Thursday, November 13, 2008

Lots Of Schadenfreude Over Starbucks

All sorts of people are rubbing their hands together and cackling with glee over Starbucks' crummy quarter.

Fewer U.S. customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter at Starbucks Corp., the company said Monday.
Seattle-based Starbucks said profit fell 97 per cent to US$5.4 million, or a penny a share, from $158.5 million, or 21 cents per share, a year earlier. The coffee retailer earned 10 cents per share when the costs from closing about 600 stores in the U.S. and 61 locations in Australia are excluded.

SBUX ranks up there with Wal-mart and Haliburton in contention for the title of "Corporation People Most Love To Hate." They may be large (and personally, I think their coffee tastes like dirt), but that doesn't mean they're unstoppable. Threat Of Subsititution is always a danger to big brands, and coffee is one market with plenty of competition.

As it happens, I just got this email from a friend who is a keen coffee watcher like myself:

Last summer I visited a single location independent coffee shop and got in to a conversation with the owner. 2 blocks away from a Starbucks. All it took for him to make a go of it were 2 things, entry level good cup ofcoffee for 60% of the price at Starbucks and the secret weapon.... Freewifi. I guess sometimes a brand, no matter how powerful it might be perceived to be, can have a critical weak point.

If you're a clever business owner, there's always a way to differentiate yourself and prosper, even in the face of giant competition.

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