The “Starbucks Experience” Slumping Economy or Something Else…
The “Starbucks Experience” Slumping Economy or Something Else…
By: Mike Dolpies
Was it the “slumping economy” or just the fact that the numbers don’t lie?
We have all heard that Starbucks will be closing 600 stores, but to blame the US economy is utter nonsense!
Starbucks simply saturated its niche, and then proceeded to cannibalize itself.
I don’t claim to be a “Starbucks Expert” as some do. Honestly I rarely ever go to Starbucks anymore. I am a brew it at home kind of guy. I like good coffee and I am not loyal to any one kind at the moment. I enjoy gourmet store brands (you know the kind that you have to dispense into your own little bag that you can buy by the pound), whole bean Starbucks, and whole bean Dunkin’ Donuts. For me it is just a matter of what is in front of me. Electing to brew at home is more of a responsible financial decision and a time management thing than a belt tightening brought on by higher gas prices. Because I work from home it would not make sense for me (time wise) to run out and be a loyal patron of a nearby coffee shop.
So why is Starbucks closing 600 stores? I’ll tell you why…
It’s all about the niche…
Their niche is folks that are on the run and appreciate a good cup of coffee or one of those fancy concoctions and do not mind spending a few dollars for it. Their niche is also made up of folks who are not really “on the run” but can actually sit and drink their coffee while they are working on the wifi, between meetings, engaged in meetings, or simply hanging out. There were times when I’d work from a local Starbucks and I’d always see the same regulars in there who fit this profile.
Niches are Niches for a reason…
Niches are prospects that fit a psychographic, demographic and geographic profile. If everyone was the same, then niches would not exist. Starbucks simply forgot who its niche was or hedged the wrong bet that the niche was larger than it is. That’s it!
Is 5% really that bad?
The fact that the closings reflect the “lowest performing 5% off stores” should reveal to you that this is really no bigger a deal than any company getting rid of excess baggage. But of course, leave it to the brain dead theorist and the “doom and gloomers” to blame the economy. The blame should rest with the executives at Starbucks who opened more stores than the niche could handle!
© 2008 By Mike Dolpies
www.askmiked.com