Who:
Bryant Simon, Professor of History and Director of the American Studies Program at Temple University
What:
an 18-minute lecture on the cultural ethos of Starbucks
Why:
It’s an intoxicatingly brilliant and thoughtful look at the cultural ethos of Starbucks from a history professor who has spent far too much time deconstructing Starbucks. I am eagerly anticipating Bryant’s forthcoming book, CONSUMING STARBUCKS.
Watch:
RSS readers … click here to watch the video.
Fascinating stuff! I read an article in an entrepreneur magazine several years ago that described the phenomenon of Starbuck's growth, referred to as "self-cannibalization". In this manner, a Starbucks is opened on every available street corner in a given area, buying up all the local coffee shops, and ultimately competing for business with itself. Eventually, the stores with the lowest revenue are then closed down.
Posted by: Rachel | May 26, 2007 at 08:02 AM
Rachel ... Starbucks real estate expansion doesn't work exactly that way. Starbucks will self-cannibalize itself by opening up clusters of locations.
Self-cannibalizing accomplishes two main objectives: faster service and a bigger customer pool. More locations in one area will reduce the long lines and thus, improve the time it takes a customer to get their beverage. New locations will siphon a percentage of business from established locations but Starbucks has found that the overall size of the customer pool increases, which outweighs any customer loss at a specific location.
Rarely will Starbucks close down a location. Instead, Starbucks will relocate an underperforming location to another nearby site.
Starbucks has acquired some regional coffee chains as it has grown. Coffee Connection, Pasqua, Deidrich's, and Seattle’s Best Coffee come to mind. But to say Starbucks has bought up all the local coffee shops is inaccurate.
The strategy of self-cannibalization to grow the Starbucks overall business is accurate. Starbucks has found that growing the proverbial "pie" of Starbucks Coffee customers, as a whole, is more rewarding growth strategy. But it isn't just Starbucks that follows that model. Whole Foods Market, Chipotle, Wal-Mart, Container Store, Home Depot and many other businesses also follow a self-cannibalization business growth strategy.
Posted by: johnmoore (from Brand Autopsy) | May 26, 2007 at 10:40 AM
As a coffee shop owner, I found Simon's talk fascinating. Thank you for linking to it, Mr. Moore.
Your response above to Rachel,
"Rarely will Starbucks close down a location. Instead, Starbucks will relocate an underperforming location to another nearby site." is a somewhat semantic argument.
"No we did not 'close down', we 're-located' that store'".
About six months ago I had a Starbucks open nearby and it knocked my store's performance back to its break-even point. I hope they create a larger pool of customers soon, because I need new ones! I realize the customers I lost to Starbucks are the ones that get the highly sweetened drinks (specialty-mochas primarily), also the most profitable drinks, by the way! So even though I brew better coffee and create better lattes and caps, all the sauces and sugar some folks put into the drinks levels the playing field in terms of quality craftsmanship. And those customers I lost I realize go there for the "cool" factor. They simply enjoy holding that mermaid logo knowing that people see them holding it.
Simon really crystallized the thoughts I've had about why I've lost customers. I just have to figure out where to go from here!
Great blog. Thanks.
Posted by: Chris Sharkey | June 07, 2007 at 11:06 AM
Great Stuff.Listen to your interview on 938 when you are in Sinapore.Cant wait for your book!
Posted by: Alvin | May 13, 2008 at 12:54 AM