projectmayhem wrote: » While I am a huge fan of starbucks coffee and the general vibe of their cafe's... it is an unreal amount of stores, but they must each be making enough revenue to justify their existence. I've never seen one of them jammers though, which is strange.
No Logo by Naomi Klein wrote: Starbucks' policy is to drop "clusters" of outlets in urban areas already dotted with cafes and espresso bars. This strategy relies just as heavily on an economy of scale as Wal-Mart's does and the effect on competition is much the same. Since Starbucks is explicit about its desire to enter markets only where it can "become the leading retailer and brand of coffee," the company has concentrated its store-a-day growth in relatively few areas. Instead of opening a few stores in every city in the world, or even in North America, Starbucks waits until it can blitz an entire area and spread, to quote Globe and Mail columnist John Barber, "like head lice through a kindergarten." It's a highly aggressive strategy, and it involves something the company calls "cannibalization." The idea is to saturate an area with stores until the coffee competition is so fierce that sales drop even in individual Starbucks outlets. In 1993, for instance, when Starbucks had just 275 outlets concentrated in a few U.S. states, per-store sales increased by 19 percent from the previous year. By 1994, store sales growth was only 9 percent, in 1996 it dipped to 7 percent, and in 1997 Starbucks saw only a 5 percent sales growth; in new stores, it was as low as 3 percent. (See Table 6.3, Appendix, page 473). Understandably, the closer the outlets get to each other, the more they begin to poach or "cannibalize" each other's clientele—even in hyper-caffeinated cities like Seattle and Vancouver people can only suck back so many lattes before they float into the Pacific. Starbucks' 1995 annual report explains: "As part of its expansion strategy of clustering store in existing markets, Starbucks has experienced a certain level of cannibalization of existing stores by new stores as the store concentration has increased, but management believes such cannibalization has been justified by the incremental sales and return on new store investment." What that means is that while sale were slowing at individual stores, the total sales of all the chain's stores combined continued to rise—doubling, in fact, between 1995 and 1997. Put another way, Starbucks the company was expanding its market while its individual outlets were losing market share, largely to other Starbucks outlets (see Table 6.4, Appendix, page 473). It also helped Starbucks, no doubt, that its cannibalization strategy preys not only on other Starbucks outlets but equally on its real competitors, independently run coffee shops and restaurants. And, unlike Starbucks, these lone businesses can only profit from one store at a time. The bottom line is that clustering, like big-boxing, is a competitive retail strategy that is only an option for a large chain that can afford to take a beating on individual store in order to reap a larger, long-term branding goal. It also explains why critics usually claim that companies like Starbucks' are preying on small businesses, while the chains themselves deny it, admitting only that they are expanding and creating new markets for their products. Both are true, but the chains' aggressive strategy of market expansion has the added bonus of simultaneously taking out competitors.
Thaedydal wrote: » Which one ?
Thaedydal wrote: » I don't mind there being more coffee shops then pubs but why to they all close so early. Why can't I go and sit for an hour and have coffee at 10:30pm ? Why don't they encourage people to have meetings and use the place for socail gatherings like they do in other countries.
quank wrote: » Yeah, it's pretty unreal the amount of them. Now we can finally appreciate that episode of the Simpsons where all the shops in a mall are turning into Starbucks.
Keith186 wrote: » I too would also like to say I'm dissapointed with the Americanisation of Ireland to this extent.
Sea Devils wrote: » Though it eventually will happen I hope to hell Starbucks never comes to Galway
Keith186 wrote: » You don't mind more cofee shops than pubs??? Are you fit to be a moderator of Beer, Guts and Receeding Hairlines anymore?
deswalsh wrote: » Pffft,not likely! Even Cromwell wouldn't go there!
Keith186 wrote: » Joking aside the late opening social thing for meetings could be good in certain areas. Would be a good idea for somebody thinking of starting up to mailshot local clubs and give them some reward like 20% off prices for meetings.
colly10 wrote: » +1 - Id say Starbucks coffee is the worst of any of the coffee chains with the exception of the coffee in O'Brien's and possibly Cafe Sol yet it somehow manages to do the best business of any of them. Im convinced that half of their customers aren't really coffee drinkers (or at least weren't until Starbucks opening in their area)
