Archive for July, 2008

08
Jul
08

Starbucks closes 600 stores

The Starbucks sign is seen outside one of its stores in New York July 3, 2008. REUTERS/Chip East

It’s fascinating how one dimensional the media can portray a piece of news. Today on Yahoo! there was an article entitled “Some coffee fans get grim delight in Starbucks woes.”

The article briefly mentions that the company is planning to close 600 under performing U.S. stores. It then quickly states that this “is evoking glee and little sympathy from aficionados who say they resent the coffee shop giant and favor small independent cafes.”

The bulk of the article contains interviews with people mainly in favour of seeing the demise of the coffee chain.

I have a problem with this.

Before I get into my reasons, and get a lot of hate mail,  I want to state for the record that I am not a loyal Starbucks customer. I haven’t set foot in one in over a year.

I have no personal feelings or money invested in the company in question, nor do I work for an independant coffee company. I therefore consider myself generally unbiased.

Where my concern with this article comes from is in the way that it glosses over the reasons why a company like Starbucks has to close 600 stores in the first place.

Think of it this way. Starbucks is massive. It is able to utilise economies of scale to keep it’s costs down. It is also able to afford marketing experts and PR people that small independent coffee companies don’t have access to in order to keep the public interested.

One of the few truths of the article was this:

“Starbucks has really created a coffee culture, raising awareness of good coffee, which is good for independents,” said Carol Watson, owner of the Milk and Honey coffee shop in Chicago. “But on the other hand, they’re on practically every corner, and that makes it tough on the little guy too.”

Frankly, I think independent companies should be worried. 600 stores represents approximately 10% of all Starbucks stores worldwide. How many small companies can afford a 10% total loss (or more) and thrive?

In my opinion, a lot of the aggression towards Starbucks comes from jealousy. How many of those small companies are trying very hard to be the big dog? Business is and always has been competitive. Don’t like the fact that another business is doing better than yours? Improve or fail. In the end it’s the consumer who will determine the winner. 

The customer is always right.

At this point, the customer is broke.

That’s the real story behind Starbucks closing 600 stores. People can barely afford to fill up their cars and get groceries, let alone spend several dollars on a coffee.

600 stores are closing. Thousands of jobs will be terminated. I guarantee that 600 independent coffee shops will not pop up to replace the stores being closed. So why is this a victory for anyone involved?

The truth of the matter is that big buisness doesn’t just create jobs and offer cheap products, it also offers a place for small business to sell their products too.

A car plant recently closed in a city several hours north of where I live. People lost their jobs in that city. The trickle down of that plant closing is that a lot of places that had contracts with that particular company are now having to scale down their operations and lay off employees.

Nobody wins when big business closes up shop. We can’t all work at local coffee shops and in turn patronize local coffee shops. The economy just doesn’t work that way.

07
Jul
08

Sunfest 2008

I spent Saturday with the family at Sunfest 2008.

Sunfest is Canada’s Largest World Music Festival and it takes place in London, Ontario. 

I love world music, and any festival that has world music is a great spot for sampling “world food.”

I had a Columbian areppa (I hope I’m spelling it right), a gyro, and a Mexican churro. I was awefully tempted by the jerk chicken and pad thai, but I was too full and too hot to eat any more. My wife stuck to mainly Vietnamese food, but had an elephant ear for dessert.

We got to do a lot of walking. There are more than 225 vendors and more than 35 professional musicians from all over the world. 

My daughter surprised us by dancing up a storm (she’s 3 months old). She Loves Reggae. I liked the Japanese Taiko Drumming. You could hear it clear across the park.

http://www.sunfest.on.ca/