Rebranding + Global Corporation = Local?
This past July, Starbucks announced the opening of a new coffeehouse as well as a new rebranding campaign. Interestingly, however, their new coffeehouse is called 15th Av. Coffee & Tea rather than simply Starbucks. As the first step in their rebranding campaign, 15th Av. Coffee is an attempt to create unique, local neighborhood coffeehouses alongside their ubiquitous Starbucks franchises. There are several noticeable differences between a Starbucks and 15th Av. Coffee. First, coffee served at 15th Ave is roasted in smaller batches and brewed within days of roasting (as compared to Starbucks’ mass-roasting process). Secondly, espresso served at 15th Av. is made from an old-fashioned espresso machine and servers spend extra time adding “latte art” to the drinks. Unlike Starbucks’ “thaw and serve” pastries, 15th Ave. offers pastries baked daily by a local bakery. Customers can also read their poetry and perform songs during open-mic sessions at 15th Av. as well as bring in their own LPs to play on the sound system. In “How to Manage Radical Innovation,” Stringer explained how large companies usually avoid innovation due to financial restrictions and bureaucratic structures. It is particularly interesting to study the 15th Av. Coffee innovation in light of Stringer’s arguments.
The company is planning to open several other “neighborhood” coffee shops around the country this year, each with their own name and locally-inspired atmosphere. In an attempt to gain new customers and stay afloat, it seems Starbucks is determined to appeal to the portion of the market that would otherwise be uninterested by its impersonal corporate chain.
I think it’s clear that Starbucks’ product is not their coffee; it’s their coffee shop experience. In turn, the true innovation of 15th Av. Coffee & Teas is its new coffee shop product and rebranding campaign. With their rebranding innovation, Starbucks is essentially trying to rebrand and create another product: the personal and intimate neighborhood coffee shop experience. Here around Nashville, there seem to be two types of successful coffee shops: the corporate giants, like Starbucks, where masses of customers can order their favorite, predictable coffee drink; and the charming neighborhood coffee shop, like Fido’s, where loyal customers who want their coffees with a side of character and quirkiness, warmly greet the owners and usual faces. The latter has a sense of place and character that Starbucks simply does not have.
However, I think Starbucks’ strategy could generate a new, promising operating model for global franchises. Rather than operate a variety of sub-brands themselves, perhaps Starbucks could give local entrepreneurs the chance to operate these local coffee shops using the company’s valuable resources. In other words, Starbucks (and perhaps other national franchises) could allow local entrepreneurs to take advantage of the franchise’s supply chain and operational skill for a monthly fee. This could be a new, innovative operating model: local entrepreneurs benefit from access to Starbucks’ resources & Starbucks increases profits from monthly fees- a win-win situation!
Stringer cited that highly bureaucratic practices and slow commercialization usually prevent large companies from successfully implementing innovative ideas into businesses. This partnership could maximize the advantages that both large (resources, stability, etc.) and small companies (flexibility, closer to the market, etc.) have in the innovation process. I think this could really help Starbucks successfully implement their 15th Av. model.
Questions:
Is Starbuck’s 15th Av. Coffee innovative or merely deceptive branding?
For more information, you can visit:
http://schott.blogs.nytimes.com/2009/07/23/stealth-starbucks/
