More On Starbuck's Expansion

Tuesday's Wall Street Journal featured a very good piece describing the tactical considerations involving how Starbucks sites new stores.

As with most business operations, the details of each site's size, funding, and expectations paint a picture of how the company uses its knowledge of consumer behavior to capitalize on its brand, and drive growth.

Thus, one observes the phenomenon, written about in the story, of as many as three out of four corners of an urban intersection sporting a Starbucks coffee store, of one size and ownership or another.

This reminds me of nothing so much as the late-1980's growth of another fast-service, convenience-oriented purveyor of morning comestibles- Au Bon Pain. Many years ago, the Journal featured a similar article on that older chain. At the time, I traveled to Boston frequently on business, and noticed the saturation of the Downtown Crossing area with Au Bon Pain stores.

If I recollect, the chain found pretty much the same behavioral information on its customers as Starbucks has on theirs. For many urban areas, total sales actually rose with a saturation of stores, rather than splintering a seemingly-fixed demand among more outlets. Traffic patterns and purpose-specific visits allowed for more sales as the brand was more conveniently placed in the paths of more consumers.

Even Coke knows this, as its CEO has recently articulated a goal of putting a Coke within some very short distance or time period from every thirsty consumer on the globe.

It's hard to say whether or not this type of attention to operational detail and consumer behavior will result in Starbucks' total return reversing its recent stall, as depicted in the Yahoo-sourced chart (click on the chart to view a larger version) at the beginning of this post. I wrote much the same in my piece on Schultz's now-infamous memo, back in February of this year, here.

So, while I applaud Schultz's honesty about the changing nature of his brand's face, and his minion's careful study of consumer behaviors in their siting and expansion of outlets, I remain sceptical (hey, I am "the reasoned sceptic") that these well-intentioned efforts will reverse the firm's fortunes, and its senescence, on behalf of its shareholders.