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Beg to Differ

A brand strategy blog - by DenVan

Starbucks: beer, bands, & baristas

July 20, 2009 // Dennis Van Staalduinen 7 Comments

Coffee giant tries to get mojo vibrating again

Once, order Starbucks was just a local coffee shop in Seattle. Then it became a mega-brand, sildenafil standard-bearer for the premium coffee category worldwide. But lately, more about the “star” has been fading, and even the “bucks” are drying up. So now the chain will be re-launching a few of its many under-performing stores under a new name – and it ain’t “Starbucks”. Brand seppuka, brilliant extension strategy, or just a curious experiment?

Photo from Seattle Times article - 15th Avenue Coffee & Teas (nee Starbucks)
Photo from Seattle Times article - 15th Avenue Coffee & Teas (nee Starbucks)

Many little rocks; one Goliath target

I won’t spend a lot of time documenting all the many woes of Starbucks – from closing 1000 stores worldwide over the last few years, to endless streams of controversy , to an actual bombing this year at a Manhattan Store. The bigger story is actually thousands of small stories: how Starbucks is being beaten in the ground wars by smaller, more flexible, more community-minded local shops – like Ottawa’s fair trade coffee champs Bridgehead (of whom I’ve written at length in another post).

Starbucks’ erstwhile strength – ubiquitous presence in major markets worldwide – has almost become an Achilles Heel. Comedian Lewis Black thinks it is surely a sign of the end of the world (WARNING: contains hilarity – may not want to play this in a cubicle):

Starbucks responds

They’ve been fighting back of course, with their new “Starbucks™ Shared Planet™”  brand and a pledge to apply renewed attention to three big perceived areas of weakness:

Starbucks - ethical - environmental - community

  • Ethical sourcing – to answer the Fair Trade movement, which, because of their size and massive bean-supply-chains, they have been slow to embrace. Notice they still don’t call it “Fair”;
  • Environmental Stewardship – to try to get back some of their tree-hugging mojo; and
  • Community Involvement – to fight the idea that they are the rapacious corporate villains strip-mining local economies and ruthlessly targeting competitors without giving much back – largely fair complaints.

In which the corporation offers to share… the planet

These three principles are embodied (and proclaimed loudly) in three new Starbuck’s branded “Green Stores” , the first of which opened July 1st at Paris Disneyland (of all places Press Release / Pictures)

At Brandvelope, of course we think all this is great. We’re sure Starbucks is sincere in their commitment to these ideals, and we applaud the incremental steps they are taking in this direction. The problem is their  ability  to move their Titanic-sized infrastructure to match their ocean-sized ambitions, and navigate around the great big pointy icebergs they face.

For example, Starbucks™ Shared Planet™ says “by 2015, we want to: Purchase 100% of coffee through ethical sourcing practices.” Great. But in the intervening 6 years, a goodly chunk of their coffee will come from, um, less-than-ethical sourcing practices, while local chains (like the Bridgehead where I’m sitting right now) are already at 100% and have been for years. And they’re already intensely environmental, and already deeply committed to their communities. So Starbucks: welcome to the club (let us know when you get here).

The problem with local

Which brings us to Starbucks’ latest uphill battel – its attempt to make itself more local, and more responsive to the communities in which it operates. Because, even on on its home turf in Seattle, where Starbucks still has some claim to being “local” – small coffeeshops are thriving and forcing Starbucks store closures.

So it shouldn’t be a surprise when a small army of field-tripping keeners were spotted at several Seattle area coffeeshops over the last few months, making loud observations about store design and product lines, and filing their notes in folders marked “Observations” in large letters. The results? Wait for it…

The new brand: “15th Avenue Coffee & Tea”

Branded by location: “15th Avenue”. That’s the name of the new game-changing Starbucks location on (surprise!) 15th Avenue in Seattle.

So does this mean a “15th Avenue” will be coming to a neighbourhood near you. Nope. Yours would be “Main Street Coffee & Tea” or “Broadway” or “Grosse Pointe Strip Mall” or “All-Knowing Supreme Leader Boulevard” or whatever. The idea would be to have each location branded with its location to make it seem like it grew organically in that space.

Two other stores in Starbucks’ native Seattle will follow suit, each getting its own name to make it sound more like a neighborhood hangout, less like Big Coffee, a Starbucks official told The Seattle Times on Thursday. Chicago Tribune.

Booze & guitars: The field-trippers focused on coffeeshops that serve alcohol alongside their hot drinks, as well as those that feature live events like poetry readings and guitar-jams. So nosurprise that these will be part of the cocktail mix at the new shops. The idea is 1) to prop up sales in the traditionally flat evening hours, 2) tap into lucrative alcohol profit margins, and 3) to make Perez Hilton very very happy.

No logo: all the media I’ve read are saying that no Starbucks logos will appear on the signage, the products, or anywhere else in the store. I can’t confirm this, so if any Seattle-based readers can visit and confirm, please do!).

But if this is a purely “white label” approach to branding these new locations, I’m interested to see how Starbucks is going to evolve this concept as they go forward. For now, the perceived independence of the locations is a useful way to allow the clipboard-toters at Starbucks to experiment and study the new format without dilluting the corporate brand.

Coffee industry analyst Andrew Hetzel: “It looks to me that they are testing a specialty sub-brand to see if they can capture some other segment of the market that would otherwise be disillusioned by a large corporate chain,” Hetzel said, adding that opening only one at first “gives them a live shop to test changes in menu offerings, store design and, perhaps, procedures quickly” without disrupting operating stores branded with the Starbucks name. Whole
article here
.

Where to from here?

But this can’t last forever. Assuming the format works and Starbucks wants to roll it out to different markets, eventually, they’ll see the need to create visible connections (and brand equity) between locations. Because creating a series of purely local brands with no overall brand marketing synnergies across the chain would be counter-productive for a company of Starbucks size and clout. And I find it hard to believe they’d be that stupid.

AdAge article: Technomic President Ron Paul… predicts the concept will look much different if rolled out on a national stage. “I still think it’s more a of test lab than something they’re more serious about rolling out,” he said. “That’s not a national strategy.” Full article here.  

So three basic brand strategy options:

1) New “family” brand:

Starbucks name would not appear in branding. Instead, the new shops would be given their own umbrella brand which would operate as a stand-alone “entity” within the broader corporate portfolio. So for example, the new branches could use a high-character name like “Mermaid Cafe” or a more neutral name like the “Your Independent Grocer” chain in Canada.

Advantage: diversifies the Starbucks portfolio without risk of brand dillution or confusion around over-extension.
Disadvantage:
little transfer of brand equity – must essentially start from scratch building a new brand.

2) Premium brand extension:

This new format becomes a flavour of the existing Starbucks brand, but is given a descriptor or “soft brand” name of its own – like Starbucks Plus or Starbucks Cofeehouse.

Advantage: Leverages 30+ years of brand equity, but
Disadvantage: seriously undermines the consumer’s current idea of what a Starbucks is and what they can expect when they walk through the door.

3) Endorsed brand:

The new brand has its own brand identity and branches would clearly not be “Starbucks” but everywhere the name appeared in graphics or formal text (like a Press Release), it would be “endorsed” by the Starbucks brand – as in “Courtyard by Marriot” or “Clever Cutter from K-Tel“.

Advantage: blends clear connection with separate identity.
Disadvantage: requires careful management to balance the two aspects of the brand.

So which way do you think Starbucks should go? Your thoughts are welcome as always.

Filed Under: Analysis & review, Brand Names, Brand Value, Consumer Behaviour, Consumer product brands, Innovation, Rebranding, Retail Brands Tagged With: 15th Avenue Coffee and Tea, beg to differ, begtodiffer, brand architecture, brand management, brand strategy private label, differentiation, no logo, positioning, rebrand, retail, Seattle, Starbucks coffee, unbranded

More coffee with a conscience – Bridgehead opens 10th location

June 8, 2009 // Dennis Van Staalduinen 8 Comments

Signage and store design nicely blend warm colours with very contemporary elements. The stores fit equally well into old stone heritage buildings or brand new condo buildings (as here).
Signage and store design nicely blend warm colours with very contemporary elements. The stores fit equally well into old stone heritage buildings or brand new condo buildings (as here).
Right across the street from Starbucks, cialis 40mg and about 500 metres from the 1st Bridgehead in the Westboro area of Ottawa (and a short walk from my house), dosage my favourite coffee brand has opened a shiny new 10th location. And boy am I excited.
 
Two days before they opened, rx I managed to get a tour from store manager Mia and Tracey Clarke – one of the co-owners of the chain – but I had to keep my bike helmet on since it was still a hard-hat zone. Then, on Friday morning before the store opened, I was able to score the first cup of coffee.
 
Okay, so I’m a geek, and the chain is run by friends, but as a brand guy I’ve been eagerly following this local success story nearly from the beginning.
Coffeeshop manager Mia Eriksson and Bridgehead chain owner Tracey Clarke
Coffeeshop manager Mia Eriksson and Bridgehead chain owner and my local brand hero Tracey Clarke (yes that's a box of subway tiles she's slogging).

Top ten brand lessons to learn from Bridgehead:

  1. 1. Great product consistently delivered – yes it’s fairly traded, organic, and shade grown, but Bridgehead puts great care into the quality, variety, and freshness of the product. The rest of my top ten list would matter not a bit if the beverages, treats, and lunch items weren’t top notch. They are.

Oh, and on the innovation front, BH managed to scoop Starbucks on the custom coffee front. Just as the Seattle mega-java purveyors were buying the Clover company  BH was able to get a small number of the uber sexy Clover Machines before Starbucks stopped selling to cometitors.As a result, Ottawa coffee lovers will get to taste Clover coffee years before Starbucks ever brings the technology to its Canadian stores.  Wired.com reviews the Clover. 

2. Great cause(s) – Tracey Clarke got into the coffee business after visiting Central America in the 80’s and realizing that the local people were producing incredible coffee, but they couldn’t get any of it because of a) export monopolies, b) prohibitive prices, and c) shamefully low prices for their beans. She and a partner bought the original Bridgehead brand from a well-meaning charity that was way over its head trying to run even one  retail store, then turned it around, and in a few short years has become the quality coffee brand in Ottawa.

3. Local brand – I’m an Ottawa boy. They are an Ottawa-based chain; the money stays in town. All good.

4. Committed to walkable urban neighbourhoods – despite the obvious pull from suburban areas, there are no drive-thru windows at any Bridgehead (yet). The chain has continued to place its new locations in traditional main-street areas throughout Ottawa, and as a founder of the Welling ton West BIA, I can tell you they have been very supportive and active in street-level retail initatives and issues.

5. Really nice people – the founders are level-headed, approachable folks, and their approach has attracted strong staff in the stores. Employees tend to be older, better educated, and “hipper” than in the other shops around town.

Here's me at the new Bridgehead withthe first cup of coffee served to an outsider and the all-important first Internet ticket.
Here's me at the new Bridgehead withthe first cup of coffee served to an outsider and the all-important first Internet ticket.

6. Great spaces – real attention to the usability of space. Nice blend of lounging, working, and conversation spaces, Bridgehead has been refining the blend with each new store they build, creating a noticeably more “human” place than the average Starbucks or Second Cup.

7. Family friendly – because of the demographics of many of their host neighbourhoods (and fact that most of  the management have young children), they’ve proven much more open to non-coffee drinkers in the stroller set, plus toddlers and school-aged children. Creates a lot of noise at times, but on the weekends, my kids love to visit.

8. Business-friendly – after some wrestling over the prevalence of laptop “campers” in some early stores, Bridgehead has struck a nice balance between open areas and places to plug in, and free wireless with a one-hour limit. 

9. Strong retail branding – their online and social-networking presence could use some definite work, but in terms of creating a brand experience outside and inside their stores, they are hard to beat. This is due to the active involvement of the founders in every aspect of store design, so it will inevitably become increasingly challenging to sustain as they grow further without more formal “policy” work. But the fundamentals are very strong.

10. NO ADVERTISING(!) – this may sound strange on a “branding” blog, but remember this site is about brand strategy, not advertising, so I don’t make my money from media buys or column inches purchased. Bridgehead has managed to accomplish all of the above without spending a penny on traditional advertising. Again, this may have to change as they grow, but by reaching out through social-justice oriented circles, supporting like-minded causes, lots of “in-kind” community contributions, and to reitierate, being incredibly smart about their product and retail fundamentals,  they have succeeded by DIFFERING not by TELLING people they were different.

Filed Under: Analysis & review, Brand Value, Consumer product brands, Retail Brands, Service Brands Tagged With: brand, Bridgehead, coffee, Fair Trade, local retail, Ottawa, retail

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