Starbucks' cluster strategy and adoption of cashless payment technology

Steep analysis Conduct "Technology trends" "T" part a STEEP Analysis (bullet point - a comment supported APA / MLA In-Text citations valid- referenced sources, addresses pros & cons Technology trends.

Starbucks: Innovation and enterprise in the world of coffee

Why the company was chosen

Starbucks began as a largely free-standing empire of stores. The original concept of the corporation's coffeehouse model was to replicate the 'home away from home' feeing in the store's flagship Seattle location at every Starbucks. The franchises were initially conceptualized as urban gathering-places. "For each targeted region, Starbucks selected a large city to serve as a 'hub'; teams of professionals were located in hub cities to support the goal of opening 20 or more stores in the hub in the first two years. Once stores blanketed the hub, then additional stores were opened in smaller, surrounding 'spoke' areas in the region" ("Starbucks Case Study," McGraw Hill, 1997). The store's urban cache would generate buzz, and gradually encourage suburban consumers in the 'spoke' areas to patronize Starbucks when they moved to their area.

Starbucks saturates its locations, with every Starbucks adopting a slightly different character to suit the needs of different population groups. Sometimes one Starbucks is only blocks away from another. Eventually, this super-saturation drove Starbucks into strip malls, as well as free-standing stores. Starbucks "cluster-bombs neighborhoods, adding ever more stores to compete against each other and drive off the competition" (Anderson 2007). Every Starbucks, whether present in a shopping mall, strip mall, or free-standing may be in competition with nearby Starbucks, but from the company's perspective, all is well, because all patrons seeking coffee are drinking Starbucks, rather than a competitor's brand ("Starbucks Case Study," McGraw Hill, 1997). However, retaining its image of iconic quality and iconoclastic Seattle attitude has been difficult, as franchises grow more pervasive in suburbia and malls. CEO "Schultz sent out a well-publicized e-mail suggesting that Starbucks' retail culture had perhaps swung too far commercially, and the stamped-out franchises 'no longer have the soul of the past and reflect a chain of stores vs. The warm feeling of a neighborhood store. Some people even call our stores sterile, cookie cutter....'" Schultz wrote (Anderson 2007). The aim for Starbucks is that every store is slightly different, to suit the specific needs of the individual coffee demographic it is trying to attract within its narrow radius.

Success of failure: Locations within a shopping center

Starbucks' saturation of locations is a primary component of its strategy. It is not unusual for a consumer to patronize a free-standing Starbucks in the morning and then, after shopping during his or her lunch hour in a mall, grab lunch at a Starbucks within the structure. Ubiquity is a primary component of the coffee shop's success (Anderson 2007). Malls provide food purveyors with captive audiences, since shoppers do not want to leave in the middle of their trip. For shoppers who do not want greasy or fattening mall food, Starbucks offers an alternative, and unlike a fast food establishment, a Starbucks has the potential to thrive both within a food court and near non-food related stores. A patron can grab a coffee to go or a sandwich to consume at a table.

For example, in the Mall in Columbia, Starbucks is located in the food court area, but given that it sells CDs, mugs, and coffee-related paraphernalia as well as take-in and take-out, it has more flexibility in terms of where it can be stationed than a Wendy's or a Taco Bell ("The Mall in Columbia," Store Directory, 2012; Levy and Weitz 197-199). While certain remote store locations might prove difficult (since Starbucks is an 'impulse buy' to some extent, relying upon the consumer's olfactory senses to the stimulated by the coffee), Starbucks could succeed and thrive in almost any location within an enclosed structure like a mall -- and use mobile technology to draw loyal patrons to its doors.