Innovative Retailer – Starbucks

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The Name: Starbucks

The Place: Well, obviously the whole universe is bloomin’ full of them, around 24,000 stores spread all over the world.

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The Story: Let’s pretend I am a hipster.

This might take some time: What do I think when I see yet another Starbucks in front of me?

Hang on, I’m still envisioning: I’ll tell you… I’m thinking Starbucks coffee is so like, from God knows where, with like no provenance. Know what else?

Listen, this imagining thing is going to take some time: I’m stroking my beard and I’m saying Starbucks is so everywhere, it’s so the McDonald’s of coffee, it’s so last century, it’s so…

Unbelievably popular and lucrative? Well, possibly. But actually it turns out that the lucrative curve might be just stopping a little short these days.

Yikes, people turning away from the green mermaid. Really? Last quarter the growth slowed for the company globally and that’s worrying.

Where is it worst? The Americas mainly. Obviously rumours of Starbucks demise are greatly exaggerated but chief executive Howard Schultz is not a man who got where he is today by not having a plan for the moment when everyone has drunk enough gingerbread lattes.

I think I lost that sentence around halfway through: Schultz has decided that the future is high-end.

Yessir: The future is speciality roasted beans from small plantations.

Yessir: The future is immersive coffee experiences.

Wait. I have to be actually immersed in coffee: The future, according to Mr S is …Willy Wonka.

So loving this idea: Theatre, showmanship, retailtainment.

OMG. Oompah loompahs serve my coffee:  Alright, when I said Willy Wonka I really meant elements of the magic and interest of the tasting room and production processes.

Stop it! Fat German boys will be serving the coffee: NO. Envisage a place where the cups and saucers rattle around the customers on high wire conveyor belts, where the roasting machines are loud and in your face like sitting in a warehouse full of grinding and roasting, wood panelling and lots of people with plenty of money to spend on the very priciest coffee types.

Woah. And my local Starbucks is going to look like that: No. In fact there is currently only one of these in the entire world.

And you need a golden ticket? Already I am regretting mentioning the Wonka thing. No, anyone can go. It’s in Seattle. Incidentally it’s a stone’s throw from the site of the first ever Starbucks but it’s an outsize 15,000 square feet. ‘The Reserve Roastery and Tasting Room’.

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Well, I don’t think world domination is going to continue with just one is it? Calm down, there’s another one planned for 2017.

New York, I suppose: Nope

London: Nope.

Blimey. Sydney? Nope. In that well known coffee hub – Shanghai. But there is a third unit due in New York in 2018.

So, that’s one a year. Is it just me or is turnaround going to be really slow at this pace: Trust me, the management thinks that these outlets have shown “stunning” success so we can be assured that there will be plenty more of them. Perhaps it’s best to think of the future of this chain as three tiers (good, better, best) with the normal Starbucks the good and the above mentioned Wonka-fest Roasteries the best.

Which begs the question – what’s better: Aha. Step forward the ‘Reserve’ and shortly to be launched ‘Reserve-Only’ concept.

The Third Way: Indeed. There are globally currently 2,000 Reserve units, which centre on the best bits of your average Starbucks menu served along with the premium small-lot Reserve coffees.

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Can I ask a stupid question: Why stop now?

What is small-lot coffee? A coffee grower may have a small section of coffee plantation where the beans are the very best but usually all the beans from the whole plantation will be ground up together and so this excellence is lost. A small-lot coffee is one where these very best beans have been separated and roasted together – there may be only one or two bags produced every year and because of their scarcity they become super expensive.

Got it: So the new Reserve-only shops will be selling only this high-end stuff? Not a coffee Frappucchino in sight. And make no mistake, a proper coffee-head will pay absolutely what it takes to get hold of the rarest brews, which may one day include batches from the Hacienda Alsacia in Costa Rica.

Um, possibly. Not sure I am familiar with it: Well, it’s Starbucks’ own coffee plantation, which they bought several years ago precisely with this high-end scenario in mind. That Mr Schultz – he’s such a long game player.

You know, I just haven’t seen these stores: Don’t be looking for the green fishy lady on the logo – it’s all new. Kind of like a big capital R in red with a star around it.

So, I’m thinking that all they need to do now is sort the food out and this thing may have legs: Sometimes you are cleverer than you look. Food is indeed the next thing to change and they are already all over it. Does the name Princi mean anything to you?

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Do I have to answer that? Thought not. It’s a small Milan-based bakery chain with outlets in Italy and London only. Starbucks just took a big stake in it. This time, says the chief executive, a foray into food is going to work.

As opposed to… The last time Starbucks bought into a food concept – La Boulange in 2012 – largely held to have been unsuccessful. This new deal means Starbucks becomes the global licensee for Princi and signals the first time that an in-store bakery will operate anywhere in a Starbucks. Princi, I need hardly add, is a high-end concept in its own right.

Well, hallelujah to that: They will provide all the food in the Roastery sites and Starbucks will probably also open standalone Princi shops.

That Mr Schultz – he’s got his work cut out hasn’t he? Yes, but not quite in the way you think. He announced this year that he is going to step back from some of the chief executive duties to focus on this new premium end of the business, and in fact a whole new division Siren Retail has been formed purely devoted to the new concepts. Starbucks is deadly serious about creating a whole new global business.

This is all very innovative but the question the world really wants answering is: will squirrels be sorting the coffee beans? Just leave it.

 

PCMS is a global provider of IT software and services for the retail industry. PCMS offers a full-range of integrated commerce solutions across selling touch points and also provides turnkey managed services and cloud hosting. Its client list includes John Lewis, Marks & Spencer, Waitrose, Whole Foods, as well as Walgreens in the US and fashion brands including Prada and Ferragamo across Europe.

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