With massive expansion and too many brands, it was inevitable that coffee shops just couldn’t keep growing – there are only so many corner sites in a high street. Add to this McDonalds aim to get a big slice of the action, it’s not been a great time for all of them, especially Starbucks.
There’s something I have noticed about many coffee shops – they don’t smell of coffee. When I lived in West Hampstead there was a coffee shop by the station that pumped out that arresting aroma, it was impossible to pass by without wanting to go in. Smell is a powerful sense and is strongly linked with memories – I can smell it now. Linking smells to positive experiences can be a powerful marketing tool.
After much consultation, Starbucks are to getting back to basics and will start grinding coffee again in store to generate that powerful aroma. Gone will be that sanitized environment, in comes rich coffee aroma.
This is all part of CEO Howard Schultz’s “back to the future” strategy to revitalize the world’s largest chain of coffee shops – with 15,011 stores in 42 countries, more than 45 million customers around the world visit a Starbucks every week.
Schultz plans to offer the “freshest cup of coffee on the planet”. Last year, embarrassingly, McDonalds managed to beat Starbucks in a major consumer report and with other chains, including Dunkin Donuts, chasing the lucrative coffee market, it’s become a battleground that requires tough action.
Schultz intends to get back to basics and focus on the coffee with the introduction of premium blends. Meanwhile they plan to cull some stores in the US but expand stores internationally. Growing markets include India and Asia.
“The Third Place” was a genius positioning but times have moved on and there’s a need to redefine what the third place is. Many coffee shops are offering soft seating, wireless internet access and the internet café has sprung up all over the place. The integration of coffee shops into books shops was another clever move, but what will the coffee shop look like in another 5 years?
One area that has been significant in separating Starbucks from the crowd has been their ethics. They been well aware since 2000 that ethics is becoming a key element in consumer choice and have made the biggest moves forward of any chain. The phrase “people before profits” sits at the core of their ethos (few large organisations can claim that as an ethos). Their work to support coffee growers is impressive and they are now the world’s biggest buyer of Fairtrade coffee.
The chain has always been a great supporter of local communities and it’s books at Christmas project, part of the Starbucks Foundation, is part of a mission to improve young peoples’ lives by supporting literacy programs for children.
Despite the risk to business, they have championed smoking bans in most of their stores around the world.
Their Ethos water range funds clean water projects in under-developed areas and have raised over $4 to date.
Despite a highly impressive range of ethical initiatives, Starbucks still gets bashed by left wing greens who see them as a classic American brand that symbolizes globalization. This is the inevitable fate for any large and successful organisation. However, large world brands when they adopt ethical policies tend to make far more difference than small worthy individuals can.
Finally some trivia. The company is named in part after Starbuck, Captain Ahab's first mate in the book Moby Dick. It nearly got named Pee-quod. The logo is a "twin-tailed siren" . At one point they were opening a coffee shop every day.
CHRIS ARNOLD
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