Who's Apple? Let's talk Starbucks! ~ Sounds + Food 'n' Retail

Who's Apple? Let's talk Starbucks!

I feel like I've written enough about Apple over the last months on Tech IT Easy, and similarly the blog-space is a-buzz with the news of iPods, new colours, new ways to get media, blablabla, how boring huh?

Well, while I still want an iPhone, especially now that it's dropped to a price where the synergy between media-player, mobile PC, and phone is actually quite compelling, I was much more interested to hear the news about yet another partnership, this time with Starbucks. If you aren't a faithful reader of Tech IT Easy, you may not have noticed that lately I spent a lot of time discussing food-related things (completely unrelated to tech of course) and in particular, several posts about Starbucks. The first was on how Starbucks uses vertical integration to maintain a high level of quality throughout their value chain (it is not a franchise!), and the second, more tech after-all, on the concept of a third place and how the web fit into this.

The third place
I hopefully do not need to go into this again too much, as much of the definition can be found on my post and on Wikipedia. But essentially a third place is the space between home-life and work-life, where we try to find some time for ourselves.

Starbucks has really been pushing this concept, both in their amazing book, and of course in their stores. I should mention that, as a European, I'm quite spoiled as far as third places / food-related leisure venues go, and Starbucks, in my opinion, could use some... personality, for lack of a better word. But that is mainly the legacy of scale economies, which is king in the US, and lead to the global and uniform-looking  chains, like McDonalds (see my other post on that here), that we are used to seeing, of which Europe, in turn, has very little to offer.

How has Starbucks tried to make their venues third-place worthy? Well it starts with creating a place where people like to be. Initially, Starbucks was a coffee-bean retailer, not selling coffee-drinks, and a big credo at that time, and ever since then, was to educate people about coffee. This is based on two vital ingredients: excellent coffee and a staff both qualified and approachable. And education and customer-service are pretty much the core of Starbucks, as I see it.

Second is creating an atmosphere that makes people feel at home. Here, music plays an important part as well as providing places where people can work and browse the internet. This has manifested itself in several partnership, with music-producers and artists, incl. Apple, as well as T-mobile to provide fairly global internet-coverage in their chains.

The latest is of course Apple's announcement that people will be able to buy songs currently playing in a Starbucks at a finger-click through itunes, and at no internet-charge.

Starbucks the retailer
After reading the book "Pour your heart into it," I've always seen Starbucks as much more than a simple coffee-chain. The company is aggressively forming partnerships to offer customers a richer experience in their stores, and expanding their reach into supermarkets as well, in order to gain mind-share. And, as Schultz announced in the Apple Keynote, the company is still in its embryonic stages, which I can easily believe.

Focussing purely on their retail-outlets for now (and not their innovative shifts into people's homes), that is what their coffee-houses are in fact becoming. Building on the reputation of their coffee, Starbucks has been extending that to other products in their stores as well, always using the credo of "quality first." While, similar to Apple, this quality comes at a premium, Starbucks is playing into current market -trends that quality leads to less price-sensitive customers, and as long as the company keeps doing well, it can keep charging these prices.

What I see is a shift from the supermarket, book- or music-stores, to places where people come first of all to relax and second to surround themselves in a type of glamour, listen to good music and buy it, read a good book and buy it, have a great coffee and buy some beans to take home.

This is only made possible because Starbucks has a strong control over their value chain and a lot of marketing power at its disposal. A regular coffee-chain, which does not own its own coffee-factories, nor have the financial capacity to own multiple stores, instead franchising them, does not have the same negotiating strength with partners to guarantee this level of quality.

While Starbucks did not entirely start from the ground up—Howard Schultz actually acquired the bean-maker after a while and took their name, it clearly pays off to start as high as possible on the value-chain, as a manufacturer, while having a keen eye for what customers want. 

I'm sure there are other lessons to be drawn from this, such as for instance lock-ins and Apple's perspective. More on this as I think about it or as you suggest it in the comments.

The Escheresque picture is courtesy of MIT.


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