RyanHarne.com

A few RSS feeds that I subscribe to get a quick “Mark All As Read” press once a day after I glance over the article titles. Today, though, something decent fell through the line-up from Business Week. Is Starbucks Pushing Prices Too High?

The title isn’t what interests me here. The first point to catch my eye was the use of the term “cannibalizing” in reference to a supersaturation of storefront locations. Some time ago, I was in that mega anti-Starbucks mood, where I discovered that term appeared in their very own annual shareholder report. It has always intrigued me how cannibalizing sales is even possible when you consider the number of McDonald’s, 7-11s, Dunkin Donuts, etc, etc and how they don’t seem to suffer a similar epidemic.

I know that Apple doesn’t sell logo-clad attire (and it is ridiculously difficult for campus reps to get Apple-logo shirts for ourselves) in order to not saturate the brand image to the point of washing it out. Ironically enough, the iPod has engulfed the music player industry putting the Apple logo everywhere. Here me out, before long, Apple will stop putting those Apple stickers in iPod boxes and will instead reserve them especially for Mac purchases. Anyways, the point is that, perhaps, keeping your brand image intact and attractive boils down to allowing competitors room for making themselves look stupid. Starbucks had a period of rapid expansion so broad that they could have violated their own heritage and become the foolish coffee purveyors themselves. Thus the initiative to ramp back and curb the drop in sales.

Secondly, the article mentions the full offensive front that Dunkin Donuts and McDonald’s are setting up to take a chunk out of the existing Starbucks coffee consumers that are indifferent to the image when compelled with the bottom line, as long as the bottom line tastes similar or better. On my latest spring break romp in NYC, I walked from Spring St. to the Empire State Building in 10º F weather, complete with frightful winds and runnyred nose. Just a few blocks shy of ESB, I stopped at a Dunkin Donuts to warm up and to guzzle some afternoon java. Once my tastebuds warmed up, I discovered I was drinking a fabulous cup of coffee. The table beside me eventually filled up with newly-freed schoolkids who shared donuts and coffee, as well as rumors about who is keen on who. It was an experience I had never thought I could have at a Dunkin. If Dunkin Donuts and McDonald’s can take a bite out of the Starbucks share, have at it. They deserve it. Quality at a fraction of the cost of the standard $bucks charge; plus, both establishments are cleaning up their atmosphere from the historically-degrading reputation of sloppily-mopped floors and messy condiments tables.

My distaste for drinking at Starbucks continues, but, though I may be purchasing their bagged coffee from discounters like Target, I have no particular wish that their profits perpetuate. If Starbucks can’t maintain competitive prices, forget about it. Their stockholders will drop like flies, employee perks vanish into the manager’s offices, and earthen-colored tiled floors will show signs of negligence and sloppy mopping.

This entry was posted on Thursday, August 2nd, 2007 at 12:36 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.