Independents and Consumer Reactions to Starbucks Closing Stores

I have been talking to a lot of people looking to open a coffee business, or are existing retailers already about the announcement that Starbucks will be closing roughly 600 stores. There has been some mixed thoughts, concerns and feelings about how this will ultimately effect the independent retailer. (I would love to hear from some of you who are in the industry as well).

I think it is important to remember that Starbucks WAS the neighborhood coffee bar when they emerged on the scene. With their growth plan, and focus on tapping new markets and market saturation, what has happened is that the independents have come in and done it better. The care for the customer, serving quality beverages, knowing who your customers are and supporting a more local atmosphere, are all aspects that the indy coffee bar thrives in, and we have seen in the past few months, Starbucks interest in moving back towards this model.

They over saturated to the point that they were often competing with themselves, paying for two locations and maybe splitting profits/customers. It seems that to sustain their new changes, that closing some stores would be inevitable.

I don't see this as being a bad thing for the independent retailer, but it is a confirmation that coffee retail has evolved to the point that it is imperative to offer a high quality product, and that demographics are very different from city to city, and a boiler plate, corporate coffee bar is not always what consumers want. As the economy moves towards a much more local focused, sustainable business model, I think the independent coffee bar/roaster can very much succeed.

Here is a link to an article on Reuters that has some interesting comments ...

"Starbucks was a cool brand, and then all of a sudden it's not a cool brand," he said. "There's this new global consciousness that is out there that can suddenly shift."

Anyway, I thought this would make a good topic for discussion as we have such a wide variety of coffee professionals, consumers and retailers on the site.

- Matt

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There was a local radio show in Greenville SC talking about this the day it was announced, and the host was taking calls asking why the listeners thought the closings were happening. As I was making deliveries to the indies around there I decided to call in, and that's pretty much what I said. The new wave has bypassed the Mermaid, and is forcing it to change its game.

It's hard two two hours of worthy discussion into two minutes airtime! Hopefully it educated some people though : )
I agree with you that Starbucks' move is not a bad thing for the independent. My town has two local shops and the news that we may be getting a Starbucks in the supermarket across the stree doesn't really worry them. The Starbucks brand has gone through a definitive shift to something slightly this side of McDonalds. At the shop I managed in another town they didn't see much of a drop in sales when the Starbucks moved in less that two blocks from them. It was simply catering to a different demographic and 15 years of loyal patronage dies hard.

These particular examples may be small towns, but I believe in a town of any size the closing of Starbucks will do little, at first, to change their "bad" corporate connotations and the small local shop could see an increase in interested customers. Take advantage of the situation if you are near one closing and get marketing!
My views tend to be radically different than many of my peers on Starbucks. While many of my peers either hate/bash Starbucks, or spend amounts of time thinking/worrying/visiting Starbucks, I really don't care.

From my perspective, I see Starbucks as being equivalent to McDonald's or Outback Steakhouse. Solid performing chains but quite a bit different than what my company does. As a company, we're focused on delivering our vision of a quality coffee experience. One that's quite divergent from the Starbucks model.

While perhaps not entirely apropos, does Thomas Keller worry about what McDonald's/Outback is doing? Probably not. As such, I don't really worry about what Starbucks is doing.
I know Starbucks reported a 28% drop in sales the 1st quarter, and are acting desperate with the new rewards program. It is impossible to not take note of what is going on with Starbuck's however they are not who our shop looks up to in the industry. Shops like Artisiano, Zoka, & Intelligentsia are much better examples for independents to get inspiration from. I am happy to say our shop showed growth the 1st quarter!
I'm on board with the idea that this is not a bad thing for the independents at all. However, one major issue that i have not heard much about when talking about this issue is the economy. Yeah, Starbucks had an extremely questionable growth plan, and yeah there is corporate backlash present, and McDs is about to drop about 10K cafes on us, but i think the underlying issue is the economy. When people cant pay their mortgage or fill up their gas tanks, it makes that "affordable luxury" not so affordable any more. Consumer Confidence is low and many parts of the country are getting hit pretty hard. This is why i think its more important than ever to distinguish yourself. Like that article said: "he preferred Lux, a cafe in Phoenix serving lattes with a fern-like pattern teased from steamed milk in ceramic cups, over Starbucks."

The positive that I have seen through my travels lately is that people really want to help each other out more than ever through the rough patch in the economy. This corporate backlash really is growing. People are much more apt to give to an independent shop and a familiar face than the corporate giant. And this isn't just true for the specialty coffee industry. Its pretty exciting. Hopefully these closings will give all of the independents a chance to capture a larger customer base and continue to show growth.
While I see the merit in what Jay is saying, I have worked in a shop that has changed its focus to be more centered on quality during the time Starbucks has been in town just across the road. Unfortunately, it's been very hard to establish our new identity because of the prevalence of Starbucks in the community. That paired with a working-class town that has not yet developed a taste or understanding of gourmet coffee has hurt us a bit. this just might be our fault, though.
I can only speak to the phenomenon I see in San Francisco, but to me it seems like independents have made great efforts to distinguish themselves from Starbucks by offering a quality product and more personality. Even to the casual consumer it is readily apparent that Starbucks represents a sort of fast food end of specialty coffee.
My fear is that perhaps Starbucks has become wise to this and is desperately trying to recover their specialty image. By downsizing Starbucks may be able to make themselves a commodity once again as opposed to the evil empire it has become.
In either case, it is really suburbs and the Midwest that will suffer. I think the name is despised enough on the coasts to hamper any recognition from real coffee drinkers.
I have a friend who owns a construction company that does the majority of the build-outs for Starbucks in the Southwest. He's slated to continue to do this as he has 60+ stores he has to complete by end of 2009. With that said, it was eluded in January (Time Magazine) that they would remove most of non-profitable/bad location stores to enchance profits and recoup losses. Just and FYI of course....however I do believe its a postive for the specialty coffee house...
Atmosphere, caring and quality are things I look for in a coffee shop. While some Starbucks demonstrated that, many didn't. I worked there part-time for a couple years and we had people drive miles out of their way to come to our store. We have the same coffee as every other Starbucks including the two or three they drove by to come to our store. So what were they after? We did great milk, paid attention to detail, cared about our customers and each other while had a great atmosphere in our store. People came there to feel good. In a challenging economy, there aren't many places people can go for that!

Leadership...leadership....leadership: the store atmosphere and attitude of staff reflects the true priorities of the person at the top. Leadership is contagious and trickles down into the details. Our store went downhill quickly when we had new leadership come in who focused primarily on the bottom line.

There are two local shops I visit on occasion. I never know if my latte will be drinkable, there is no consistency. One day, I'll have a great coffee conversation with the store manager and the next visit, they act like I'm a total stranger they've never seen before. I can make great coffee at home so why should I bother stopping at a local shop when they offer poor drinks and no connection?

It's the little things that add up.
Here is a link to an article and map that is showing where the proposed stores that are closing are located:

http://seattletimes.nwsource.com/flatpages/businesstechnology/locat...

- Matt
Perhaps this is in the link you posted Matt; a pdf listing of Starbucks store closures.

http://www.starbucks.com/aboutus/USStoreClosureInfo.pdf
The thing is starbucks wants thier barista's to be more involved with oppertunities. Which is a way to open thier own stores so easily. Now there are Starbucks stores on every corner still. I think closing down the 600 stores is the best way to keep starbucks alive. Our store in Taunton, England is the best in our district because our barista's care about the customer as well as what we sell. There aren't many stores like that around here in England. I know. I have worked in other stores and bascally, they suck..lol
Much luv
Vanessa Edwards

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