A Tipping Point for Starbucks?

by Stubborn Mule on 6 August 2008 · 10 comments

On 1 July 2008, Starbucks announced the closure of around 600 outlets in the US. More drastically, on 29 July they then announced that 61 of the 84 Australian outlets would be closing.

Over on BeyondDigitalMedia, Chris Bishops posted an interesting examination of the challenges Starbucks has faced in the Australian market and goes on to predict that Gloria Jeans will suffer a similar fate.

Although the US closures represent a far smaller proportion of total outlets than here in Australia, they still represent a striking turnaround in the previously relentless growth of the coffee giant. Could this presage a significant change in the fortunes of one of the darlings of the MBA set? Or is it simply the evolution from growth to maturity?

The Evolution of Starbucks

I have to thank Mike for the data in this chart, which was painstakingly extracted from the Starbucks company timeline. The 2008 figure takes into account the 616 US closures (exact figure taken from the full list of closures) and the 61 Australian closures. Admittedly, since the timeline accentuates the positive, there may be past closures not accounted for in the chart. Also, any new store openings in 2008 are not accounted for.

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{ 9 comments… read them below or add one }

1 Matthew August 6, 2008 at 1:08 pm

Take a look at this article from the Big Picture blog detailing an extraordinary amount of retall closures going on in the USA in the past few weeks :

http://bigpicture.typepad.com/comments/2008/08/the-us-banking.html

This is bigger than just coffee!

2 Michael Michael August 6, 2008 at 2:52 pm

Why does that chart have ~20 years of 0 stores? I’ve deducted marks in the past for that kind of sloppy graphery…

3 Brendan Carmody August 6, 2008 at 2:55 pm

This is definitly worth a comment! So I did so, on the Beyond Digital Media site…

4 stubbornmule August 6, 2008 at 3:03 pm

@Michael Michael: that’s just your eyes letting you down. It actually starts at one in 1971 (when the first Starbucks store opened by Pike’s Market in Seattle). The first jump up is 1987 when they opened 17 new stores.

5 stubbornmule August 6, 2008 at 3:09 pm

@Matthew: I’m sure that the broader economic weakness is a significant factor in the US. Here in Australia, there seems to be a more specific problem for Starbucks.

6 stubbornmule August 6, 2008 at 3:45 pm

@Brendan: Just read your comment over on BeyondDigitalMedia.

7 Michael Michael August 6, 2008 at 5:39 pm

I like it – thanks to the Mule’s disparagement of my eyesight, I’ve also commented on Beyond Digital Media. I smell a drop in market share for the Mule! Graph that!

8 stubbornmule August 7, 2008 at 3:39 pm

@Michael Michael: have a look here if you would like to make a closer study of the underlying data.

9 stubbornmule August 19, 2008 at 4:46 pm

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