A Local Retreat For Starbucks

Last fall, I wrote this post describing the woefully inept customer service ethic at my local Stop & Shop grocery store.

Earlier this week, while visiting the store for some minor items, which I continued to do in the wake of that post, I noticed the most significant change since the fall. Or, really since the store completed its upgrade to "Super" Stop&Shop.

The in-store Starbucks kiosk/cafe is closed.

Considerable money and effort were expended on this feature. The kiosk was a handsomely-paneled, freestanding wood structure which emulated the ambiance of a Starbucks retail location. Stop & Shop employees were painstakingly trained as Starbucks barristas. A broad selection of Starbucks items, paraphernalia and coffees were on display for sale outside the kiosk.

Earlier this week, as I briefly visited the store for a few produce items, I saw massive sheets of brown paper covering the kiosk. Strips of tape cordoned off the area. It looked like the entire structure was being packed up for return to the coffee roaster.

I can't help but think this is more evidence of the overall weakness of Starbuck's strategy and management. The extreme overreach, if you will, of the brand down market to average-income Americans.

Not being privy to the business arrangement between Starbucks and Stop&Shop, I can only surmise the terms. But, certainly, Starbucks paid some royalty to the grocer for the space and/or sales volumes. Or, perhaps Stop&Shop operated it as a licensed business, paying the employees and booking the profits, while paying a percentage of the gross or net to the coffee giant.

Either way, the two must have been splitting the too-meager profits.

As I recall, the hours of the kiosk weren't the same as the store, which remained open until 11PM. Even during the hours it was open, I seldom saw more than two people at the Starbucks kiosk.

Perhaps this was simply part of the large retrenchment of Starbucks locations in process during the past year. But, given the captive grocery customers, you have to wonder what this portends for Starbucks' future growth. Evidently it just isn't penetrating beyond the upper-income segments, especially in this recession.