Starbucks moves beyond the ‘cookie-cutter’ look for stores
Seattle Times business reporter
The Starbucks Reserve store that opened quietly in October at University Village bears little resemblance to the other three Starbucks that already inhabited the tony Seattle shopping mall.
The bar and the back wall are made of reclaimed woods, and one side of the store is covered by a world map made of Starbucks coffee cups. The menu is neatly handwritten in chalk, unblemished by prices.
The mermaid logo, elsewhere so ubiquitous, here takes a back seat to the star-shaped symbol signifying the luxury Reserve brand, which features Starbucks’ rarest coffees. It’s one of the first Starbucks stores to feature the Reserve logo on its storefront.
It’s also part of a slow, widespread makeover to give the middle-aged coffee empire a bespoke look.
Starbucks always embraced design during two decades of prodigious expansion, but in recent years it has moved away from what executive Clifford Burrows called its “historical cookie-cutter approach.”
A global network of more than 350 in-house designers in 18 cities now works closely with store managers and real-estate experts to make every store at least a little bit unique, and responsive to its surroundings.
The design drive is one of Starbucks’ answers to two major challenges: rejuvenating itself in the U.S., a mature market where the chain is practically on every corner, and adapting to wildly diverse new countries, where the biggest opportunities for growth lie.
Some of Starbucks’ new rollouts have been splashy — like the store it unveiled at the end of September at Canal Street and St. Charles Avenue in New Orleans, inspired by an early 20th century apothecary, or the train-car store it unleashed in Switzerland last November, the first rolling Starbucks.
But a lot of the company’s everyday tinkering with store design, such as the Reserve store in University Village, pops up unheralded.
“A lot of this we’ve pushed and tested right under people’s noses,” said Arthur Rubinfeld, the company’s chief creative officer, in an interview at the company’s Seattle headquarters.
In key Seattle locations the company’s new look is in plain sight. A newly renovated store in Pioneer Square features a mural depicting the Smith Tower and downtown’s skyline. The Starbucks on Pike and Broadway has live-edge wood tables and an Old World feel.
Not every store gets the royal treatment, which includes unique pieces by local artists; location and traffic dictate the degree of customization a store gets. But all renovations and openings are treated with the new aesthetic, Starbucks says.
The company says that by now a majority of its nearly 20,000 stores have been retouched in some way, and 90 percent of the 3,000 new stores added in the past five years are deemed “locally relevant.”
Starbucks declines to say much about the cost of its makeover. But Burrows, in the November presentation where he talked about putting aside the cookie-cutter approach, said the company had invested hundreds of millions of dollars in the effort.
When Starbucks bumped up its capital spending by $300 million for 2013, it dedicated about $51 million of that amount to store renovation.
Experts say the gradual overhaul of Starbucks’ footprint is a critical adaptation as increasingly sophisticated consumers grow less tolerant of corporate uniformity.
“Cloning isn’t sustainable among today’s global consumers,” said Nancy Koehn, a Harvard Business School professor who has closely followed Starbucks since the mid-1990s.
Starbucks was among the first retailers to suffer from the tectonic shift among consumers. In early 2007 Howard Schultz, then chairman of the company, penned an internal memo decrying the “watering down” of the Starbucks experience. That commoditization, combined with the financial crisis, led to a big drop in sales later that year.
“They got burned real bad in those years and they don’t want that to happen again,” added Koehn.
So far the strategy has won Starbucks design awards and helped boost its bottom line. Starbucks in September closed its best fiscal year ever, albeit marred by a $2.8 billion charge from a legal dispute with Kraft Foods.
“The momentum seen within Starbucks’ domestic retail stores is remarkable in both its magnitude and consistency,” said RBC Capital Markets analyst David Palmer in a recent note.
The company is pursuing other avenues for growth beyond its coffeehouses, as shown by the purchase of tea retailer Teavana and juice maker Evolution Fresh. It’s also betting big on the packaged-food business, which benefits from Starbucks’ careful preening of its image.
Mixing it up
The understatement of University Village’s new Starbucks shows how design helps Starbucks find ways to grow in an area where it has become omnipresent.
There are already three other Starbucks coffee shops there — a large store packed with UW students, a little store in the northern part of the mall that Starbucks says focuses on in-and-out traffic, and a licensed store within the adjacent QFC — not to mention the Evolution Fresh location and a brand-new Teavana bar.
“What you see here is a response to a mature market,” said Bill Sleeth, the company’s head of design for the Americas, in an interview at the Reserve store. “You’re unlikely to see a store like this in Brazil or China,” where Starbucks is likely to display its brand more boldly, he said.
The company always experimented with new products and design ideas — but its rapid growth allowed little freedom to tinker much with the look of most stores.
“When I was there it was seven stores a day and we couldn’t stop the train,” said Stanley Hainsworth, head creative at Starbucks from 2002 to 2008.
Local customization “was a luxury we didn’t have,” said Hainsworth, who now runs Tether, a Seattle-based design studio.
By 2008, as the crisis pinched caffe-latte budgets, Starbucks was looking stale. Competitors from the so-called “third wave” of coffee, such as Portland-based Stumptown, lured coffee snobs away. Other big retailers — Massachusetts-based Dunkin’ Donuts and burger giant McDonald's — also carved chunks off Starbucks’ market share.
That year Schultz retook the helm of Starbucks after a seven-year hiatus and reassessed its growth plans. Store design gained an unprecedented importance.
The new design philosophy seeks to highlight long-standing Starbucks practices, such as a strong relationship with farmers, high-quality coffee and sustainability, executives say. Designers were also tasked with reinvigorating Starbucks’ role as a “third place” away from home and work where people like to hang out.
Local customization became a priority when building or revamping stores.
Starbucks invested in increasing its number of designers by 25 to 30 percent in the past five years, the company says. They work in 18 locations across its operations — 10 in the U.S. and Canada, two in Latin America, three in Europe and three in Asia.
The design overhaul’s first offspring was the First and Pike store in 2009. Real materials such as wood and metal replaced laminates and plastic. The store was built to inspire the local design teams, Sleeth said.
Other unique, upscale Starbucks began popping up globally: In 2011 the company renovated its Times Square location to give it Broadway flair and opened a Louvre store featuring reclaimed Champagne racks and cafe chairs purchased at flea markets. A 1,400-square-foot store inside a former bank vault in Amsterdam opened in 2012. All new company-owned stores comply with LEED energy efficiency requirements, the company says.
Before the overhaul, Starbucks designers were restricted to three different sets of store furnishings. Now designers can pick from an open catalog that gives them far more combinations.
A lengthy rollout
Creatively, the challenge is to keep things interesting while not tampering with Starbucks’ “mystery ingredient,” said Brian van Stipdonk, senior designer for the Pacific Northwest.
Stipdonk’s theme for University Village’s Reserve location was transparency. He chose an open ceiling with exposed ductwork and an exposed concrete floor. The store also features handicrafts from Ethiopia and other coffee-growing regions and several maps.
“We really wanted the materials to do all the talking,” Stipdonk said.
Refurbishing a far-flung empire is a lengthy process. Starbucks stores have a renovation cycle of five years for minor renovations — which can include new furniture and a coat of paint — and 10 years for major overhauls.
In fiscal 2014, the company expects to renovate more than 1,000 stores. All of the 1,500 stores it plans to build from scratch this year will follow the new design mandate.
The company says even its “concept stores” — avant-garde forays that seek to break new ground — are designed around efficiency and profitability, in the hope that at least some elements will be replicated elsewhere.
That happened with a Tukwila drive-through Starbucks made in 2012 out of reclaimed shipping containers; its modular style was used in 10 other stores. The design’s latest incarnation will open in Ballard in January.
“We keep in mind the bottom line,” said Anthony Perez, who heads Starbucks’ concept design in the Americas.
Ángel González; 206-464-2250 or firstname.lastname@example.org. On Twitter: @gonzalezseattle