MELVILLE, N.Y. — Starbucks’ a
nnouncement that it is shuttering 600 stores marks an end to what seemed to be the company’s continual upward climb and invincibility in the retail coffee shop industry.
Two market-research experts spoke recently about the world-famous company.
What happened to Starbucks?
Several things. For years, Starbucks has been exceptionally profitable and was a darling of Wall Street. But it expanded too rapidly: "You can expand so much," said Robert Passikoff, founder and president of Manhattan-based market-research firm Brand Keys.
Did the excitement wear off?
Pretty much, said Harry Balzer, a vice president of Port Washington, N.Y.-based The NDP Group. "They [Starbucks] certainly had a nice run," Balzer said. "I’ve been doing this for 30 years, and I don’t think I’ve seen anybody do it better. But there’s nothing like success to bring on competition. Nobody says you can have the whole market forever."
What else went wrong?
Passikoff said Starbucks tried to migrate its coffee brand into a lifestyle brand. "They came out with the movies and the books in the stores. There’s nothing wrong with that aspiration. But as part of this, they essentially took a step away from the core quality of the brand, which was the coffeehouse experience, which they imported from Europe and turned into an American experience. For a while, no one was grinding beans. The place didn’t sound like the coffeehouse and didn’t smell like the coffeehouse anymore," Passikoff said.
Bad marketing decisions?
Yes. The experts said their stores were getting too crowded with furniture, Passikoff said. The couches went. "What essentially they did overall was re-engineer the experience right out of the stores. So customers were standing on line, and there was no experience anymore. They were too much like everyone else."
How much of Starbucks’ decline is related to the economy?
Passikoff argues not that much, that Starbucks’ market share began to decline a year ago. "In our tests last year, they came out No. 2 to Dunkin’ Donuts. This year, Dunkin’ is No. 1, McDonald’s is No. 2 and Starbucks No. 3 in our market surveys." But Balzer said the entire restaurant industry has been harmed by the bad economy.
Should Starbucks have stuck with its original strategy of being just a coffeehouse?
Yes, Passikoff said. "You don’t walk away from a successful brand strategy, not when you’re making money."
Can Starbucks go back to what it was?
Passikoff said he doubts it. "Customer values have shifted so dramatically. They are what they are." Balzer said Starbucks still has a lot of marketing power left, however. "They have got to do new things," he said.
Source:http://www.star-telegram.com/business/story/742107.html
No comments:
Post a Comment