In Christopher Guest’s witty canine mockumentary Best In Show, there is a line of dialogue that tells you everything you need to know about the world’s biggest coffee chain. "We met at Starbucks," says a woman character of her current romance. "Not the same Starbucks, but we saw each other at different Starbucks across the street from each other." Not many companies are so instantly recognisable that their brand names can be dropped straight into a movie without introduction. Indeed, there is probably only one: Starbucks. But, quite possibly, not any more. For the first time since it was founded in Seattle in 1971, the company that introduced the double mint mocha decaf skim latte to the world is on the retreat. Its stock price has been hammered. Its key founder has been hauled back to restore the old magic. It is experimenting with new products to revive flagging sales. And, most significantly, it has announced that 600 of its American shops are to close, the first major cull since it was founded. For the first time, people are starting to ask if the caffeine empire is about to fall. If so, it will be as good a symbol as any of the closing of an era of capitalist exuberance. You could have an interesting debate about which was the most iconic business of the last couple of decades. Microsoft was the richest, and Apple probably the coolest. But, for an exercise in pure marketing, for the chutzpah involved in turning frothy milk and hot air into one of the most powerful brands in the world, it would be hard to beat Starbucks. But like many companies before it, Starbucks has grown too big for its own good. In 2000, Howard Schultz had stepped aside from day-to-day management of the chain. But in January this year, he was re-appointed chief executive after customer traffic in established Starbucks outlets was reported to have fallen for the first time ever and the stock price dived. So what went wrong? One problem is that the chain simply became too hyper (maybe it was all the caffeine). In Manhattan, for example, there are 185 stores, eight per square mile. Even New Yorkers find that a bit excessive. Schultz himself acknowledged the problem: "Stores no longer have the soul of the past and reflect a chain of stores versus the warm feeling of a neighbourhood store." The coffee house was meant to be small, local and intimate. Trying to take it global may well have been an absurdly over-ambitious idea in the first place. As it became bigger, it became soulless. And that was always going to be its downfall in the end.
Last update : 26-07-2008 16:08
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By: hemant (Registered) on 05-08-2008 14:20