Starbucks - One step forward, two steps back

Do you remember when Starbucks was cool? I will never forget the time I went into the original location in Pike’s Market in Seattle years ago. I had dodged the guy’s throwing fish over my head and really just stumbled across the place. I say stumbled but it was really the smell that drew me in – they had fresh bags of roasted coffee beans on the floor and the whole place just made you want to hang out (even though there were virtually no chairs back then).

When they came to New York and then London, I made a point of going to there, mostly because of the experience, as I have never really been a huge fan of their coffee. Howard Schulz is a great entrepreneur – I just wanted to see him succeed.

Then they grew and grew and grew some more. They were everywhere. Initially this was good, because they took coffee out of the bodegas and corner stores – it was definitely a step up. But while they grew into every airport, supermarket and even Target, little by little they lost their way. Interestingly they spurned a host of new coffee roasters and espresso bars, some of which are truly authentic and unique, such as Ink Coffee in Denver and JJ Beans in Vancouver. Now almost every urban area has somewhere like this.

Starbucks, although nobody will have ever told them this, lost their way because they abandoned the NEOs and Evolvers upon whom their success was based. It’s a pity because they are a great company, who are highly ethical to their suppliers and achieve an awful lot of good around the globe. However, uniform stores, lousy food, mediocre coffee and just being so damn ubiquitous, led the people who were always happy to pay a premium, off to other stores that just seemed more human. Not completely of course, we all still “grab a Starbucks” when it is convenient, but if you talk to NEOs; nearly all of them will have a great little coffee place they love.

Starbucks is now Traditional. It is the McDonald's of Coffee and is ironically fighting Big Mac for the discount latte market. They are in the process of further screwing it up by launching an instant coffee brand called VIA – it is all starting to look a bit desperate. They are even bribing people with a free pastry to follow them on Twitter! Revenues and same store sales are down – this is not the recession, this is a change in their customer base. They are now stuck competing on price - and that’s a pity for a company that did a lot right, but never really understood the NEO /Traditional world view.

Now they are trying to back up and reconnect with the NEO and Evolver audience by a new concept called “Fifteenth Avenue – Coffee and Tea “Inspired” by Starbucks”, which will have live music in the evenings and sell alcohol. It will be interesting to see how this works, but it is hard journey to re-establish authenticity once it is gone, especially while your Mom is drinking the instant stuff at home!