Starbucks Cup Now Runneth Under

When Starbucks on Nov. 15 reported for the first time in years that the number of customers visiting its stores had dropped, the coffee reseller announced plans to send more managers into the field.

Company officials pointed to recent price increases—because of milk price hikes—and denied that store saturation may have played a role in the decline.

But theres something else going on here. Starbucks has been retails best example of a company that truly understands social networking and how to make a retail outlet a destination. Starbucks prices are high for coffee and other independent coffee shops—and even some chains, such as McDonalds and Dunkin Donuts—offer what some consider to be better tasting coffee.

However, consumers choose to go to Starbucks to meet with friends, do business meetings and sometimes just hang out. More unexpected is that the chain that has so skillfully mastered social networking has a Web site that is fine, but not great. It has virtually no community section and it goes out of its way to not promote what it has.

This is a company that has decidedly made the Web a very low priority. Could Starbucks be learning that man doesnt live by bricks alone, and that a well-crafted Web presence doesnt merely generate page views and generate a little e-commerce revenue? The chain does permit consumers to buy their coffee-making equipment online.

An intelligent Web strategy uses the site to generate excitement and to send more people to the store, where they start discussions that they can continue online. Integrated, it allows community building locally and globally. On their own, though, the stores will eventually lose their buzz and traffic will drop off.

Starbucks CEO Jim Donald is quoted in the Nov. 15 Wall Street Journal as saying that Starbucks has decided to open 100 fewer stores next year than it has projected this fall because the chain is “taking a little more deliberate approach.” Perhaps had officials taken a more strategic approach with its Web approach, this more deliberate approach—a deliberate retreat—might not have been necessary.

Retail Center Editor Evan Schuman has tracked high-tech issues since 1987, has been opinionated long before that and doesnt plan to stop any time soon. He can be reached at Evan.Schuman@ziffdavisenterprise.com.

To read earlier retail technology opinion columns from Evan Schuman, please click here.

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