Revolution or Retread: Thoughts on Starbucks’ 15th Avenue

Let me get this out of the way. I’m a big fan of Starbucks from a marketing and corporate perspective. While they have certainly fallen on relative hard times lately as a result of quarterly results driven growth, they remain an incredible group of business creators and marketers. Perhaps their greatest strength has been their refusal to accept the status quo and continue to innovate. By that same token ones greatest strength is oftentimes the greatest weakness. Interestingly enough the vibrant brand that Starbucks has built through its innovation is now under siege and the response is 15th Avenue Coffee, which Starbucks unveiled in Seattle this past week.

As you would expect the response to 15th Street among the marketing digerati has been swift and almost universally negative. Their are two main veins of contention with this new concept. The first is from the purists who are flummoxed that Starbucks would dare to create a new concept that claimed local when in fact it just an appendage of the evilness that is corporate coffee shops. The second issue raised is that 15th Avenue is the tired marketing trope of a big company rebranding a small subsection of its business, but not changing it philosophy or operating principles, these critiques have been rife with talk of TED, Song or Gap’s ill fated effort Fourth and Towne.

I’d like to quickly deal with the criticism and then lay out what I think would be a fascinating strategy by Starbucks, presaged by a very different brand than United or Gap. I think the chiding of Starbucks for being big but trying to be small misses the point. Starbucks has created a category that led to a thriving culture of coffee shops around the US, the creation of innovative devices like Clover, the growth of coffee bean entrepreneurialism in countries like Rwanda and many other positive externalities of scale and demand creation. That said there are certainly negatives that are attributable to Starbucks, but overall I find it very difficult to chide a brand for experimenting with new ways of expanding their business which are unrelated to the core brand. As for the second criticism, I think it is a fair warning, but with only one store built and the overall strategy neither fully articulated or executed I think patience is in order.

I think patience is in order because Starbucks may be embarking on a rather remarkable retail exploration that could establish a new operating model for the 21st Century Coffee House that would enrich Starbucks and this country. That model in my mind, is the Amazon Web Services of Coffee. Bear with me here and by all means inform me in the comments of where I misjudge, but here’s where I think Starbucks could go and why I’m so excited. Rather than get stuck on one concept, 15th Avenue, as a new brand, my hope is that Starbucks exposes their incredible supply chain and operational expertise to local entrepreneurs who utilize these services by paying a monthly fee. This is exactly what is happening at Amazon, where they have exposed the guts of their organization (supply chain, order fulfillment, web hosting, bandwith) as services that entrepreneurs can call on on a monthly basis to scale their businesses in line with demand.

Now imagine this same model applied to coffee houses, local entrepreneurs, trained at Starbucks (or perhaps elsewhere) lead their own local coffee experiments. These experiments generate not only immense real world data about what’s working but also maximize the value of Starbucks operational and procurement resources. If Starbucks does this right I think that they’ll model themselves more like Amazon than as United and as marketers we’ll have a new case study in marketing effectiveness.

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• Starbucks: Redesign/positioning stores (sub-branded) (theworldison.blogspot.com)
• Piers Fawkes: Inside Starbucks New Stealth Store: 15th Avenue E Coffee and Tea (huffingtonpost.com)

Tagged as: amazon, aws, Coffeehouse, marketing, retailing, Starbuck, Supply chain