink more coffee. Howard Schultz, founder of Starbucks, says he was inspired by cafes in Italy that seemed to be more of a communal center than a retail store. Genius!
But in comes the recession and down goes the king. Starbucks has suffered tremendously due to the economic downturn and shopper retreat. Last week, they announced plans to introduce a new global store design strategy in an effort to get back to the basic strategy of infusing the store environment with the customer’s lifestyle. The new design strategy involves several components including redesigning and building stores to reflect the local market and emphasizing sustainability in store design. For instance, the redesign of their Pike Street location (not far from the original Seattle location) includes wood cabinets made of fallen Seattle trees, a community table re-purposed from a local restaurant and preserved columns, floors and ceiling.
There are some pros to Starbucks’ approach. They are getting back to the thing that defined the brand — creating a unique experience. Allowing some diversity in the store design, tailoring each shop to the local flavor, could generate interest in visiting different Starbucks locations. In addition to creating goodwill, the sustainability program will save the company money over time (although the initial outlay could be hefty). However, Starbucks has an uphill battle on pricing. They are now competing with McDonald’s, Dunkin’ Donuts and even Wendy’s in the specialty coffee arena and some say that the product is comparable. If you read through comments on the Seattle Post’s website, customers don’t appear to be impressed with the plan. At this point price is of much greater concern to the average buyer. We’ll see how they fair.
ABC News ran an interesting story on the coffee wars. Click below for video.
