Two timing the brand

Poor old Starbucks. Jack Trout (who writes an excellent column for Forbes in the US) states it is a brand in trouble. Anybody that headlines an article with Whither Starbucks has to be a good chap, in my book, despite the fishy moniker. Here’s the skinny (as they say in America) Starbucks has put tremendous energy into opening hundreds and thousands of outlets, with quality coffee and baristas to ensure the experience is top notch, but sales worldwide are declining. They’ve even begun to advertise, God forbid. Why? Well, there’s a ton of competition, from all quarters. Every half decent deli and corner shop now does a lovely latte or cappuccino, selling the stuff for rather less than the three or four dollars a shot in Starbucks. (It’s just £1.10 for delightful coffee from the Petit Coin in Stoke Newington, for example). Even McDonald’s is at it, withcoffee1.jpg an increasingly decent brew becoming a normal consumer expectation of any food outlet anywhere (except on the M6, obviously.) Coffee is the world’s single largest commodity, after all. So what should Starbucks do? Stick to the knitting get good at coffee? Well possibly, but it seems a little late now, especially as consumers realise that the coffee they make is the same product obtainable everywhere else, and indeed, can make it at home in sophisticated devices as well as cups and kettles. Is it realistic to have a high value brand at a premium price point, and offer a value brand as an alternative but developed from the same supply chain? Starbucks has become commoditised, the company admits. It’s not a good place to be, and a salutary lesson to all who fail to understand that customers are just as capable of unpicking the supply chain in an open source world.

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