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MBA professors are reportedly claiming that Starbucks made a few specific errors in judgement in regards to their business lifecycle:
#1 - They over expanded and underestimated how far people are really willing to travel to buy their coffee. A good example is how nearby my home is a large "outdoor mall" in which there is a Starbucks both inside a Barnes & Nobles, and also an independent Starbucks (also without a drive thru) on the other side of the mall. Yes it is a big mall, but that was definitely a poor judgement call by the company. For Starbucks most people are willing to walk one tenth of a mile (or even drive 1-5 miles)... I know if I was still buying espresso I wouldn't consider that a tremendous inconvenience.
#2 - Unlike McDonald's which actually is primarily in the real-estate business (the company actually owns and leases nearly all of its locations to the franchisers/store owners), Starbucks leases most of its locations from landlords. It thus has little ownership in actual real estate and cannot leverage its real estate assets as McDonald's (or even Walgreen's) can.
#3 Starbucks doesn't have any sort of method for retaining customers - no significant nationwide loyalty program. They sell a luxury product, and in a tough economic climate, Starbucks really needs a loyalty program to retain the customers it already has today. They are bleeding customers willing to go down the street to another coffee shop, perhaps a locally owned business, perhaps a business with a quieter or nicer atmosphere, or perhaps a place which an equivalent drink can be had for .50 cents less.
[quote=mbuszu;3634234]MBA professors are reportedly claiming that Starbucks made a few specific errors in judgement in regards to their business lifecycle:
#1 - They over expanded and underestimated how far people are really willing to travel to buy their coffee. A good example is how nearby my home is a large "outdoor mall" in which there is a Starbucks both inside a Barnes & Nobles, and also an independent Starbucks (also without a drive thru) on the other side of the mall. Yes it is a big mall, but that was definitely a poor judgement call by the company. For Starbucks most people are willing to walk one tenth of a mile (or even drive 1-5 miles)... I know if I was still buying espresso I wouldn't consider that a tremendous inconvenience.
I agree with this 100%. There is a mall here in NJ - average size, not huge. There are four Starbucks. One in the mall, and one outside the mall. There is also one inside Acme (supermarket) and inside Target. All are within easy walking distance of one another. Crazy!
MBA professors are reportedly claiming that Starbucks made a few specific errors in judgement in regards to their business lifecycle:
#1 - They over expanded and underestimated how far people are really willing to travel to buy their coffee. A good example is how nearby my home is a large "outdoor mall" in which there is a Starbucks both inside a Barnes & Nobles, and also an independent Starbucks (also without a drive thru) on the other side of the mall. Yes it is a big mall, but that was definitely a poor judgement call by the company. For Starbucks most people are willing to walk one tenth of a mile (or even drive 1-5 miles)... I know if I was still buying espresso I wouldn't consider that a tremendous inconvenience.
I second both you and UKOK on that about Starbucks, as I can name many areas in the Chicago area where I feel Starbucks has overexpanded. Not to mention(of course), that as a result of their excessive expansion, they've successfully cannibalized sales from their older locations.
BTW, well said about Dunkin' Donuts, SPNARD1! I've more and more grown to really enjoy their coffee in the last year, since I randomly tried it myself about a year or 2 ago.
Starsucks has no future. As commodities prices rise due to demand and shortages, you'll see most of the Asian and African countries convert from coffee plantations back to rice cultivation. That will cause the price to rise very quickly. In the case of some of the African countries, I wouldn't be surprised to see the governments seize the coffee bean plantations from US corporations and convert the land back to its original rice cultivation to feed their people.
No, they won't be going anywhere. It's interesting when people have issues with what others spend their money on. I sense some jealousy, hmmm.
No, no jealousy here. Just an observation of indicators. Sharper Image and Linens & Things have fallen by the wayside. As people tighten their belts these types of places will suffer first.
No, no jealousy here. Just an observation of indicators. Sharper Image and Linens & Things have fallen by the wayside. As people tighten their belts these types of places will suffer first.
Things are not "suffering" as bad as the media makes it appear.
No, they won't be going anywhere. It's interesting when people have issues with what others spend their money on. I sense some jealousy, hmmm.
Hard to be jealous over people spending money they don't have
But I suppose that a quick swipe of the card makes one an "owner" of such fine products
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