Jul 11, 2008

Starbuck’s – Still Opening Near You?

What to make of all the headlines about Starbuck’s? *

. . . That even an outstanding retailer can oversaturate its market and self-cannabilize its stores’ sales?

. . . That risky 'category adjacencies' and product line extensions (for Starbuck’s, into selling CDs and DVDs and breakfast sandwhiches and home wares) are tricky and likely to fail?

. . . That pushing elaborate loyalty programs are becoming the strategic equivalent of a drowning man flailing his arms?

. . . That retail real estate moves are a core competency better handled by local entrepreneurs in each geographic area than a bloated central corporate bureaucracy (a strategic advantage successfully realized by Walgreens and Wal-Mart)?

All sad and true.

The harder lesson, for Starbuck’s or for any company, is to keep its focus on customers from evolving to a company that is 'customer compelled' .

In the end, Starbuck’s remains a terrific company. No better sign of that than its (unusual) ability to recognize when it’s taken a wrong 'go to market' turn, admit that, and correct decisively as it is now doing. I believe with Howard Schultz's leadership, they will do fine. But its emphasis has to shift, from infilling the U.S. to adapting its service and business models to the customer experience requirements and singular distribution challenges of many other country markets.

Not easy. A ton of details. Some relinquishment of central control. But to judge from 95% of Starbuck’s track record, well within its capabilities.

* See, for instance , the latest Financial Times story.

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