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March 09, 2007

Solving Starbucks Problems : LOSS OF STORE SOUL


This post continues the series where Paul Williams and I, two former Starbucks marketers, offer recommended changes based upon Howard Schultz's email to the Starbucks leadership team.
Loss_of_store_soul
"However, one of the results [of streamlining store design] has been stores … no longer have the soul of the past and reflect a chain of stores vs. the warm feeling of a neighborhood store. Some people even call our stores sterile, cookie cutter, no longer reflecting the passion our partners feel about our coffee.” -- Howard Schultz email

In his super-smart post, Paul says Starbucks can solve for its “Loss of Store Soul” issue by doing a few key things. He recommends Starbucks build destination locations (“flagship stores”) where the majesty of whole bean coffee and the artistry of brewing coffee at home are front-and-center. These destination locations would offer exotic and rare coffees as well as a wide range of home brewing equipment that ordinary Starbucks locations would not carry.

Paul also recommends
Starbucks “Mom & Pop-ify” its locations by allowing individual stores to be just that, individual. Ditch the uniform tables and chairs, replace them with mix and match furniture. Add plants/flowers and allow each store to put is local imprint on store design decisions. It’s a well-thought out idea. But it doesn’t go deep enough to address the biggest issue facing Starbucks in “Mom & Pop-ifying” its stores—ingrained company culture.

The Starbucks “Kit of Parts”
Starbucks is opening a minimum of six stores a day somewhere around the world. The company has mastered the build-out process of opening new stores fast and inexpensively. (For reference purposes, I’ve heard Caribou Coffee, one of Starbucks competitors, spends twice-as-much as Starbucks does on building-out their stores.) One of the reasons Starbucks has excelled from a profitability perspective is because they build-out stores using a “Kit of Parts.”

The Starbucks “Kit of Parts” approach is akin to children playing with paper dolls. You remember paper dolls, right? Armed with an outline of a person and pages full of plug ‘n play paper clothing cut-outs, a child could create numerous looks for a person or for a family of people. Starbucks took this same mindset to its store expansion process by designing a palette of plug ‘n play pieces which can fit any store size. This approach allows Starbucks to build-out stores quickly and inexpensively with a high degree of consistency. These plug ‘n play design pieces include point of sale counters, condiment bars, wall art, merchandise wall bays, Frappuccino-prep stations, Espresso Machine stations, etc.

Problem is … Starbucks has maxed out its “Kit of Parts.” They’ve used every plug ‘n play piece so many thousands of times that its store design has become boring, staid, and soulless.

But this "Kit of Parts" mentality is really an issue of control for Starbucks.

Command and Control-Driven
To truly follow-through on Paul’s ideas to “Mom & Pop-ify” Starbucks, the company’s culture must evolve. Despite its entrepreneurial pretense, Starbucks, as a company, is very command and control-driven. Top-down direction reigns supreme within the ranks at Starbucks.

One aspect paramount to the Starbucks culture is consistency. Starbucks wants a customer in Memphis to have the same “Starbucks coffee experience” as they would have in Malibu, Mexico City, Madrid, or Moscow. They give stores precise instructions on how to do EVERYTHING. Thus, relatively little decision-making happens at the individual store-level.

For example, suppose a local Starbucks is having a jazz trio play on a Friday night. For that store to promote the jazz trio with a simple sign, they have to contact someone in regional marketing to make a sign. Starbucks command and control culture doesn’t allow for stores to create homemade signage.

Starbucks does, however, allow stores to get creative with their Daily Offerings board. Whenever you visit a Starbucks you’ll notice a board, by the menu planks, with chalk art designs. Many stores use the Daily Offering sign to creatively promote the promotional beverages Starbucks is focused on at the time. Store-level baristas will chalk-up something fun and playful to promote a drink like the Cinnamon Dolce Frappuccino.

And recently, Starbucks has taken steps to loosen this command-and-control culture by allowing stores to handwrite snappy descriptions of beverages directly on promotional posters. This is a HUGE step forward for Starbucks.

Starbucks is beginning to show more trust and confidence in their store’s ability to create a more local store imprint. That’s a sign the company culture is evolving at Starbucks.

Give Stores More Cowbell
Starbucks needs to continue giving more individual control to each and every Starbucks. Allow them to make more decisions at the store level. A homemade sign promoting a jazz trio performance will not detract from the strength of the Starbucks brand. And who really cares if there’s a typo on the homemade sign—it’s not like Starbucks in-store signage created from the command-and-control headquarters hasn’t let a few typos slip through.

Here’s my strategic recommendation … Starbucks should give stores a “Signage Kit of Parts.” Create a library of promotional signage from which each store can dress its posters and countertops with. Allow stores to actively promote whatever beverage sells best in their store given the season. Allow stores in Miami to promote Frappuccino during January with in-store signage. Allow stores in Calgary to promote Caramel Macchiato in May. Allow stores in Atlanta to promote Iced Tazo Tea in August.

Starbucks will need to trust that stores and regions will make the best decisions possible to drive sales at the local, store-level. Starbucks must show confidence they’ve hired smart store managers that can make sound decisions on which products to promote in order to best increase sales at their store. The time has come for Starbucks to allow its store managers to truly manage their stores.

Howard Schultz as the Over-Achieving Parent
There’s a poignant quote in Howard’s book where he says, “Perhaps I’ve set the bar too high. Like an overachieving parent, I want it all for Starbucks: success in all the conventional ways, plus an extraordinary level of innovation and style.

That really sums up everything. Howard Schultz is the parent who can’t let go. He wants the best for his child. He wants his child to succeed and accomplish things no other child has. But the time has come for Howard to following some more of his home-brewed wisdom. In his book, Howard also says, “To stay one step ahead, you have to invest in creativity.

The time has come for Howard to invest in giving his stores more creative control. To counter the loss of store soul and to inject warm neighborhood feelings, Howard needs to unleash the power of creativity at the store-level. He needs the soul of Starbucks to shine through decisions made at the level closest to the customer—the store. After all, that’s what Mom & Pop shops do.



Series Review & Preview
Introduction post
LOSS of COFFEE THEATRE: Paul’s post and my reply
LOSS of COFFEE AROMA: My post and Paul’s reply
LOSS of STORE SOUL: Paul’s post and my reply
LACK of MERCHANDISE FOCUS: coming soon
LOSS of IDENTITY: coming soon

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» Solving Starbucks Problems - 3. Loss of Store Soul from Idea Sandbox Blog
John Moore and I, two former Starbucks marketers, are offering recommendations to Starbucks in response to chairman Howard Schultz’s recent email. We are examining his third challenge to the team: Loss of Store Soul "Clearly we have had to streamline ... [Read More]

» Passionate Loyalty from bigPicture
John Moore and Paul Williams are having a great (and VERY detailed) discussion about what Starbucks can do to solve their current identity problems. This was spawned by Starbucks CEO Howard schultz's internal email. Everyone should consider the amount of [Read More]

» Passionate Loyalty from bigPicture
John Moore and Paul Williams are having a great (and VERY detailed) discussion about what Starbucks can do to solve their current identity problems. This was spawned by Starbucks CEO Howard schultz's internal email. Everyone should consider the amount of [Read More]

» Solving Starbucks Problems - 5. Loss of Identity from Idea Sandbox Blog
This is the 5th in a series of 5 posts where John Moore and I, two former Starbucks marketers, offer recommended changes based upon Howard Schultz's email to the Starbucks leadership team. I have said for 20 years that our success is not an entitlemen... [Read More]

Comments

Does the news that they plan on starting their own music label just make that Mom & Pop task more difficult though. Seems like they’re getting farther away from the original brand with major moves like that.

For those unaware, the NY Post ran a story today revealing Starbucks will step deeper into the music business by forming its own record label, Starbucks Records, and release Paul McCartney’s next CD.

Timing of this deeper foray into the music business by Starbucks isn’t the best. It’ll be interesting to see how Wal Street reacts to this announcement. SBUX stock has sagged following the release of the internal memo from Howard Schultz. I’ll have more to say on this and the whole LOSS OF MERCHANDISE FOCUS issue with my next post in this Solving Starbucks Problems series. In my post, I play the “Just because you can, doesn’t mean you should.” card.

“Just because you can, doesn’t mean you should.”

Not enough brands heed that advice.

;-p

Starbucks has to give up corporate owned stores and go to an owner operator, what image are they trying to show when most stores have kids making the food and drinks. Most of them don't care about the brand. The people in the stores who are selling the brand don't care about the brand nor do they understand branding! There's your problem.

Sorry, but all this talk about changing Starbucks is a little ridiculous. It seems that people are faulting the chain for its own success. 15 years ago, most people had never even heard of Starbucks coffee. But after a few hipsters discovered them and told all their friends, who in turn told all their friends, and in turn told all their friends, the company grew to accommodate the demand. WHAT IS WRONG WITH THAT? This is a business! If you don't like Starbucks, don't go there. There are plenty of "soulful" Mom and Pop establishments with mix and match chairs, no budget, and no customers. It seems that's only time hipsters ever like someplace -- when they're the only ones who know about it! But no one can stay in business long operating that way. Let's stop trying to change Starbucks for just being what it is. After all, they must have been doing something right to get you to spend $5 on coffee in the first place.

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