Losses grind 61 Starbucks stores | The Australian

30 Jul

This try-hard headline follows events that have certainly been in the US blogosphere all this month, as the real issue is the US economy, not the efficiency or otherwise of the Starbucks stores in Australia.

Now I have no wish to dance on the lost jobs here, but the truth is Starbucks has been The Great Unnecessary on the Australian scene. We already had far better coffee in much more congenial coffee shops, and without the bullshit. Mind you, I am not so jaundiced as to have avoided Starbucks; the coffee isn’t bad. It’s just that Juice & Java right here in Surry Hills pisses on it… As do so many others.

So what did Starbucks actually have to sell? Not much, I’m afraid.


See Associate Professor Nick Wailes, director of the Master of Management, who teaches strategy in the faculty of Economics and Business at the University of Sydney, on this: Sydney Morning Herald.

…When I asked my students to look at Starbucks’ entry into Australia, I expected them to point out some of the challenges but was quite shocked at how overwhelmingly negative their assessment was. At the time, I attributed this to the negative publicity the company was getting from their opposition to the trademarking of Ethiopian coffee. While I pointed out to my students that Starbucks did quite a lot of good work with growers in Central America, they saw the company’s actions as an attempt to keep the cost of supply down and that, just like many other big companies, it had lost sight of its original vision. Perhaps they were right.

In my view, the key reason that they have been so unsuccessful in Australia is their inability to adjust to local market conditions. While the company’s British and Asia expansion took it to markets without strong coffee traditions, Australia, with its history of European immigration, was always going to be a test. Starbucks has been trying to sell a watered down product in one of the most sophisticated and lively coffee markets in the world. As one of my students (who, incidentally, had worked at a Starbucks) put it, “why would you want to sit around a pretend lounge room drinking a weak and expensive coffee, when you can go around the corner and have the real thing?” Ironically, it seems that the thing that made Starbucks successful in the first place, its ability to adjust the original (European) business model to local (US) conditions, is the thing that let it down the most…

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3 responses to “Losses grind 61 Starbucks stores | The Australian

  1. Bruce

    July 30, 2008 at 2:02 pm

    I was going to blog on this and you’ve pretty much said all I was going to and nothing more! I won’t harp on about feeling redundant though, in the circumstances.

  2. Neil

    July 30, 2008 at 2:36 pm

    Our loss is China’s gain, apparently. Ah, globalisation!

  3. Neil

    July 31, 2008 at 12:00 am

    Here is an unfortunate “trickle down” from the Starbucks issue both here and in the USA: East Timor’s coffee growers hit by Starbucks closures.

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