Starbucks moves beyond the ‘cookie-cutter’ look for stores
The Starbucks Reserve store that opened quietly in October at Seattle’s University Village bears little resemblance to the other three Starbucks that already inhabited the shopping mall.
The bar and the back wall are made of reclaimed woods, and one side of the store is covered by a world map made of Starbucks coffee cups. The menu is neatly handwritten in chalk, unblemished by prices.
The mermaid logo, elsewhere so ubiquitous, takes a back seat to the star-shaped symbol signifying the luxury Reserve brand, which features Starbucks’ rarest coffees. It’s one of the first Starbucks stores to feature the Reserve logo on its storefront.
It’s also part of a slow, widespread makeover to give the middle-aged coffee empire a bespoke look.
Starbucks always embraced design during two decades of prodigious expansion, but in recent years it has moved away from what executive Clifford Burrows called its “historical cookie-cutter approach.”
A global network of more than 350 in-house designers in 18 cities now works closely with store managers and real-estate experts to make every store at least a little bit distinctive, and responsive to its surroundings.
The design drive is one of Starbucks’ answers to two major challenges: rejuvenating itself in the U.S., a mature market where the chain is practically on every corner, and adapting to wildly diverse new countries, where the biggest opportunities for growth lie.
Some of Starbucks’ new rollouts have been splashy — like the store it unveiled at the end of September at Canal Street and St. Charles Avenue in New Orleans, inspired by an early 20th century apothecary, or the train-car store it unleashed in Switzerland last November, the first rolling Starbucks.
But a lot of the company’s everyday tinkering with store design, such as the Reserve store in University Village, pops up unheralded.
“A lot of this we’ve pushed and tested right under people’s noses,” said Arthur Rubinfeld, the company’s chief creative officer.
Not every store gets the royal treatment, which includes unique pieces by local artists; location and traffic dictate the degree of customization a store gets. But all renovations and openings are treated with the new aesthetic, Starbucks says.
The company says that by now a majority of its nearly 20,000 stores have been retouched in some way, and 90 percent of the 3,000 new stores added in the past five years are deemed “locally relevant.”
Starbucks declines to say much about the cost of its makeover. But Burrows, in the November presentation where he talked about putting aside the cookie-cutter approach, said the company had invested hundreds of millions of dollars in the effort.
When Starbucks bumped up its capital spending by $300 million for 2013, it dedicated about $51 million of that amount to store renovation.
Experts say the gradual overhaul of Starbucks’ footprint is a critical adaptation as increasingly sophisticated consumers grow less tolerant of corporate uniformity.
“Cloning isn’t sustainable among today’s global consumers,” said Nancy Koehn, a Harvard Business School professor who has closely followed Starbucks since the mid-1990s.
Starbucks was among the first retailers to suffer from the tectonic shift among consumers. In early 2007 Howard Schultz, then chairman of the company, penned an internal memo decrying the “watering down” of the Starbucks experience. That commoditization, combined with the financial crisis, led to a big drop in sales later that year.
“They got burned real bad in those years and they don’t want that to happen again,” Koehn wrote.
So far the strategy has won Starbucks design awards and helped boost its bottom line. Starbucks in September closed its best fiscal year ever, albeit marred by a $2.8 billion charge from a legal dispute with Kraft Foods.
“The momentum seen within Starbucks’ domestic retail stores is remarkable in both its magnitude and consistency,” said RBC Capital Markets analyst David Palmer in a recent note.
The company is pursuing other avenues for growth beyond its coffee bars, as shown by the purchase of tea retailer Teavana and juice maker Evolution Fresh. It’s also betting big on the packaged-food business, which benefits from Starbucks’ careful preening of its image.