retail news in context, analysis with attitude

MNB took note yesterday of a Wall Street Journal story about Starbucks’ tactical approach to fixing its problems:

The Journal reported that “on Friday, Starbucks opened a store in downtown Seattle featuring wood décor that is reminiscent of the company's first location, at Seattle's Pike Place Market. It is an environmental design that features recycled materials, including a large wood table that once was used at a local restaurant and inside a Seattle home. … Prices aren't listed alongside the beverages, except for a small selection of high-end coffees made in a Clover brewing machine … Instead, baristas direct patrons to disposable paper menus if they want to buy one of the sweet blended drinks or learn the price of the other beverages. A Starbucks spokeswoman said the changes were aimed at making the store feel more like a coffeehouse.”

I commented:

I’m pretty sure that not posting drink prices on the menu boards isn’t the best way for Starbucks to counter the conventional wisdom that it is too high priced to be enjoyed during an economic downturn. And doesn’t a disposable paper menu actually work against the notion of an environmental design?

I may be wrong about this, but there seems to be a lack of consistency here. And that’s a marked change for a company that used to have a laser-like focus on its own strategic imperatives, a finely honed sense of what the customer wanted, and an enviable golden touch.

One MNB user responded:

My ohh my!! Aren't we a little bit (what's another word for pissy) about Starbucks. They test something new and wow what a bad choice. Walmart or Tesco do different formats and you are all for it. MNB continuously wants innovation ...... as long as they agree. Perhaps you are too young to remember coffee shops in the 60's … maybe Starbucks will test poetry reading or musicians playing ballads. Might be good for certain demographics as the old coffee shops were back in the time of "Leave it to Beaver."

Hey dude......... peace .......

Listen, everyone is entitled to their opinions. I don't think I was being “pissy.” I think I was trying to be objective. (Ironic, too, since for a long time I was accused of being in the bag for Starbucks. Oh, well…you can't please all the people all the time…)

Let’s see if that new format is successful creatively. Maybe more important, let’s see if it is successful financially. (It sounds like it might have been more expensive to build and run.) But I still think there are some inconsistencies here.

One other thing. I’m a fairly old guy (born in 1954), so I do remember old-fashioned coffee shops…and I used to love going to them down in Greenwich Village. But I’ll tell you this – if Starbucks starts turning to poetry readings and ballad singers as a way of turning around its fortunes, anyone who still holds Starbucks stock ought to sell it. Quick.

MNB user Dave Howald had some thoughts:

I think Starbuck’s has a great opportunity to reach out to many of the people who have been laid off. We all know that Starbuck’s likes to position itself as your “third space” after the office and home. Starbuck’s could offer free/reduced price resume writing services or even on-line via their free Wi-Fi for its customers to entice people into their stores. Getting them to buy more than a small cup of coffee and hanging around for hours could be a challenge, but I’m sure there are ways to work around it.

I think they are crazy not to post prices. It smacks of the old style upscale restaurants that would only give the “man” the menu with the prices on it. We live in a world where we want transparency and not posting your prices in clear view smacks of trying to hide something. I still love the consistency of a Starbuck’s drink, but admittedly I don’t go as often as I used to due to economic uncertainty.

MNB user Doug Campbell wrote:

When I am in a store that is too embarrassed to print the prices, either they are saying "If you have to ask, you can't afford it" and I usually can recognize that kind of business, or they are simply ashamed of the price for what they are selling. That usually means I turn around and go spend my money elsewhere. Not posting the prices for a cup of coffee is telling me that it is too expensive for what I'm getting. The other day I got a large coffee at McDonalds for $1.79. It was perfectly acceptable and wasn't burned. The price was posted.

Regarding the full implementation of Country of Origin Labeling (COOL) regulations, MNB user Dale Tillotson wrote:

Reading Ag. Sec. Vilsack's comments concerning COOL, I wonder if he is aware of the following issues with COOL.

No labeling, on salad bars and buffets in stores, how about Sushi, any labeling for all the ingredients indicating COOL. No, it’s too complicated.

Without fixing the complications and doing it correctly where all Produce and Meat is COOL labeled everywhere we might as well as SUTRAF COOL labeling.


But MNB user Steve Hensley disagreed:

This has been talked about within mainly the food/grocery industry for quite some time now, and it’s good to see it finally coming about. Most of our customers are food retailers or distributors and use our technology to track movement and information within their supply chain from beginning to end, including COOL. The majority of them started thinking about and acting on COOL quite some time ago.

Finally, one MNB user had a not-so-enthusiastic reaction to Walmart’s new Great Value private label design:

Looking at these new label design reminds me of what generic ( black and white ) labels of the 70's looked like. Walmart had the leading national store brand, so why now, with Store Brands sales on the rise would you think of risking sales ( and profits ) by changing the look ? The cost of this new look surely will be added to the cost of the goods at a time when you should by Walmart standards be lowering cost....

The marketing team is being given a great deal of credit for the sales increase at Walmart, when in fact all that has increase is food sales. Given that many concede that Walmart has the lower prices ( be carful here, the price gap is getting less as Walmart raises retails..), I would say that all that marketing money would truly be better spent by lowering cost / retails and gaining LONG TERM PROFITABLE MARKET SHARE.

So I as a customer would NOT give them a high rating for this label change as it seems to me their sales were pretty good before going through all this hype....

We’ll see. As I said yesterday, I like the new design and think it will be a winner.

KC's View: