I believe that any discussion of Starbucks' woes must also include a discussion of its wins. The stock has had a tough year, but nothing like that of its nearest competitor, Caribou. Within the last couple weeks, Caribou's CEO stepped down—with no positive benefit on the stock price.
Rather than comparing or contrasting Starbucks and Caribou, I want to focus on what has brought Starbucks to preeminence in the industry in general. The points I'll mention are even more firmly rooted in personal opinion than those in my assessment of Starbucks' woes.
1) Starbucks has a unique ability to create an outstanding retail experience, giving it a platform from which to sell a variety of items that are not directly coffee-related.
In an age of increasing polarization of the marketplace, retailers that cater to middle-class consumers have raced to put in place a cheaper and lower-skilled labor force. The consumer's in-store experience—to the extent he or she interacts with store personnel—will likely range from indifferent to abysmal. In addition to the "affordable luxury" of the beverage itself, the interaction with a pleasant, personable and well-educated barista is a rare treat for the customer. For those regulars who develop a personal rapport with baristas they see often, the effect is amplified.
(To be continued.)
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