Starbucks Tests New Store Names, Alcohol Sales
16 Juli 2009 - 7:28PM
Dow Jones News
Starbucks Corp. (SBUX) is scrubbing its name from a Seattle
location in favor of the store's street address in a test that
could sprout more stores that seem more like the corner coffee shop
rather than the global coffee giant.
The store, a former Starbucks that had been targeted for
closing, is called 15th Avenue Coffee and Tea. It will also serve
wine and beer and host live music and poetry readings as it seeks
to take on a more community vibe where neighbors can gather late
into the night. Bagged coffee in the store will also be slapped
with the 15th Avenue Coffee and Tea name.
The chain plans to remodel at least three Seattle-area stores
with names based on their addresses or neighborhood rather than the
corporation, and it could expand the trial to other markets.
A Starbucks spokeswoman confirmed the test, first reported
Thursday by the Seattle Times, was in the works, but an executive
wasn't immediately available to comment on further details.
The test is the latest attempt by Starbucks to rejuvenate its
in-store experience with changes like grinding coffee beans for
each new pot and simplifying recipes for its muffins and breads.
Starbucks is also opening stores with a more sophisticated tone
that hearkens back to its early coffeehouse days.
At the same time, the coffee giant continues to face pressure as
consumers remain wary in a shaky economy while McDonald's Corp.
(MCD), with its recently launched McCafe, and other coffee
purveyors pose fresh competition.
Operating a store under a different name could provide a fresh
canvas for Starbucks to test a number of elements where consumers
won't be biased by the company's name, says Ron Paul, president of
Technomic Inc., a Chicago-based food consultancy. "It would only
confuse the customer to put Starbucks on it," Paul said.
Serving alcohol like cordials and offering entertainment could
help boost night-time business, making it serve more as a dessert
destination after meals. Still, attempts at improving the customer
experience may be lost on consumers for whom price has become the
defining factor in where they spend their money.
"There is that 'third-place' aspect for Starbucks, but that's
become less important" for consumers, said Paul, referring to a
term commonly used to describe the chain as a gathering place.
Starbucks has been battling falling sales and traffic throughout
the recession, causing the once fast-growing chain to shut hundreds
of stores and lay off thousands of employees. Its last round of job
cuts announced in January sent pink slips to 6,700 workers, while
the company closed another 300 stores.
Starbucks shares took a nosedive, hitting a 52-week low of $7.06
last November, though the company's restructuring has helped
restore order. The stock has more than doubled since, and is up 52%
this year, recently at $14.39.
Next week, Starbucks is scheduled to report third-quarter
earnings, with analysts forecasting another period of weak sales
while the chain aggressively works to cut costs.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194;
paul.ziobro@dowjones.com