The Starbucks Story (17 page)

And by doing so, they will each add depth and richness to the Starbucks brand.

“And so Starbuck found Ahab with a general chart of the oriental archipelagoes spread before him; and another separate one representing the long eastern coasts of the Japanese islands – Niphon, Matsmai, and Sikoke. With his snow-white new ivory leg braced against the screwed leg of his table, and with a long pruning-hook of a jack-knife in his hand, the wondrous old man, with his back to the gangway door, was wrinkling his brow, and tracing his old courses again.”

Herman Melville’s words from
Moby-Dick
have the ring of mad adventure about them. Another spirit of adventure has taken the modern Starbucks in different directions around the world, and with a different mission. But there is still something obsessive and all-consuming about Starbucks’ quest for new territories for its coffee houses.

Starbucks has come further faster than anyone imagined it might. It now employs more than 80,000 people, but still wants to think of itself as a small company. The truth is that Starbucks has grown from a small fish to the proportions of a whale, with the systems and logistical network of a big company. Yet for a vertically integrated company it has become remarkably successful at maintaining quality at every stage of its process, from bean to barista. Its friendly efficiency means that customers stay loyal, visiting Starbucks 18 times a month on average in North America. The equity of the brand continues to have a life of its own, building reputation and trust and enabling Starbucks to keep developing. Part of the company’s strength is that it trusts its own people; the likelihood is that the future big idea will come from the imagination of a barista located in whatever proves to be Starbucks’ next port of call. Even more certainly that idea will be based around coffee and coffee drinking. Starbucks loves imagination, but is absolutely focused on its core product as the anchor for everything it does.

With good reason, because the coffee effect has been astonishing. The drinking of real coffee has been democratized by Starbucks. In America, and throughout the world, it has filled the gap between the coffee slob and the coffee snob, and made good-quality coffee widely available on a daily basis. It has become a mass-market brand, leaving its flanks exposed to critics on one side (“Too expensive, too upmarket; I prefer instant”) or the other (“The coffee’s no good”). Coffee snobs like Frasier Crane, living in Seattle, will look down their noses at Starbucks in an effort to maintain their self-image of refinement and tasteful discrimination. They do this while enjoying, in Café Nervosa, all the benefits of ambience and sociability that have been made possible by Starbucks’ development of the coffee-drinking marketplace.

Starbucks has been a success almost everywhere in the world it has traded. Its international sales are expected to overtake its domestic US sales – a harder trick to pull off for a brand based on human experiences across the counter than it would be for brands based more on volumes of mechanical transactions. You feel that if McDonald’s could find a way to simplify the transaction and do without people altogether, it would. With Starbucks, the transaction itself is almost incidental.

Some people argue that Starbucks grows by manipulation and exploitation; some dedicate websites to their hatred of Starbucks. There is a body of opinion that says all commercial activity involves an effort of persuasion that is manipulative. But is Starbucks more manipulative than most? One fact that suggests not is its low advertising spend. If Starbucks is getting its message across, it is not doing it through advertising. So it seems that a different phenomenon is at work here.

Starbucks is actually one of the purest examples of a brand that we have. It starts with a commodity product – coffee beans – and invests them with extraordinary added value by creating an experience that transcends the simple act of drinking an unnecessary beverage. And this experience becomes an integral part of the daily lives of millions of people. The experience varies from country to country but remains recognizably Starbucks: the brand shows a high degree of adaptability and a readiness to suit itself to changing ways of living. The wi-fi hotspots that enable customers to use wireless mobile computer technology in stores have made Starbucks a world leader in this area; it has understood the increasingly informal approach people take to doing business without fixed offices.

Through such developments, Starbucks has built its reputation and trust over many years. New product developments such as Frappuccino proved to Starbucks that it had earned that level of trust. From trust comes permission to experiment. That permission is extended as long as Starbucks remains true to its core ideals. Along the way Starbucks stretched the brand beyond its core of coffee, reaching into financial services, for example, with the launch in the US in 2003 of its Duetto card: part credit, part loyalty card. The loyalty element keeps the umbilical cord to the coffee experience and stops the card branching off into unrelated territory.

The question Starbucks is increasingly asking is: does the customer trust us enough for us to act as an editor in their lives? Clearly, coffee is an essential element in customers’ lifestyle, but what other aspects of their lives can we possibly serve? One of the interesting examples that is moving up Starbucks’ agenda is music. Starbucks has played music in its stores for 20 years, and there seems to be an association between relaxed coffee drinking and a background of music.

Timothy Jones was plucked out of the stores in the early 1990s to pursue his musical interests and create taped compilations of music for the stores. Year by year the operation got more serious and more professional. It started making compilations for different times in the day, and customer reactions showed that there was a strong affinity.

From ever-bigger ranges of music, the stores were given the technology to make their own selections to fit local tastes while keeping a close connection to the brand. Through its emotional resonance, music added another sensory layer to the store experience. Certain kinds of music – particularly chart hits – were seen as distant from the brand. Discovery or, in many cases, rediscovery of neglected artists, became an explicit aim.

In 1998, Starbucks went a step further and bought Hear Music, a retailer with six stores in California. David Brewster is now a key figure in this development. Hear Music does not just provide the music to play in stores; indeed, its role is becoming increasingly ambitious. It retains a small number of Hear Music outlets that sell CDs, and is opening a flagship store in Santa Monica, Los Angeles in spring 2004. The store will test whether there is a bigger opportunity to develop a new retailing concept that combines Hear Music and Starbucks.

Whatever the outcome of that venture, music remains integral to the Starbucks experience, not just for customers to listen to while drinking their coffee but to buy and take home as CDs. US Starbucks stores now have listening posts with headphones to try out the range of music. The CDs sold at Starbucks have a high editorial content in terms of both selection and recommendation, with 50-word descriptions provided for each track. There is also a series of artists’ choices: CDs with music chosen by, for example, Sheryl Crow, Ray Charles, and the Rolling Stones. The compilations are exclusive to Starbucks and offered through its stores. For a music industry in crisis, Starbucks offers something of a lifeline, selling CDs to customers who have been neglected by the music business’s obsession with the youth market and the threat of internet downloads. Building on its understanding of its customers’ lifestyle, Starbucks has realized that there is an opportunity to fill a gap while continuing to provide a service that remains focused on the in-store experience. Selling CDs is the “frosting on top.”

The network thus created is part of the Starbucks effect. A further community, or series of communities, is built around customers’ musical tastes: for 1940s jazz, world music, soul, blues, classical. The effect on the music business has been galvanizing, and the major labels cooperate with Starbucks to make their artists’ work available. This has both revived interest in neglected musicians and helped to introduce new singers: David Gray, for example, appeared on a Starbucks CD before he started selling in millions. Links with local radio stations then spread the ripples even further. Inevitably, this works best in Seattle, where KMTT – The Mountain station plays soft rock and “unplugged” sessions by touring artists. The resulting
On the Mountain
compilations are produced by Hear Music, with radio promotion sending listeners towards Starbucks stores and a proportion of sales being donated to the Wilderness Society.

I digressed into music because it provides evidence that Starbucks still has the ability to reinvent itself and take fresh risks. But we need to return to coffee because Starbucks always does, while keeping an entrepreneurial eye open for opportunities. It remains confident that there is still plenty of room for growth in the coffee market. “Oh, the places you’ll go” is the Dr Seuss–like spirit behind Starbucks. It still enjoys planting its flag in exotic parts of the world, and its spirit of adventure and romance remains strong. At the beginning of 2004, the next port of call is Paris, France. There is excitement about how the French, with their strong opinions about coffee and Americans, will take to Starbucks. But it needs to be restated that the Starbucks approach is not based on heavy advertising to take market share off competitors. It concentrates on growing the overall market. So while Starbucks has thrived, so too have coffee shops of many kinds, including that indomitable specialist, the owner–manager shop. Expect the same to happen in France.

Little of this market growth is achieved by hard selling. Put aside dramatizations of sales techniques you might have seen in such American plays and films as Arthur Miller’s
Death of a Salesman
, David Mamet’s
Glengarry Glen Ross
and Barry Levinson’s
Tin Men
. These have mythologized the idea of the American hard sell. To get to that point there needs to be a strong base in reality: hard-sell techniques are used in the US to sign people up to everything from sex aids to religion. Yet Starbucks has never gone that route. You might get the odd offer (and strangely enough an offer does sometimes seem an odd thing to find in Starbucks), but the marketing spirit of the company is more akin to “Education, education, education” than “Sell, sell, sell.” So a lot of effort goes into training baristas to know their coffee as wine merchants know their wine. The mission to educate the customer in the ways of the bean persists, and is still in stark contrast to the dominant coffee brands that Starbucks came along to challenge. Maxwell House and Nescafé expect very little coffee knowledge of their customers. Indeed, there is a sense in which ignorance is bliss as far as these brands are concerned. Do Nescafé customers ever wonder where the coffee comes from? Few efforts are made to inform them.

Most coffee is sold in supermarkets, and for many years Starbucks refrained from competing in this arena, knowing that the brand experience is hopelessly diluted there – particularly because a pack in a supermarket does not talk to you. With Starbucks, the brand keeps coming back to its people. But there are passionate people in the roasting and packing departments too, and they knew that most of the company’s reluctance to enter supermarkets stemmed from the problem of maintaining quality. Coffee beans and ground coffee could sit on shelves for far too long, way past the short “use by” dates that Starbucks insists on. Taken in the last couple of years, the eventual decision to sell Starbucks coffee in US supermarkets was made possible by improvements in packaging technology brought about by Starbucks working closely with its suppliers and maintaining rigorous standards in its roasting plants.

So the product still remains at the center of the operation. Yet any product, any brand, is at the mercy of the subjective. “I don’t like it” is a valid reaction to any product. Personal taste counts. Starbucks is open to subjective dismissal by many people who do not particularly like coffee, or claim not to like Starbucks coffee. All I can observe is that millions of people worldwide do seem to like the coffee. And for those old enough to remember, it is interesting to recall the time before Starbucks and think about the quality of coffee available on the streets of our towns then. Starbucks has raised the overall standard, whatever your individual reaction to the Starbucks product.