Starstruck: Mall Owners Relocate others for Starbucks

Brands that are being shunted to less attractive locations to accommodate the coffee chain are not amused

A joke doing the rounds on Twitter these days is that the wait outside Mumbai’s first Starbucks coffee outlet at Horniman Circle is so long that a smart alec has started selling tea to those standing in the queue.

Starbucks Coffee Logo

Starbucks Coffee Logo

This kind of consumer frenzy is music to the ear of mall owners in India’s big cities. Sensing a huge opportunity, many of them are offering the American coffee chain preferred locations within their malls, sometimes even at the cost of relocating a brand that is already present at the location.

It’s not as if the mall owners are expecting premium charges. They just want Starbucks as an anchor tenant as such iconic brands can bring home the much desired footfalls; and also inspire other quality labels to set up shop in their malls.

Starbucks had said that it plans to open 50 stores by the end of the year in Delhi and Mumbai. That plan may or may not materialise, but the coffee retailer surely is on the fast track to sign up new spaces. “For some international iconic brands, mall developers will be willing to bend backwards as they can improve the tenant mix,” says Jaideep Wahi, director, retail agency at Cushman & Wakefield India, a property advisory firm that helps companies such as Starbucks find store space.

The Ambience group has signed up Starbucks for two of its malls in Gurgaon and Vasant Kunj in the capital. At the Gurgaon mall, a brand that was on the ground floor is being relocated to another part of the mall to accommodate the coffee house.

“I am relocating a brand for Starbucks as we wanted to give them an indoor-outdoor combination,” says Deepti Goel, head of leasing at Ambience. Starbucks is negotiating for space at another mall in south Delhi. Arjun Sharma, the director of Select Citywalk mall in Saket says he would love to move brands around for the iconic brand. “It’s a relevant brand. It’s a great brand. We always seek marquee brands to improve our tenant mix,” he said.

Another developer in Mumbai, requesting anonymity, said he was even willing to compensate an existing store operator if he vacates his current location.
A Tata Starbucks spokesperson declined to comment on queries sent by ET.

The enthusiasm to put up Starbucks has caused heartburn among a few brands that have been asked to relocate. “We were asked to move to a less-attractive location within the mall, even though the mall owner agreed to give us favourable terms. But it still can’t make up for losing a premium location,” says a manager with an apparel brand, who did not wish to be identified for risk of antagonising the mall owner.

Starbucks Looks to Bagged Coffee, K-cups to Grow

Starbucks has big plans to revitalize the bagged coffee aisle, the Wall Street Journal reports. Jeff Hansberry, the man tasked with that job, said that he wants to make “our products available wherever customers want them.”

 The company wants to enhance the coffee-buying experience.  The company is busy developing strategies to revamp its presence in supermarkets and other retailers, but is releasing no details yet. Hansberry did comment that he wanted to double the shelf space of single-serve coffee products in grocery stores. He also said Starbuck products, such as bagged coffee, K-cups, Tazo teas and Via instant coffee, should be together on a shelf.
“What we’re looking for is a brand block — to get all of our items together,” he said. “We need to make it simpler to shop.”
Part of that simplification process will happen in January, when Starbucks will debut its color-coded packaging that will make it easy for shoppers to pick a new light or “blonde” roast, medium roast or dark roast.
To help the company decide what to change, Starbucks has started surveying customers across the United States. Also this week, Starbucks announced its purchase of Evolution Fresh, which will replace Naked brand juices in its stores.

Starbucks plans to triple its China coffee shops

SINGAPORE: Starbucks Corp. is planning to triple the number of its coffee shops in China during the next four years.

Starbucks Asia Pacific President Jinlong Wang told reporters Tuesday in Singapore that the world’s largest coffee retailer plans to operate 1,500 outlets in China by 2015 from a current 470.

Wang said the company also expects to open 700 coffee shops in South Korea by 2016, up from 370 now.

He said Starbucks is preparing to open its first outlets in India next year and in Vietnam in 2013.

Starbucks said in July that revenue from its international business rose 20 percent in the April-June quarter from a year earlier and accounted for 23 percent of overall sales of $2.93 billion.

Successful Brand Marketing

With an increase in trust deficit world over, here is what brand managers need to weed out of their environments to retain their brands’ trust

MARKETING’s greatest invention is the brand. In effect unheard of 100 years ago, brands and branding now march triumphant. Everything and everybody — places and destinations, political parties and social movements, people (first celebrities and politicians, now, it appears, all of us) — are brands.

Yet, aside from a few usual suspects such as Apple, in the branding heartlands, all is not well. Y&R executives John Gerzema and Ed Lebar highlighted the problem in 2008, when they reviewed longitudinal evidence from Y&R’s Brand Asset Valuator research programme. In their book The Brand Bubble, they charted a ‘precipitous’ decline in brand trust since 1993, along with sharp falls in consumer perceptions of quality, brand awareness and ‘brand esteem’.

In 1993, for example, consumers trusted 52% of the brands researchers asked them about. Fifteen years later, the figure had fallen to 25%. Gerzema and Lebar pointed out that stock markets may have been pushing up the value of brand-owning companies, but brands themselves were being ‘hollowed out’.
Then came recession. Halfway through, Promise chief executive Charles Trevail observed that “according to every survey and index on trust in institutions and organisations from around the world, trust is in terminal decline”. Even when the recession was supposed to be lifting, Alterian chief executive David Eldridge commented on his company’s latest research: “Consumer trust is at an all-time low.”

So what’s the problem? How can brands and branding be so successful, yet so sickly at the same time? The answer may lie with the occupational diseases of brand management — diseases that are generated by the daily working lives of brand managers.

MASKING THE PROBLEM
Brand management as ‘mask management’ is the most common of such diseases. Because brands are all about external communication, many brand managers find it hard to resist the temptation to paint ‘lipstick on the gorilla’ — telling customers what the brand manager knows they would like to hear, rather than keeping to the truth of what the organisation can, or actually intends to, deliver.

In reality, the most important part of the brand manager’s job is one of internalisation: bringing customer views and perceptions from outside the organisation inside, so that the organisation understands, responds and resonates to customers’ changing demands. Yet, activity-wise, the minute-by-minute focus of the day job is external communication. When changing the external message is easy (and fun) and changing the organisation inside is hard (and painful), the lures of lipstick-on-the-gorilla mask management can become irresistible. In fact, they can even be dressed up as a new theory. Remember when we were told that punters didn’t buy the beer, but its advertising? Remember George, the Hofmeister bear?

Next on the list is brand hubris. Not long ago, it was fashionable among brand consultants to show their clients a chart depicting the relative prices of different T-shirts. Some sold for a fiver or less, while branded ones were at least £50. “Which T-shirt do you want to be?” the consultants would ask. The difference between being able to charge £5 and £50 lies in “branding”, they would say. “We can help you become experts at ‘branding’.”

Well, they may have been experts at branding, but they were dunces at economics. If you sell 1000 T-shirts for £5 with a £1 margin, you make £1000 profit. If you sell 10 for £50 with a £48 margin, you make £480 profit. By implying that the supply/demand curve could be ‘branded’ away, these consultants were usually doing their clients a real disservice. While they were doing the rounds with their presentations on ‘branding’, full of impressive words such as ‘intangibles’, the brand that romped it on the high street was Primark.

That is not to say that discounting is always the best strategy. Rather, it is to challenge the widespread belief that it’s the ‘extra stuff on top’ — the stuff added by ‘branding’ — that is the source of brands’ margins and profits. The fact is that, apart from some special cases such as luxury goods, if you look at most successful brands — such as Amazon, Apple, Dell, easyJet, Facebook, Google, IKEA, Nike, Starbucks, Tesco, Toyota, Virgin and Wal-Mart — what marks them out is not superb ‘branding’ (sometimes it’s superb, but very often it’s not) but that they deliver outstanding customer value, often via breakthrough innovations, technology and/or underlying business models.
‘Branding’ alone hardly ever makes a business successful. It is businesses, including their culture and ethos, that make brands successful. And as soon as the business drops the ball on innovation, service, quality or price, or forgets its cultural roots, the brand quickly loses its lustre.

CLARITY OF PURPOSE
Brand narcissism is our third, closely related, occupational disease. Brand narcissism works on two levels. At the first, every brand manager desperately wants their target audience to recognise their brand, love it and be loyal to it by, for example, acting as an unpaid yet enthusiastic brand advocate.
There is nothing wrong with these dreams per se. They are natural. What is wrong is when we morph the wish into a ‘strategy’ of ‘success by being popular’ — where getting people to talk about and ‘love’ the brand becomes an end in itself, pretty much divorced from the value it’s supposed to be delivering.

The second level of this brand narcissism, which is even more dangerous, is where the brand manager forgets the underlying purpose of the brand and starts acting as if it’s the job of the customer to add value to the brand (by paying a price premium or being its advocate, for example), rather than the job of the brand to add value to the customer.

An obvious point, perhaps, but it can be difficult to remember in a world where your every passing thought, and key performance indicator, is about how well-remembered you are, how preferred you are, or how many people are talking about you.

Our final occupational disease is toolkit myopia. Brand managers are surrounded by a dizzying array of sophisticated tools and techniques for research, testing, data-gathering and evaluation. They are on an endless quest for the breakthrough insight and the sparkling creativity. It’s difficult to master all these things and the quest easily becomes obsessive. So much so, that it soon seems as if excellence at these diverse technicalities lies at the heart of successful branding — when it is not.

You can, for example, use exactly the same technical toolkit, excellence, to build a brand that perfectly communicates a brand’s unique value.
And to hide the fact that the brand is nothing more than a me-too mediocrity. You can use technical excellence to articulate specialness and hide sameness, but content-wise, they are opposites, having an opposite meaning to the customer.

The one thing that branding as mask management, brand hubris, brand narcissism and toolkit myopia have in common is that they destroy trust. They are potentially catastrophic mistakes, yet they are in the air brand managers breathe, growing naturally in their working environment. So they have to be combated on a daily basis.

How? What’s the antidote? To remember that a brand’s real job is to build trust, and that everything the brand does must be tested against this yardstick. It’s this simple human understanding that successful brand managers never let anyone forget.

Target Opens 23 New Stores, Creates 4,000 Jobs

Retail Discounter Opens 17 General Merchandise Stores With Expanded Food Options

MINNEAPOLIS–(BUSINESS WIRE)–Target (NYSE:TGT) today announced the opening of 23 new stores. Of these, four are general merchandise stores, 17 are general merchandise stores with expanded food options and two are full-grocery SuperTarget stores. All 23 stores will celebrate their grand opening on Sunday, July 26, 2009.

General Merchandise Stores

Locations receiving a general merchandise store include:
* Kona, Hawaii
* Warren, Mich.
* Bronx Terminal, N.Y.
* Cheltenham, Pa.

The general merchandise stores feature a blend of everyday essentials including household products, electronics, clothing, and an assortment of food and seasonal merchandise. These stores offer amenities such as a Starbucks®, Target CaféSM and Target PharmacySM. Target also balances a wide range of national brands with its own Target brands like Archer Farms™, Choxie™, Market Pantry™ and up & upTM. Each general merchandise store employs 100-250 team members and is approximately 127,000 square feet.

General Merchandise Stores Receiving Expanded Food Options

Locations receiving an expanded food format store include:
* Vista South, Calif.
* Exeter Township, Pa.
* Lisbon, Conn.
* Hanover Twp., Pa.
* Spring Hill East, Fla.
* Lower Nazareth, Pa.
* West Melbourne, Fla.
* West Pottsgrove Twp., Pa.
* Cedar Falls, Iowa
* Huntsville, Texas
* Hammond, La.
* Hampton, Va.
* Las Vegas N. Decatur, Nev.
* Martinsburg, W.Va.
* Greenland, N.H.
* Waukesha South, Wis.
* Chili, N.Y.

The 17 expanded food stores offer all of the merchandise found in our general merchandise stores with the added convenience of fresh food. This new format has an open-market layout and features new food additions including basic fresh produce, fresh meat and bakery goods. Each expanded food format store employs 100-250 team members and is approximately 135,000 square feet.

SuperTarget Stores

Locations receiving a SuperTarget include:
* Murrieta North, Calif.
* Wylie, Texas

SuperTarget stores offer a complete, one-stop-shopping destination by combining the convenience of a general merchandise store with a full-scale grocery. Additional merchandise options include a complete assortment of fresh produce, and an on-site bakery and deli. Each SuperTarget employs 200-300 team members and is approximately 186,000 square feet.

About Target

As of Sunday, July 26, Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,719 stores in 49 states nationwide and at Target.com. Target is committed to providing a fun and convenient shopping experience with access to unique and highly differentiated products at affordable prices. Since 1946, the corporation has given 5 percent of its income through community grants and programs like Take Charge of Education. Today, that giving equals more than $3 million a week.

Note: Target welcomes the media to its stores. To contact your local store about store events, merchandise and community programs please visit “Find a Store” at http://www.Target.com. Images can be found at http://www.Target.com/Pressroom under the category “Target Stores.”

Starbucks Pushes for Lower Lease Rates

Taking advantage of a declining real estate market, Seattle-based Starbucks Corp. is pushing some of its U.S. landlords for as much as a 25 percent decrease in lease rates, according to Bloomberg.com. New York-based Prudential Douglas Elliman’s retail leasing, marketing and sales division is advising about a dozen landlords to work with Starbucks after receiving letters seeking rent reductions of 20 percent to 25 percent. Starbucks began rent-reduction efforts in January as part of a plan to trim overall expenses, Starbucks spokeswoman Tara Darrow told Bloomberg. Around the same time, the company also said it would close about 300 stores this year and cut as many as 6,700 jobs. “We’re taking advantage of the opportunity in as many cases as we can,” Darrow said. “We feel like it’s a positive program for us. Most of the landlords we’ve worked with have felt it is a mutually beneficial situation.” The rent-reduction program covers the U.S. stores operated by Starbucks, a number that totaled 7,035 as of March 29. The effort doesn’t include the more than 4,400 U.S. stores in airports, supermarkets and other licensed locations, Darrow said. Starbucks had cut $195 million in labor, food and other costs through the first half of fiscal 2009, and in April, the company said it was on pace to lower total costs by $500 million in the fiscal year that ends in September.

Mobile Micropayments Roll Out In Shanghai.

According to China Mobile’s Shanghai branch, its regulations related to micropayments made with mobile phones have been completed and consumers in Shanghai will soon be able to pay with mobile phones in McDonald’s and Starbucks.

China Mobile Shanghai said with a new SIM card that integrates the payment function, people in Shanghai can pay with their original mobile phones in the stores of China Mobile’s cooperative partners, including McDonald’s and Starbucks.

The new SIM cards are expected to realize volume production within two months. At the end of April or the beginning of May 2009, China Mobile Shanghai will invite a group of users to experience this new service first.

A representative from China Mobile Shanghai told local media that users can complete the small-scale payments by placing the mobile phones near the card reader. The costs for the change of a SIM card are between CNY50 and CNY100. The accounts of these new SIM cards are bound with the bank card or credit card accounts of users. Once the money in the SIM cards is used up, they can recharge by simply sending a short message.

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