Coffee giant Starbucks is always looking for new ways to tighten its grip on the coffee market. Last year, to take one example, it launched “Starbucks Reserve®”, a new line of Starbucks outlets finely tuned to corner the market of coffee drinkers looking for a more high-end experience.
Of course, there’s one subset of coffee drinkers the firm has yet to conquer: those who refuse to get their coffee from big coffee chains like Starbucks. But they’ve got a plan for that too: the Stealth Starbucks.
Stealth Starbucks actually have a considerable history. The first one opened in 2009 in Starbucks’s traditional stomping grounds, Seattle. The new store was named “15th Ave Coffee & Tea”, but the front door featured a telling disclaimer: “inspired by Starbucks”. In the years since, Starbucks has opened two more stealth locations in the city.
Word got out about these Stealth Starbucks, and though some reacted positively to them, others lashed out. Independent coffee shop owners were naturally displeased with the thought of a giant chain camouflaging itself and possibly siphoning off their business. As far away as Chicago, a local coffee shop owner called Stealth Starbucks “the equivalent of unmarked cars”.
But Starbucks’s CEO, Howard Schultz, has maintained that these outfits were never intended to dupe indie-loving coffee customers. “It wasn’t so much that we were trying to hide the brand,” he said in a 2010 interview with Marketing Magazine. “[We were] trying to do things in those stores that we did not feel were appropriate for Starbucks.”
Whatever the motivation, the project nevertheless did well enough that the company’s higher-ups decided to take the project on the road, from sleepless Seattle to another city that never sleeps. In 2012, the chain opened its first stealth Starbucks in New York, inside a Macys department store.
There are hints that there might be more. Veteran barista Molly Osberg feels that New York City’s unique love of independent coffee shops may be behind Starbucks’s move. “Almost 60 percent of New York coffee shops weren’t associated with a corporation,” she wrote in a recent article in The Awl. “The trend is so pervasive that Starbucks itself opened its own unbranded coffee shops, sans the company’s own name.”
In the midst of the continuing hubbub over Stealth Starbucks, the fundamental question still remains: why is Starbucks doing this? Aren’t they making enough money already as the world’s biggest coffee chain? Is their motive really, as their CEO says, to serve as a “laboratory” for new products and ideas?
The answer may actually be yes, though for much more cynical reasons than any Starbucks rep would care to admit. Mike Hudson is the founder of the independent coffee chain Handsome Coffee, which was later acquired by Blue Bottle Coffee. He thinks that these stores are effectively a mechanism for Starbucks to test out which ideas it’s going to steal from potential competitors.
“Given Starbucks’s market position, it could fall prey to a competitor with innovative ideas,” Hudson says. “The stealth outlets are a grossly patronising move by Starbucks to stay current. But they’re also a legitimate attempt to make better coffee, in the event America decides that Starbucks’s mass product offering is inferior to ‘the new thing’.”
While marketing calculus and experimentation may be the prime motivator in the creation of Stealth Starbucks, the outlets are still intended to turn a profit – and in that sense it’s significant that the mega-chain opted to open them exclusively in Seattle and New York. Despite the standardisation of consumer preferences worldwide after decades of omnipresent brand-based marketing, local preferences can still vary widely. These two cities, the move suggests, are the places Starbucks feels must be hungriest for some kind of change.
But ultimately, the most significant development to emerge from the Stealth Starbucks program may be its influence on the strategies employed on the Starbucks Reserve outlets. A New York Times article from last December confirms that the outlet’s logo, which abandons the traditional Starbucks “mermaid” seal, is a deliberate attempt to distance the Reserve locations from the standard Starbucks brand.
Starbucks plans to open roughly 100 outlets under the “Starbucks Reserve” branding scheme, far more than the four Stealth Starbucks outlets it currently operates. But those stealth Starbucks are still going strong, and there are no plans to close them in the near future. That Starbucks has made such inroads into the anti-Starbucks market is, in a way, a testament to quite how sophisticated modern marketing has become.This article is from the CityMetric archive: some formatting and images may not be present.