You may be one of those under-caffeinated Luddites bemoaning the presence of a Starbucks outlet on virtually every street corner (for some of us, that's NOT a problem...). Well, in some places there actually ARE Starbucks outlets on every street corner. Starbucks' diabolical plan is market saturation, in some cases cannibalizing the market share of their own locations in order to hook more people on the national drug of choice.
Some years ago, an episode of "The Simpsons" had Bart sauntering into the local shopping mall to get his ear pierced, only to be rushed by the salesclerk.
"Gotta make it quick, kiddo," the clerk tells him. "In five minutes, this place turns into a Starbucks."
As Bart leaves, the distinctive white-on-green Starbucks name hangs over the old In and Out Ear Piercing store -- and over every other storefront in the mall.
The joke hit home because just about everyone has felt like Bart Simpson at some point in the past decade. Consider Dupont Circle in Washington, where Starbucks has four stores in eight blocks -- two of them within two blocks of each other. Or Bowie Town Center in Prince George's County, where a Starbucks store on the strip is echoed by the kiosk inside the Barnes & Noble bookstore -- and the one inside the Safeway supermarket.
The effect is intentional, and the strategy behind it is as counterintuitive as it may be irritating.
Conventional wisdom dictates that a retailer that crams stores close to one another cannibalizes its own sales. It's part of the retail-analyst mantra. Yet Starbucks embraced self-cannibalization as the fastest way to expand its business.
Coffee entrepreneur Howard Schultz, who built Starbucks into a global goliath, explains that the decision was made in the early 1990s, a few years after he purchased the small chain from its founders. At the time, the company found itself in what should have been a predicament: two stores across the street from each other in Vancouver, B.C.
The first, a tiny but top-performing shop, was tucked away in a building about to be closed for remodeling. Fearful of what might happen, Starbucks opened a larger store 30 yards away.
To the company's delight, not only did the two stores coexist, but they thrived. Since then, Starbucks has replicated the model with similar results all over the country.
Under this model, a new Starbucks location typically eats away at the business of the older one nearby -- at first. Within a year, though, sales at the original store recover. And even if they don't, the company would rather have one Starbucks store lose those sales to another than to a competitor.
Today, Starbucks has 4,479 locations in North America and 1,256 overseas. It continues to open three to four stores a day.
A good example of this is the area in I live in. Seabrook is 30 miles from downtown Houston. Relatively speaking, I live in the hinterlands about halfway between Houston and Galveston. When I first moved here from Portland, OR, five years ago, I was ecstatic to discover a Starbucks location 10 miles from home (Generally speaking, the coffee in southeast Texas is HORRIBLE). Now, there are six within a 15-mile radius of home, and more are likely on the way. Of course, for some folks, 10-15 miles would seem a ridiculous distance to travel for a cup of coffee. Those folks obviously don't understand the depths of my depravity, or the lengths I'm willing to go to in order to get my fix. (But, hey- I can quit ANY TIME I choose t...I just haven't chosen to....)
Starbucks' plan for total world domination is an amazing, very different, and surprisingly successful approach to marketing their product. I will freely admit to being, if not an addict, then at the very a least a very serious caffeine aficionado. Hey, some people go to bars and strip clubs. I go to Starbucks. At least my wife doesn't need to worry about me sticking twenties in the g-string of some stripper (like I would anyway...). Well, OK, I occasionally have been known to tip a barista, but I think that's a little bit different....