Starbucks: Starbucks is restyling three Seattle stores as indie coffee houses, serving up beer, wine and poetry slams. With traffic at its stores flagging, it’s easy to see why Starbucks might want to experiment with other formats. But as many retailers have discovered to their chagrin, expansion from a core brand often brings new risks of its own.
The Seattle chain plans to open its first experiment in its hometown next week, as 15th Avenue Coffee and Tea. The concept seems like a less-caffeinated extension of the java giant’s ethos, with poetry slams, music in the evenings and wine and beer.
While this is a departure for Starbucks, it’s common in the retail trade to branch out in an attempt to capture different market segments. Think Gap brands like Old Navy and Banana Republic, or the family of brands surrounding Spanish retail giant Zara.
So Starbucks’ experimentation could make sense if it brings in a new class of customer, or even if it just gets those clients who pop in for a venti and a muffin in the morning to frequent its new concept store for a glass of wine in the evening.
Trouble is, sometimes these experiments don’t work exactly as planned: Abercrombie & Fitch last month said it will shutter its 29-store Ruehl line aimed at a more upscale clientele. The risk is that new concepts simply siphon customers away from the core business or take managers’ eyes off the ball.
Starbucks reported a decrease of 8% in same-store sales in its last quarter ended in March. With more than 15,000 locations around the world, it will be a long time before poetry readings and wine tastings can make a dent in the sales figures. Shareholders better hope the company’s managers aren’t distracted from the larger task at hand.