We think something more than recession led to Starbucks announcing it will shutter 600 stores in the U.S. Two years ago Starbucks was the darling of Wall Street, with management-guru books out almost every day, expansion into music and DVDs, a stock pumped to $39.63 per share (up from a split-adjusted $0.53 back in 1992), and brand partnerships with everyone from Apple to Jim Beam.
Today, Starbucks’ stock is off more than 60% from the height, like the cresting bell curve of a consumer fad. Some have criticized Starbucks for over-expanding stores, or stretching its products too far into dishware, CDs and breakfast sandwiches, or even rethinking its logo.
We think competitors caught up. Starbucks shook an entire industry by making the consumer experience part of the food buy. But soon McDonald’s launched gourmet Newman’s coffee and redesigned its stores. Dunkin’ Donuts added wood paneling and gas fireplaces. Heck, our local Stop & Shop grocery now has oak floors.
It’s a puzzle for competitive design: You can copyright a logo, but how do you copyright a customer experience? The sensory delight of the fragrant, earthy, green point-of-purchase environment became just another commodity. Sort of like a cup of coffee.