Starbucks tries going local

One of the world's most famous brands is changing tack and opening some unbranded coffee shops...

by
Last Updated: 06 Nov 2012

When does a brand become too big? Starbucks may have been wrestling with that question in the last year, as sales plummeted. Now the coffee giant is apparently re-branding three stores in its hometown of Seattle, stripping off the Starbucks name and replacing it with something more in tune with local tastes. It’s also aiming for a more bohemian flavour, with punters able to buy alcohol, listen to music and poetry and (presumably) hang out in unnecessarily tight black clothing. So is this just sensible diversification? Or the first admission that the Starbucks brand is in need of re-invention?

It’s been a tough year for Starbucks, with sales well down in both of the last two quarters as cash-strapped customers cut back on the milky coffee. So although chairman Howard Schultz (who re-took the executive reins last year) has been trying to focus on the core business, he clearly feels a new approach is worth a try. Tim Pfeiffer, senior VP of Starbucks’ global design, told the Seattle Times that the re-branded stores would have more of a ‘community personality’: for instance, one will be called ‘15th Avenue Coffee and Tea’ (because it’s on 15th Avenue – creative whizz-kids, this lot).

Starbucks claims the concept is based on its original outlets of the 1970s. But the move is interesting because it’s essentially a reaction against the kind of bland, ubiquitous corporatism with which Starbucks has become synonymous to many people. It’s basically admitting that some customers are now put off by well-known popular brands, and are more inclined to favour smaller local ones instead. Since this sentiment is hardly unique to Seattle, it seems possible that if the concept works there, we might see it elsewhere too.

However, it won’t be straightforward. Presumably Starbucks hopes this concept will appeal to people who don’t like Starbucks – but these people are bound to be extremely suspicious about the coffee giant’s motives. The new stores have already been dubbed ‘Stealth Starbucks’ by critics, who just see it as an underhand way to make a quick buck from people who wouldn’t usually be seen dead in its outlets.

On the other hand, making a buck is what companies do. And you can hardly blame Starbucks for reacting to what consumers want. It’s had a tough year, and has clearly paid the price for expanding too fast. But analysts reckon Schultz’s overhaul is starting to have an effect, just as the coffee market seems to be picking up. Starbucks still has some committed fans, so there’s no need to throw out the model completely – but why shouldn’t it experiment around the edges?


In today's bulletin:

Rich kids get all the best jobs, says Government
Next and Morrisons cheer City with higher profits
Starbucks tries going local
3bn tax bill sends Porsche's VW bid into a spin
We're all not going on a summer holiday

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Subscribe

Get your essential reading delivered. Subscribe to Management Today