Secret Starbucks

For years, as its stores spread like kudzu across the country, Starbucks was accused of driving neighborhood coffee shops out of business. In most cases, it seems to have done exactly the opposite. In recent times, the Seattle-based company is in retreat, having closed hundreds of stores and laid off thousands of employees. But now it’s making a crafty move on its community competitors, opening new locations in Seattle that look, feel, and behave like local mom-and-pop cafes, with the Starbucks logo nowhere in sight. If these prototype “stealth Starbucks” succeed in Seattle, you may well see (or rather, not see) one soon in your city as well. [%comments]


Andres Ferraro

So instead of working on their image, and creating sub-brands, they're "dumping it and duping us". Nice. Popular knowledge of this tactic seems likely to backfire very-very badly. These (the backlash) are BASIC lessons of marketing - and Starbucks as a corporation is no neophyte, so this seems something more darkly shrewd than slightly harmless.

Lee

Could there be a direct correlation between caffeine consumption and hyperactive mentality we have right now? It seems like everyone from soccer moms to internet junkies are all so wired up that even daily activities need to be done so fast or anger flares up even at the instance of slight delays. I hope some people switch to non-caffeine and be mellow.

Robot Mistake

While the stories point out a decidedly different answer to what Starbucks is doing (basically, why not be Coke and Pepsi).

Could this also be a result of people traveling less. Starbucks/ McDonalds are always oasis of the traveler where a consistant well known product will be served.

It could be people are less interested in finding a product they know while out of thier home area and more focused on people finding the things that make thier own region special.

I think Panera/ Atlanta bread company does the same thing.

AC

This is a brilliant move towards exposing anti-corporation hypocrisy, showing that their hatred of corporations is based on style, not substance.

Grant

@Lee (#2) - Are you serious? Give me a break...

Kyle Robinson

The first of these stores was opened only a few blocks from me. I would like to point out that "Inspired by Starbucks" is still on its front door and on the wall behind the counter so it's not a complete avoidance of their brand. Also, there is an actual Starbucks one block away inside the grocery store. Also is the fact that you can't hardly order any of the typical drinks you might purchase at a regular Starbucks. For example, their focus is on french press coffee and loose leaf teas, and the only flavor they offer if you still want a latte is vanilla.

With all of this in mind, it's not so much "stealth Starbucks" as it is an attempt to branch into a new brand.

blue92

"This is a brilliant move towards exposing anti-corporation hypocrisy..."

Although I'm sure some corporate bashing is hypocrisy, it's sometimes difficult to tell how much.

The "sins" of corporations are much more visible and persistent than those of your neighborhood corner store. XYZ Local Sporting Goods buying unknowingly from sweat shops via distributors is at least conceptually different from Nike setting up their factories in China... though the effect is probably not too dissimilar in the end analysis.

Smaller businesses may not be any less guilty in sum, but just as they consolidate profits, conglomerated operations more efficiently accumulate collective iniquities that had previously been spread amongst many disparate organizations.

With power comes responsibility... and probably some sort of spandex costume.

David Chowes, New York City

There is a significant difference between a style and a fashion -- though some belive them to be synonomous. Coffee shops have lasted in this country forever. So, they go under the rubric of style.

However, Starbucks is a relatively new phenomenon. I love the coffee there. But, it gained a status and price way beyond the quality of the product. This made it ripe to be driven by status seekers and, therefore, peer pressure.

So people who couldn't in fact discern the difference between instant, freeze-dried and (I believe) the superior Starbucks' products went there to be up with the latest fashion. And, the quite high prices charged helped the chain to spread even more rapidly. This generated even more status-- not to mention increased revenues.

But, it must be added that by definition, fashions come and go... Styles may change -- but, tend to last over a long period of time.

I will add that I believe that their plan to convert some of the branded stores to 'coffee shops' has little chance of being effective.

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Mike

This is nothing new. For years Starbucks has been tried to branch out. In SF they owned a store called Circadia, and in Palo Alto another store on University Ave that has since closed.

Kyerra Dorsey

Starbucks, of course, is a brand. And when you have a brand, you do whatever possible in order to sell it. Starbucks has that "special" appeal, and going to Starbucks becomes more than just grabbing a cup of coffee to go. Unfortunately, I see people who use Starbucks as a way to exemplify who they are as a person, in which that starbucks cup becomes just another accessory to go along with a Coach handbag.

In the past few years, have seen and experienced neighborhood coffee shops (with better coffee than Starbucks) go out of business. I have also seen Starbucks that were too close in proximity go out of business as well. These questions come to my mind when I think of Starbucks:
Will Starbucks always be around? Or is it just another fad in today's society.....?
And what will be the next coffee that will take our society by storm...?

di

It sounds like Starbucks has realized that for many of us, they are not a destination. They are a pit stop because they are handy, consistent, and have clean bathrooms. Notice that their main competition these days is not the mom and pop coffee shop but McDonalds.

Ms

The only reason I think this stealth Starbucks will survive --It sells beer/wine !! The markup is huge and will probably be the major source of profit.

Jan

Starbucks is just handy if I'm in a rush. But it's not cheap, the coffee is horrible and the food not particularly good.
They made it big in America and Asia because most people there don't know what good coffee is. Starbucks coffee to me is bad coffee.
I suspect they're going stealth now because people now know their offerings are not worth their hard earned cash. That and it's no longer a 'cool' place to go to. There are coffee franchises popping up everywhere, most with better coffee (not the best, just better). People are going back to Mom and Pop shops or to new tea places (potentially the next Starbucks line?). Starbucks is no longer unique. Their now and have been a long time just part of the pack (I would never consider them a market leader).
That is the problem. Starbucks just don't excite the customers anymore.

Going stealth will not solve their problems. If anything, it's more reason for their franchisee to sell up. They can start their own coffee shop. No need to pay for a stealth brand when you can build your own.
Starbucks means terrible Miscela, bad Macinacaffe, laughable Macchina and no Mano; the most important part of good coffee.

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Meagan B Call

I don't know why everyone is so down on Starbucks. It's not only that they've created a coffee culture where local stores CAN compete (thank you Freakinomics for pointing this out), they were also one of the first corporations to incorporate fair trade (even if an illusion, it set a high bar), they have a kind of Oprah book thing going, and they created a whole new job type for college aged people to complain about. They certainly haven't done everything right, but it's more like we're punishing them for success than their faults. If the prices are ridiculous (yes), don't buy coffee there, but don't grudge them the ability to get other people to drink it.

Also, in Seattle they aren't "trying" to look local, they are local. Big might keep them from claiming mom and pop, but it shouldn't keep Seattle from claiming them.

Eric M. Jones

Perhaps Starbucks has expanded its business to the market-saturation limit, where no more growth of the business is possible. So to keep growing and making their shareholders happy, they have to do something else.

When the economy was booming, most big companies used to go and buy another business that they knew absolutely nothing about running, (called diversification) and as a result, wreck both companies. Today the problem is different-- the economy is so bad that retailers are competing with the neighborhood mom-and-pop stores to get the last crumbs from the profit table.

When I become an economist in my next life, I am going to figure out a practicable business model that allows the building of a healthy thriving enterprise, running it, and staying put.

---I, for one, welcome our Starbucks Overlords.

econobiker

Anyone remember when coffee was only sold from either a Dunkin Donuts or 7-11 in styrofoam cups by scuzzy-looking guys named Eddie or Frank?

None of this high-falutin' classy paper cups and destination stuff. You got your coffee, cigarettes, and went on.

Rebelle

My hometown of Portland, Oregon, was one of the first major cities to see explosive Starbucks growth in the late 1990s. While living on the east coast, people frequently asked me if it was true that there was a Starbucks on every corner. I had to tell them that at most shopping malls there were two stores inside and one across the street in each direction. While I found it annoying, I have never found the abundance of Dunkin' Donuts shops in Boston and New York to be bothersome. Maybe because Dunkin' Donuts doesn't carry the attitude that they are saving the world. And, I happen to like their coffee.

But here in Portland, we have a local chain called Stumptown, that roasts really great coffee, and in its own way has become the other Starbucks. There is usually a line out the door, it has an attitude of its own, the drinks are expensive and the brand is as ubiquitous within our community as Starbucks is in most cities. However, in a culture where "local" is a buzzword and "corporations" like Starbucks are synonymous with pure evil, a person would be lynched by cyclists with generic tattoos and one pantleg rolled up if he dared to draw the parallel.

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Rob

What's so bad about paying $1.75 for a medium coffee? Free refills if you have a registered Starbucks card. Where can you find cheaper? It's true: the quality of the coffee varies by location. But just because Peet's has consistently better coffee doesn't mean that I will stop supporting SBUX. I'll continue to support both, and mom and pops too.

November

How stealthy are these things if we all keep reading about them in the papers?

I do hope they take off though, I like the idea of being able to pop in for a glass of wine or a froufy coffee. I hope these new ones have a more chillax atmosphere. Starbucks' decor has gotten so contemporary that they've lost that comfy feeling.

Don H.

Here's the issue:

1) Where coffeehouses were already popular, Starbucks pushed coffeehouses out of business. Partly because they could, and partly because they had the scale and popularity to expose the local options as not strong enough.

2) Where coffeehouses didn't exist before (or had tried and failed), their presence has added to the market. Plus, their insistence on giving health insurance to their workers is a definite plus, even as it inflates coffee prices.

I've seen all this happen. One block had to close two coffeehouses to get a Starbucks. Another coffeehouse closed themselves down BEFORE plans for a Starbucks were seen within a storefront (that coffeehouse was struggling, so it made sense). It's also the only coffeehouse in much of Northwest Indiana where one feels halfway comfortable sitting for a while (Try sitting and reading at a Dunkin' Donuts. It won't work. I've tried. And that's the only competition, outside of a Borders with a Seattle's Best in it, in the area.).

3) I believe that Starbucks has saturated their market niche. The days of dartboard growth are done. Whatever growth they get (and I'm sure there's still some growth out there) will probably be slower and more calculated.

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