Starbucks failure in Australia Paul G. Patterson, Jane Scott and Mark D. Uncles All authors are from the School of Marketing, Australian School of Business, University of NSW In mid-2008 when Starbucks management announced that they would be closing nearly three-quarters of its 84 Australian stores there was a mixed reaction. Some people were shocked, others triumphant. Journalists used every pun in the book to create a sensational headline, and it seemed everyone had a theory as to what went wrong. This case outlines the astounding growth and expansion of the Starbucks brand worldwide, including in Australia. It then shifts focus to describe the extent of the store closures in Australia, before offering several reasons for the failure and lessons that others might learn from the case. History of Starbucks Starbucks fi rst store opened in 1971 in Seattles Pike Place Market. By the time the company was publicly listed in 1992, it had 140 stores and was expanding at a breakneck pace, with a growing store count of an extra 40%60% a year. While former CEO Jim Donald claimed that we dont want to take over the world, during the 1990s and early 2000s, Starbucks was opening on average at least one store a day (Palmer 2008). In 2008 it was claimed to be opening seven stores a day worldwide. Not surprisingly, Starbucks is now the largest coffee chain operator in the world, with more than 15 000 stores in 44 countries and, in 2007, accounted for 39% of the worlds total specialist coffee house sales (Euromonitor 2008a). In North America alone, it serves 50 million people a week, and is now an indelible part of the urban landscape. But just how did Starbucks become such a phenomenon? First, it successfully Americanised the European coffee traditionsomething no other coffee house had done previously. Before Starbucks, coffee in its current form (latte, frappuccino, mocha, etc.) was alien to most US consumers. Secondly, Starbucks did not just sell coffeeit sold an experience. As founding CEO Howard Schultz explained, We are not in the coffee business serving people, were in the people business serving coffee (Schultz and Yang 1997). This epitomised the emphasis on customer service, such as making eye contact and greeting each customer within fi ve seconds, cleaning tables promptly and remembering the names of regular customers. From inception, Starbucks purpose was to reinvent a commodity with a sense of romance, atmosphere, sophistication and sense of community (Schultz and Yang 1997). Next, Starbucks created a third place in peoples livessomewhere between home and work where they could sit and relax. This was a novelty in the USA where in many small towns caf? culture consisted of fi lter coffee on a hot plate. In this way, Starbucks positioned itself to not only sell coffee, but also CASE STUDY 10 Go online to to fi nd more case studies. While Starbucks may be responsible for growing the premium in-store and takeaway coffee market in various parts of the world, competing brands are emerging in many parts of the world. 1 «???ª 4 2 7 to offer an experience. It was conceived as a lifestyle caf?. The establishment of the caf? as a social hub, with comfortable chairs and music, has been just as important a part of the Starbucks brand as its coffee. All this came with a premium price. While people were aware that the beverages at Starbucks were more expensive than at many caf?s, they still frequented the outlets as it was a place to see and be seen. In this way, the brand was widely accepted and became, to an extent, a symbol of status and everyones must-have accessory on their way to work. So, not only did Starbucks revolutionise how Americans drank coffee, it also revolutionised how much people were prepared to pay. Consistency of product across stores, and even national boundaries, has been a hallmark of Starbucks. Like McDonalds, Starbucks claims that a customer should be able to visit a store anywhere in the world and buy a coffee exactly to specifi cation. This sentiment is echoed by Mark Ring, CEO of Starbucks Australia, who stated: Consistency is really important to our customersa consistency in the productthe overall experience when you walk into a caf?the musicthe lightingthe furniturethe person who is working the bar. So, while there might be slight differences between Starbucks stores in different countries, they all generally look the same and offer the same product assortment. One way this is ensured is by insisting that all managers and partners (employees) undergo 13 weeks of trainingnot just to learn how to make a coffee, but to understand the nuances of the Starbucks brand (Karolefski 2002) and how to deliver on its promise of a service experience. The Starbucks formula also depends on location and convenience. Starbucks has worked on the assumption that people are not going to visit unless its convenient, and it is this assumption that underlies its highly concentrated store coverage in many cities. Typically, clusters of outlets are opened, which has the effect of saturating a neighbourhood with the Starbucks brand. Interestingly, until recently, it has not engaged in traditional advertising, believing its large store presence and word-of-mouth to be all the advertising and promotion it needs. Starbucks management believed that a distinctive and memorable brand, a product that made people feel good and an enjoyable delivery channel would create repeat business and customer loyalty. Faced with near-saturation conditions in the USAby 2007 it commanded 62% of the specialist coffee shop market in North America (Table 1)the company has increasingly looked overseas for growth opportunities. As part of this strategy, Starbucks opened its fi rst Australian store in Sydney in 2000, before expanding elsewhere within New South Wales and then nationwide (albeit with 90% of stores concentrated in just three states: NSW, Victoria and Queensland). By the end of 2007, Starbucks had 87 stores, enabling it to control 7% of the specialist coffee shop market in Australasia (Table 1). By 2008, consumer awareness of Starbucks in Australia was 90% (Shoebridge 2008), with each outlet selling, on average, double the number of coffees (270 a day) than the rest of Australias coffee shops (Lindhe 2008). TABLE 1 Starbucks share of the specialist coffee shop market in each major region Region 2002 % 2007 % North America 44 62 Western Europe 17 21 AsiaPacifi c 15 19 Australasia 6 7 Latin America 0 18 SOURCE: Euromonitor (2008b). 2 Starbucks expansion into Asia Starbucks currently operates in 44 overseas markets and even has a small presence in Parisbirthplace and stronghold of European caf? culture. Beyond North America, it has a very signifi cant share of the specialist coffee shop market in Western Europe, the AsiaPacifi c and Latin America (Table 1) and these regions make strong revenue contributions (Table 2). It is in Asia that it sees the most potential for growth as it faces increasing competitive pressure in its more traditional markets. Half the international stores Starbucks plans to operate in the next decade will be in Asia (Euromonitor 2006; Browning 2008). Indeed, Starbucks has done well in international markets where there has not traditionally been a coffee drinking culture, namely Japan, Thailand and China. In effect, it has been responsible for growing the category in these markets. The fi rst Starbucks outside the USA opened in Tokyo in 1996 and, since then, Starbucks Japanese stores have become twice as profi table as the US stores. Unsurprisingly then, Japan is Starbucks best performing overseas market outside North America. More than 100 new stores open each year in Japan, and coffee is now more popular than tea in terms of both volume and value (Lee 2003; see also Uncles 2008). In comparison with its entry into the Australian market, Starbucks made small changes to its formula for the Japanese market; for example, the invention of a green tea frappucino, and the provision of smaller drinks and pastries to conform to local tastes. Starbucks arrived in China in 1998 and by 2002 had 50 outlets, and 165 outlets by 2006 (BBC News 2006), quickly becoming the nations leading coffee chain. Starbucks now sees China as its key growth market due to the size and preferences of the emerging middle class. In the AsiaPacifi c region, Starbucks command of the specialist coffee shop market grew from 15% in 2002 to 19% in 2007 (refer to Table 2). The total market for caf?s in China grew by over 135% between 1999 and 2004 to reach US$2.6 billion. It is projected to grow another 144% by 2008 to reach US$6.4 billion in sales. More specialty coffee shops are opening across China as a middle class with strong purchasing power emerges, although this rise in coffee consumption is highly concentrated in large cities such as Beijing, Shanghai and Guangzhou. Starbucks has said that it expects China to become its biggest market after the USA and the plan is to open 100 stores a year (Euromonitor 2006). Signifi cantly, certain Western brands are valued by Chinese consumers and Starbucks appears to be one of them. A growing number of Chinas 500 million urbanites favour Starbucks for its ambience, which is seen as an important signal of service quality, and Starbucks design concept rests easily with Chinas consumers, who tend to lounge with friends while sipping coffee. Its outlets in China frequently maintain larger seating areas than average outlets in other countries, and plush chairs and davenports are provided to accommodate crowds that linger. TABLE 2 Regional sales performance by outlets and value, 2006 Region % of company sales (outlets) % of company sales (revenue in US$) North America 79.0 80.5 AsiaPacifi c 13.3 10.8 Western Europe 6.7 7.7 Australasia 1.1 1.0 World 100.0 100.0 SOURCE: Percentage of company sales in each region is calculated from retail sales within this market in 2006, with sales data drawn from Euromonitor (2007). 3 4 2 9 However, success for Starbucks in China is not a given, and it will face several challenges in the coming years. Chinas accession to the WTO has led to the gradual relaxation of the policy governing foreign-owned retail outlets, and this will lead to more foreign investment and thereby competition (Lee 2004). Several multinationals are engaged in selling coffee (including KFC, McDonalds, Yoshinoya and Manabe), and a number of local brands have recently emerged, some even imitating Starbucks distinctive green and white logo and its in-store ambience (notably Xingbake in Shanghai). Furthermore, the reduction of import tariffs on coffee will also encourage foreign investment in coffee. The retail coffee industry in Australia Australians taste for coffee is a by-product of the waves of immigrants arriving on the countrys shores following World War II. European migrants, predominantly Greeks and Italians, were the fi rst to establish the coffee culture, which was later embraced more widely in the 1980s. For decades Australians enjoyed a variation of the lifestyle coffee experience that Starbucks created from scratch in the USA. Australians did not need to be introduced to the concept of coffee as many other countries did. Savouring a morning cup of coffee was already a ritual for many consumers. It is fair to describe Australias coffee culture as mature and sophisticated, so when Starbucks entered Australia in 2000, a thriving urban caf? culture was already in place. This established culture saw Australians typically patronise smaller boutique-style coffee shops, with people willing to travel out of their way for a favoured cup of coffee, especially in Melbourne where coffee has developed an almost cult-like following. For Australians, coffee is as much about relationships as it is about the product, suggesting that an impersonal, global chain experience would have trouble replicating the intimacy, personalisation and familiarity of a suburban boutique caf?. Furthermore, through years of coffee drinking, many Australians, unlike American or Asian consumers, have developed a sophisticated palate, enjoying their coffee straighter and stronger, and without the need to disguise the taste with fl avoured, syrupy shots. This love of coffee is easily quantifi ed. The Australian market is worth $3 billion, of which $1.8 billion relates to the coffee retailing market. For every cup of coffee consumed out of home, two cups are consumed at home (AustralAsian Specialty Coffee Association 2006). Per capita consumption is now estimated at 2.3 kgtwice as much as 30 years ago. While Australians are among the highest consumers of instant coffee in the world, they are increasingly buying coffee out of the home (Euromonitor 2008c). More than one billion cups of coffee are consumed in caf?s, restaurants and other outlets each year, representing an increase of 65% over the last 10 years. Even between 2000 and 2005, trade sales of coffee increased about 18%. In 2007, the growth in popularity of the caf? culture resulted in trade volume sales growing at an annual rate of 5%. Some 31% of the coffee sold through foodservice is takeaway, and it is thought that fast coffee will be a growth area in future years (Euromonitor 2008d). There is also a trend towards larger takeaway sizes, with 400ml cups increasing in popularity (Euromonitor 2008d). One might argue that Starbucks drove these trends, especially in regard to larger sizes. There are almost 14 000 caf?s and restaurants serving a variety of coffee types in Australia and, during 2006/07, they generated $9.7 billion in income (Australian Bureau of Statistics 2008). However, despite these statistics, the coffee business does not guarantee success. As Paul Irvine, co-founder of Gloria Jeans, notes: Australia is a tough retail market and coffee retailing is particularly tough. According to offi cial statistics, the caf? business is not always profi table, with the net profi tability of caf?s falling to about 4%. For a caf? to be successful, it has to offer marginally better coffee than local competitors, and do so consistently. Coffee drinkers in Australia are discerning, and they will go out of their way to purchase a good cup of coffee. They are not as easily persuaded as people from other countries simply to visit their nearest caf?. Second, 4 for a caf? to make a profi t, it needs to turn over 15 kg of coffee a week. The national average is 11 kg, so a caf? has to be above average to begin with even to make a profi t. Any newcomer needs to understand this before entering the market. The other signifi cant constraint on profi tability is the cost of hiring baristas, with a good one costing between $1000 and $1500 a week (Charles 2007). However, it seems that this is a necessary cost in order to deliver a superior product. The question that then begs to be asked is: How well did Starbucks understand this existing coffee culture? Did it underestimate the relational aspect of coffee purchasing in Australia, as well as the importance of the quality of ingredients and the skills of the person making each cup? Did it overestimate the value consumers attach to the in-store experience and the third place concept? Or did it just look at the statistics regarding coffee consumption and think that operating in Australia was a licence to print money? Did it simply see Australia as the next logical step to global domination? Starbucks has 87% of the US specialty coffee shop market, and only now is it beginning to feel pressure from non-traditional competitors such as Dunkin Donuts, 7-Eleven, McCaf? and Krispy Kreme (Burritt 2007). However, in Australia, the competitive landscape is different. Gloria Jeans dominates the high-street part of the coffee retailing market and McCaf? dominates the convenience end (Shoebridge 2008). Other signifi cant competitors include The Coffee Club and Wild Bean Caf? (an add-on to BP petrol stations) and Hudsons Coffee (see Table 3). All offer a similar in-store experience to Starbucks, with McCaf? from 2007 onwards refurbishing many McDonalds stores to imitate the Starbucks experience, albeit at the economy end of the market. TABLE 3 Competition in the Australian specialty coffee chain market (chains arranged in order of the number of stores operating in Australia) Number of stores in Australia Year established in Australia Business model Price of an espresso coffee (e.g. fl at white, cappuccino) Performance highlights and lowlights Gloria Jeans 500 1996 Franchise Regular $3.25 Overall Winner, 2005 Franchisor of the Year. Sales rose 18% to an estimated $240m for 07/08 driven by new stores and growth from existing stores. McCaf? 488 1993 Some storeowned, some franchise Small $3.25 The fastest growing caf? brand in Australia and NZ. Number of stores up from 60 in 2002. The Coffee Club 220 1989 Franchise Standard $3.40 Winner, 2008 Food Franchisor of the Year. The number of stores reported here includes NZ. Wild Bean Caf? (BP) 105 2004 Part of a franchise with BP Connect Regular $3.40 Plans to open more sites. Hudsons 45 1998 Franchise Small $3.10 Plans to expand store numbers by 2030% 08/09. Starbucks 23 2000 Store-owned Tall $3.60 Prior to closures in August 2008 there were 84 stores. SOURCES: Various company reports as at the end of 2008. 5 4 3 1 Growth grinds to a haltstore closures Shunned Starbucks in Aussie exit (BBC News, 4 August 2008) Weak coffee and large debt stir Starbucks troubles in Australia (Australian, 19 August 2008) Memo Starbucks: next time try selling ice to Eskimos (Age, 3 August 2008) Taste of defeat for the mugs from Starbucks (Sydney Morning Herald, 31 July 2008) Coffee culture grinds Starbucks Australian operation (Yahoo! News, 3 August 2008) In recent times however things have started to go wrong for Starbucks. Internationally, company earnings declined as cash-strapped consumers faced record petrol prices and rising interest rates, meaning they have had to pull back on gourmet coffee and other luxuries. Sales fell 50% in the last two years, the US share price fell more than 40% over the past year and profi ts dropped 28% (Bawden 2008; Coleman-Lochner and Stanford 2008; Mintz 2008). Consequently, Howard Schultz, the founder and chairman of Starbucks, resumed the position of CEO in 2008 with the aim of revitalising the business. He slowed the pace at which stores were opened (and in fact closed more stores than he will open in the coming year), introduced key performance targets (KPTs) and an employee rewards system in the USA, and simultaneously shut down every store in America for three and a half hours of staff training (Muthukumar and Jain 2008). Customer-oriented initiatives have included the addition of more food, the launch of the Starbucks card and Starbucks express, and the provision of high-speed wi-fi internet access (Hota 2008). Notably, Schultz acknowledges that the companys focus has been more on expansion than on customer servicethe very thing that was at the heart of its unique value proposition. However, it seems that these measures were too late for the Australian operation. On 29 July 2008, Starbucks announced that it would be closing 61 of its 84 Australian stores (i.e. 73%) by August 2008, resulting in a loss of 685 jobs. All of these stores had been underperforming (eight were in SA, the ACT and Tasmania, 28 in NSW, 17 in Victoria and eight in Queensland). This decline of Starbucks in Australia was not as sudden as many would have us believe and in fact some reports (Edwards and Sainsbury 2008; Shoebridge 2008) indicated that by late 2007 Starbucks already had: accumulated losses of $143 million a loss of $36 million for that fi nancial year lost $27.6 million the previous fi nancial year loans of $72.3 million from Starbucks in the USA was only surviving because of its US parents support. These closures saw 23 stores kept open in prime locations in Sydney, Melbourne and Brisbane. But this begs the question: Can a 23-store chain be viable for the brand in the long term? Based on the approximate numbers in Table 3, Starbucks had a 6% share of stores in Australia before the closures; this has now fallen to a share below 2%. Even before the closures, Australasia represented only 1% of company sales (Table 2) and now the fi gure is expected to be much lower. This may not make much commercial sense as it will be diffi cult to achieve economies of scale in terms of marketing and purchasing, and such small numbers are totally out of step with the clustering strategy adopted in its strongest marketsthe USA, Japan and China. However, it could also be argued that with Starbucks strategy of global domination, it is unlikely that it will ever close its Australian business entirely. While Starbucks management have been keen to suggest that this decision represents business challenges unique to the Australian market and in no way refl ects the state of the Starbucks business in countries outside of the United States, the US market has also suffered. By September 2008, 600 stores had closed 6 (or were due for closure), with about 12 000 workers, or 7% of Starbucks global workforce, affected (Mintz 2008). It should be noted that the situation in the USA has only worsened as a result of the global fi nancial crisis. Everyone seems to have an opinion as to why Starbucks failed in Australia. Our research suggests there is some truth to many of these opinions. While the troubled economy might seem an easy scapegoat, with people tightening their belts and eating out less, it is unlikely that this was the core problem as evidenced by the continuing growth of its competitors. Clearly there had been an emergence of new lifestyle caf? chains (The Coffee Club, Gloria Jeans, even McCaf?although it might be argued the target market is different) as well as a growing number of intimate, locally owned, suburban independent caf?s. Furthermore, in recent times 7-Eleven stores in Asia have allocated fl oor space for a premium takeaway coffee machine (caf? latte, cappuccino, etc). It seems coffee is no longer considered a luxury item by many Australians, but rather an affordable part of their daily routine. Instead, there is substantial evidence to suggest a number of factors combined to bring about Starbucks demise. As Andrew Mackay, Vice-President of the Australian Coffee Traders Association, noted (Martin 2008): I just think the whole system, the way they serve, just didnt appeal to the culture we have here. While there was initial curiosity and hype about Starbucks, after trying it many Australians quickly found that it failed to offer a particularly unique experience that was not offered by other chains or caf?s. Given the strong established coffee culture and discerning palates of Australians, the core product coffeewas not seen as particularly different from, say, a latte or short black from a good suburban barista, Gloria Jeans or The Coffee Club. Its point of difference in Australia, where a coffee culture already existed, had to be in its supplementary or value-adding servicesi.e. its unique servicescape, engaging customer service, brand image and so on (Lovelock et al. 2007). But was this worth a premium price, especially as the competition began replicating Starbucks in-store experience? Starbucks has since been harshly criticised by Australian consumers and the media. Its coffee has been variously described as a watered down product, gimmicky, and consisting of buckets of milk. These are not the labels you would choose to describe a coffee that aspires to be seen as a gourmet product. It has also been criticised for its uncompetitive pricing, even being described as one of the most over-priced products the world has ever seen (Martin 2008). Even the idea of the third place has come under criticism: Why would you want to sit around a pretend lounge room drinking a weak and expensive coffee when you can go around the corner and have the real thing? (Wailes 2008). It seems that Starbucks rapid expansion, its omnipresence, somewhat standardised store design and recent insistence on staff achieving various sales KPTs (key performance targets) such as serving x customers per hour, all combined to diminish the in-store experience. The introduction of sales targets for frontline employees, for example, meant staff and baristas had less time to engage with customers. It began to stray too far from its roots and the very values upon which its success was built. Some of these actions were forced upon Starbucks by emerging competitors seeking to imitate the brand in many ways, and thus gain a slice of the ever-growing lifestyle coffee market. Starbucks points of differentiation were systematically being eroded and, in a sense, the brand that taught the world that coffee is not a commodity was itself becoming one. 7 4 3 3 Next, the brand has also come under fi re for declining customer service as it continued to expand. For example, the quality of baristas is said to have declined as Starbucks widened its pool of applicants in order to meet demand at new stores. Can a 17-year-old high school student really compete with a boutique-trained barista with a passion for coffee? By not offering a better experience and product than emerging direct competitors, Starbucks found itself undermined by countless high-street caf?s and other chains that were selling stronger brews at lower prices and often offering better or equal hospitality. While it may have pioneered the idea of a third place, it was an easy idea to copy, and even easier to better by offering superior coffee, ambience and service. Now, with so many coffee chains around, Starbucks has few points of differentiation; even wi-fi internet access has become commonplace across all types of caf?. Furthermore, while customers were offered promotional rewards for returning to Starbucks, the card-based scheme is no more sophisticated than equivalent me-too cards at Gloria Jeans, The Coffee Club, Hudsons and many independent caf?s. And as noted earlier, one of the things that set Starbucks apart from the competitionacknowledging customers (often by name for regulars) within a few seconds of entering the store and seriously engaging with thembegan to unravel when Starbucks imposed both customer service and sales targets for its caf?s. The imposition of these targets plus an ever-widening range and complexity of coffees to remember and make to perfection, meant staff morale and inevitably customer service levels declined. In fact in the USA some staff were so disillusioned with the imposition of sales targets (because it meant they simply didnt have time to engage with customers) that they posted blogs openly stating that Starbucks had lost its way. Finally, it appears that Starbucks was not even delivering on its core promise of serving superior coffee in comfortable surroundings, thus justifying its premium price. By switching to vacuum-packaged coffee, consumers are denied the store-fi lling aroma of the coffee beans. The switching of traditional coffee machines to automated espresso machines (which can make coffees 40% faster and move customers through the lines more quickly) has also resulted in a loss of theatre (Grove et al. 2000) for people wanting to see their coffee made that way and has also had implications for taste. In-store, it has been noted that there are fewer soft chairs and less carpeting, and Starbucks recently lost ground in the service and surroundings category of the Brand Keys 2007 Customer Loyalty Engagement Index (Cebrzynski 2008). It seems that Starbucks is now less about the quality of the coffee and is more about the convenience of faster service and being on every cornerwhile still charging a premium. Ironically, it seems that the very thing that made Starbucks successful in the fi rst placeits ability to adjust the original (European) business model and coffee tradition to local (US) conditionsis the thing that let it down. While Starbucks has made minor changes to its menu in countries such as Japan and Saudi Arabia, it generally offers the same products all around the world. When the company came to Australia, it brought its American offering, simply bringing what worked in the USA and applying it here, without really understanding the local market. But with more than 235 ethnicities speaking more than 270 languages and dialects, companies wanting to get ahead in Australia need to be aware that they are not dealing with one homogeneous market. Unfortunately what worked in the US was bitter, weak coffee augmented by huge quantities of milk and sweet fl avoured syrups. Not so much coffee, as hot coffee-based smoothies. For the Australian consumer raised on a diet of real espresso, this was always going to be a tough sell. (Mescall 2008) As McDonalds Australia chief executive Peter Bush noted, US retailers that have had trouble making it work in Australia (e.g. Starbucks, Dennys, Arbys, Taco Bell) are those that have introduced formulae developed for US palates and for the US way of doing businessThese formulae have, at best, modest relevance in Australia. Peter Irvine, co-founder of Gloria Jeans, also noted: US retailers often arrive in Australia thinking the size of their overseas chains and the strength of their brands in other markets will make it easy for them to crack the local market. Their focus is on global domination rather than the needs of the local consumers. Further, there 8 is a strong sense in Australia of buying local, supporting the community, having relationships with the people you buy from, and supporting ethically minded businesses. Starbucks clashed completely with that, whereas local stores can differentiate themselves as being local and noncorporate. Furthermore, some would argue that Starbucks has become a caricature of the American way of life and many Australians reject that iconography. Many are simply not interested in the super-size culture of the extra-large cups, nor want to be associated with a product that is constantly in the hands of movie stars. Did Starbucks try to expand too quickly? In the USA, Starbucks started in Seattle as a single store. In a nation bereft of a genuine caf? culture, that single store captured peoples imagination and soon there was a second store, quickly followed by a third. Before long, Starbucks had become a demand-driven phenomenon, with everyone wanting a Starbucks in their local area. McDonalds grew exactly the same way in Australia, opening just one or two stores in each citynowhere near enough to meet demandthus creating an almost artifi cial scarcity, which created huge buzz around the brand experience. Krispy Kreme did the same. But when Starbucks opened in Australia, it immediately tried to impose itself with multiple store openings in every cityadopting the US model of expansion through store clusters. Australians were not given a chance to discover it. As Mescall (2008) points out: They took key sites, hung huge signs, made us order coffee in sizes and gave the coffees weird names. Starbucks said to usThats not how you drink coffee. This is how you drink coffee. Starbucks took the Coca-Cola strategy of being available wherever people looked, but this quickly led to market saturation and the businesss own undoing. Its
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