St. Louis Oracle

St. Louis-based political forecasting plus commentary on politics and events from a grassroots veteran with a mature, progressive anti-establishment perspective.

Monday, January 16, 2006

Is Starbucks the 'blue-state' WalMart?

Just after the first of the year, I went by my friendly neighborhood coffee house, The Sweet Life on Chippewa in Barney's Plaza, across the street from Target. It really was friendly as well as in the neighborhood. Bosnian-American owners Shon and Vesna made a point of welcoming everybody. More like the immigrants of last century than the current wave of which they are a part, they didn't make a big deal about their ethnicity and consciously did their best to assimilate into U.S. culture. Bosnian-American with the accent on American.

But this time, there was a simple hand-written note on the door saying that they had closed their doors forever on December 31, but thanking all of their dear friends for their loyal patronage. A loss to our community.

Shon wasn't there to ask, so I speculated why closing might have been necessary. What came immediately to mind was the "new" Target, right across the street. Target had reopened its newly remodeled store in early October. When they did, they brought along an extra business imbedded inside: a new Starbucks, the giant in the coffee house industry. Starbucks is also planning a second location just a few blocks west, on the site of the former Steak n Shake. Perhaps so much competition from the industry leader so close proved to be too much.

It reminds me of the early knock on WalMart. WalMart moves into a community, and the mom n pop stores on Main Street close, one after another. I don't know anything about Starbucks' employment practices or its employee health care plans, but the parallels to the WalMart impact on local business are striking.

And then the irony struck me. WalMart is the epitome of pure red-state capitalism. Based in Arkansas, WalMart executives dating back to Sam Walton himself have been big supporters of the Republican Party, as well as their conservative home-state Democrat, Bill Clinton. In contrast, Starbucks is very blue-state. I don't have comparable data about its executives' political donations, but Starbucks is based in deep-blue Seattle, and its customer base is the young urbanites that voted heavily for John Kerry. An August, 2005 Zogby Poll disclosed that Starbucks' national dominance in consumer preference (leading 2nd place Dunkin Donuts, 34%-30%) was powered by a 2-1 margin among self-described liberals and progressives. (How did we ever survive as a people without essential information like that?)

So Starbucks moves into the increasingly blue neighborhood around Hampton Village, and within three months, The Sweet Life is history. I wonder if they're scouting property near Hartford Coffee.


Anonymous Norm Pressman said...

I kinda doubt that a Starbucks inside a big box store put a neighborhood coffee store out of busdiness- Its unlikely that people would go to the Starbucks to sit and schmooze-the two really don't compete.

More likely is that coffee stores are relatively expensive and need lots of traffice to pay the overhead and the neighborhood, while up and coming, didn't have enough people will to spend $7 for coiffee and a roll!

January 17, 2006 at 12:04 PM  
Blogger St. Louis Oracle said...

There is some merit to questioning whether a Starbucks imbedded in a Target was really competition, but the economics are different. The Sweet Life wasn't overpriced like Starbucks, and the neighborhoods (St Louis Hills, Tilles Park and nearby Southhampton) are better off financially than most other city neighborhoods. The Bread Company down the street has trouble keeping its overpriced rolls on the shelf.

January 17, 2006 at 12:58 PM  
Blogger Joe said...

I went to The Sweet Life once or maybe twice, having only discovered it about a year ago. Unfortunately, that center's parking lot is rather awkwardly configured. Then again, so is the new Target's garage. That's also a little bit outside the main Bosnian hang-out areas along Gravois, so they may have had trouble attracting their base clientele. I think if it was a little more visible location or if word-of-mouth had gotten out better, they would still be open. But you just never can tell for sure.

They were quite friendly when I went there, and the portions were huge and reasonably priced. So I'm sad to see them go.

January 18, 2006 at 10:54 AM  
Anonymous Deusx said...

The parallels are staggering? What impact? Where do you get your figures? The assertation you make is unsubstantiated to say the least. Walmart comes in and aggressively undersells all competition till they can't afford to stay open. I defy you to find an area that Starbucks opens a store that they are not the most pricey coffee supplier. Most cities with Starbucks with Starbucks have MORE independant/small chains of coffee shops than those who don't.
Open a phone book for Seattle. Look at places like Columbus, Oh and Detroit.

January 18, 2006 at 9:26 PM  
Anonymous Deusx said...

Sigh, I need to proofread more before I hit the "post" button.

January 18, 2006 at 9:27 PM  
Blogger AWG said...

Here in Lawton, Oklahoma, we just got our first Starbucks. This came just months after the opening of the indie coffehouse, Common Grounds near Cameron University. I think both have their place. Starbucks is more get-it-and-go, while Common Grounds is slower-paced and more comfy. I guess it depends on what mood I'm in when I decide to get a cuppa joe.

January 18, 2006 at 11:55 PM  
Blogger howdy said...

I'm sorry that The Sweet Life closed its doors. However, you need to know that the Starbucks "embedded" in the new Target is NOT a corporate Starbucks - it is a licensed store (just like the ones at Barnes & Noble).

January 19, 2006 at 11:12 AM  
Anonymous starbuckspartner said...

Thank you for raising this question. As more information comes out about Starbucks business practices it would seem they are closer to a Wal-Mart or McDonalds than anything else. Those who say Starbucks is just Starbucks and not similar to anything are somewhat off-base.

Starbucks current CEO Jim Donald used to be a Wal-Mart executive. Starbucks hardline anti-union stance is comparable to that of Wal-Mart. Wal-Mart has a higher percentage of employees with health insurance than Starbucks according to a recent Wall Street Journal article. Starbucks and Wal-Mart both will fight to plop a store down in spite of community members not wanting them there.

The one thing I have to disagree with you on St. Louis Oracle is the effect of Starbucks on indie coffee shops. I live in a city full of them and when Starbucks came in it didn't even put a dent in their business. The only coffee shops that stand to really suffer at the hands of Starbucks are the ones with similar business models. But thats okay because I think we would both agree that we don't want Starbucks replicas anymore than the real deal cluster bombed all over our communities.

Thank you again for pointing out this very interesting and somewhat disturbing (as a Starbucks worker) similarity.

January 19, 2006 at 9:52 PM  
Anonymous Robin said...

I was always curious about The Sweet Life, but never stopped. Whenever I drove past, it was impossible to tell if they were open or closed. The parking situation was bad. It was just a bad location. Besides, the Starbucks in Target isn't a destination location. It's a convenience location.

There are so many places in St. Louis where Starbucks and the indie coffeehouse have coexisted for years. Messhuggah in the Loop has been around forever, even expanding their location two+ years ago. In the CWE Starbucks coexists with Coffee Cartel and The Grind.

It's also worth noting that local Kaldi's has opened outposts near long-established Starbucks in Kirkwood and Chesterfield. I'm curious to see what kind of backlash Kaldi's will get as they grow into a bigger chain.

I spent nearly four years writing a column for a local food rag that focused on locally-owned food-related ventures. I have the utmost respect for indie places, but they've got to have something to bring people in. I wouldn't frequent a Starbucks near Hartford because the latter has a better product. But I do frequent the Starbucks in the Loop. To blame Starbucks across the board for putting indies out of business isn't fair, because it doesn't examine what the indies could do to improve, should they venture into the biz again.

January 20, 2006 at 9:39 AM  
Anonymous someone who knows said...

There wouldn't even be a demand for local coffeehouses if it weren't for Starbucks' strong presence in St. Louis. Having Starbucks around just exposes more people to coffee in general, especially in the county.

Prior to Starbucks opening in St. Louis area (pre-1999) think of all the unsuccessful coffee houses that had to close their doors. Whose fault was it then?

Competition is good. And, if not for Starbucks there would be fewer coffee drinkers (or, coffee drinkers willing to pay expensive prices) in the area in the first place.

Lastly, Starbucks doesn't strong arm the vendors the way Walmart does. Starbucks pays more than double the rate that Folgers or Maxwell House pays for coffee. And, they pay the same amount of money for a gallon of milk as your average consumer.

You should've done a little more research. And, be careful who you make mad - you might get decaf. ;)

January 20, 2006 at 3:57 PM  
Blogger Michael Allen said...

Before Starbucks arrived in 1999, the St. Louis Bread Company operated on a coffeehouse-style format that was widely successful. Many coffeehouses pre-date the Starbucks infestation -- Kaldi's, The Grind, MoKaBe's, etc. -- and I don't think Starbucks has built those places up. I would argue that Starbucks came into St. Louis after seeing that the independent coffeehouses, and St. Louis Bread Company, were doing well. Starbucks is as far from innovation as Wal-Mart (probably why they tapped McDonald to be CEO), even if slightly better in its purchasing practices. (They do stock some fair-trade coffee, after all.) Their treatment of workers and anti-union stance is widely known, though.

January 23, 2006 at 10:05 AM  
Blogger GregSTL said...

You're all over this with both feet. Starbucks is just like Wal-Mart, Walgreens, Office Depot, Petco, Sports Authority and every other mega-box store that's run every family-owned business into the ground the last 30 years at the cost of retail and vendor jobsas well as U.S. mfging. They've left local economies, across the country weakened, shells of what they once were.


January 24, 2006 at 12:51 PM  
Anonymous someone who knows said...

Name one coffeehouse (still open) in St. Louis County that predates Starbucks arrival. I cannot think of one, unless you are counting Kaldi's, which wasn't even in the county before Starbucks came here. There are MANY coffee houses that closed down for many reasons well before Starbucks came to town. The Grind and the Cartel and Kaldi's and MoKaBes and Hartford all have their niche market. And that is great. I frequent those places, too.

You really don't think that having Starbucks around creates more coffee drinkers overall? Isn't this good for the entire industry? Bottom line: Starbucks has made coffee drinking and coffee houses accessible to EVERYONE, not just students, or psuedo-intellectuals, or smokers, or gays and lesbians that need a friendly establishment to hang out at, or late-night people.

People of all ages and all walks of life frequent coffee houses now. Why? 1) Starbucks presence is inviting. 2) Caffeine is addictive. 3) It's a widespread social phenomenon - a trend. It's not exclusive anymore. Why? Starbucks.

Oh, and to address the fair-trade issue: All of Starbucks coffees are bought at or above Fair Trade rates. Why aren't they all certified, then? Because the coffee farmer has to pay to become certified, around $30,000 a year. Instead of 'forcing' its farmers to do so, Starbucks instead pays them as if they were Fair Trade certified without expecting the farmers to meet that stiff financial burden.

A striking difference between Starbucks and Wal-Mart, and one that has been largely overlooked here:

Wal-Mart sells all kinds of goods (household, grocery, pet, electronic, clothing, pharmaceutical, sporting, etc) at a discounted rate. Their target audience is everyone, but specifically those with lighter wallets. Ever seen their Robin Hood ads?

Starbucks sells gourmet coffee and coffee merchandise, as well as music - expensive music at that. They advertise lightly, and usually in upscale publications aimed at those that can afford to purchase them: The New Yorker, New York Times Magazine, etc. The audiences of these two companies are vastly different, many of their policies are different, some of their methods are different, and their product lineups are extremely different. We are not comparing apples to apples here.

If by 'blue-state' you mean 'those with expendable incomes' then you are correct. I don't think that's what you meant, though. Besides, there are plenty of people in Texas (a red state) with money to spend, and there are plenty of Starbucks there, too.

You have one thing going for your argument about red-state/blue-state: Wal-Mart donates overwhelmingly to the Republican party, while Starbucks gives to the Democrats.

January 25, 2006 at 2:07 AM  
Blogger Michael Allen said...

It seems to me that Starbucks swooped in on the success of St. Louis Bread Company (then an actual locally-owned chain), and used its vast capital to saturate the market. While new coffeehouses have sprung up lately, the arrival of Starbucks and the drastic alteration of St. Louis Bread's format seem closely related.

I also see some significant overlap in the audiences of Wal-Mart and Starbucks, at least locally. The popularization of coffee has led many a Wal-Mart shopper to grab some Starbucks, and the middle-class obssession with perceived savings has no doubt led many Starbucks drinkers to shop at Wal-Mart. There is a reason that both chains are as big as they are, and the reason is not that a bunch of yuppies or a bunch of ripped-off poor people are keeping these stores alive. The base of most chain stores is more diverse than critics usually allege.

January 26, 2006 at 10:40 AM  
Blogger Joe said...

Um, Kaldi's first opened in 1994 on DeMun. Last time I checked, that was in St. Louis County - and a pretty damned affluent part of the county at that.

Sure, they've recently expanded to Chesterfield, Kirkwood, and for some reason Springfield MO. But I doubt that has a whole lot to do with Starbucks.

February 15, 2006 at 10:55 AM  
Anonymous Mac said...

Starbucks is one of the most predatory businesses around.

They actively target the local mom and pop and are reported to put pressure on landlords and use underhanded leasing tactics as well as strong-arm tactics and 'cluster-bombing' (a tactic involving opening up multiple shops around a competitor until it closes).

I only patronize my local independent. My community depends on my support.

March 18, 2006 at 10:08 PM  
Anonymous kiop said...

nice story

October 16, 2007 at 10:41 PM  

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