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Tuesday, July 22, 2008

Fighting the Big Boys...

BusinessWeek had a great article story about how small, local, coffee houses were competing with Starbucks. And not just surviving, but thriving. While Starbucks is its own worst enemy (although they are at least taking the right steps to right the ship) in a lot of areas, including here in Southern Oregon, they are getting their butt handed to them by local, or regional chain.

So how do you compete with a behemoth?

  • Zig to their Zag - Competing directly can be suicide. If they are trying to expand into other areas, focus on your core. Or, Muffins vs Cookies. Pleasant people vs the not so nice (at least here).
  • Know your niche - They grew because they became an authority on coffee. If you are gonna compete find your niche or sub-niche, like fast service, special Teas better loyalty rewards, etc.
  • Work Harder - Howard Schultz works very hard, but the bigger you grow even a 1% bad apple quotient is gonna creep in (if not higher). Be prepared to personally out-work them. I have tried a lot of new places because they were, well, open! Hire other hard workers. Pay them more then the competition and only hire the best. If they aren't fire them and do it yourself. If you can't outspend them (and you can't!) Gotta make this step!!!

This applies to any business. If you say you can't compete, you can't. You won't buy better then them no matter how hard you whine, so work hard, work around them, and know your business and I guarantee success!


Sharon said...

I've watched our local Starbucks change management, then crash and burn. Coffee is cold, service is poor, etc. I remember if you had to wait for a fresh pot of coffee, they would give it to you free. They no longer do that, unless I complain. I've stopped going, mostly because I get it free at work and I make my own at home. Part of the reason I liked Starbucks was the atmosphere. But unfortunately, that has diminished as well.

I believe most businesses will succeed if there is great customer service. Unfortunately, that has declined across the board. :(

Hey, I hear Southern Oregon is BEAUTIFUL! Would you post some pictures?

RacerX said...

Hey Sharon!

Yep same everywhere. Happens when you expand too fast. You get less and less experienced workers running the shop.

Controlled expansion is the name of the game!

Cath Lawson said...

Hi Racer - These are brilliant tips. Especially becoming an authority in your niche - that really does matter.

Firing people and doing it yourself is really tough though - but I guess sometimes it's necessary unfortunately.

RacerX said...

Thanks Cath! Very kind!

I guess my point was to not settle on someone for lack of choice. The damge to the brand can often outweigh the lost gains.

Funny about Money said...

We were thrilled to see a little guy open a coffee house in a downscale shopping center near us. There is a Starbucks down the road in the other direction, but I'm too picky about my coffee to enjoy Starbucks, and the environment is not friendly for sitting around.

We asked the new proprietor how he expected to make a go of it in a strip mall whose anchor stores were a dollar store and a cut-rate ethnic grocery store serving a working-class community of Mexican immigrants. He said he located there to be across the street from the hospital, whose staff he (correctly) figured would appreciate a decent cup of coffee.

Eventually he also figured out that our area is full of retirees and lazy bums (the latter would be me and SDXB) who are looking for low-rent sites to indulge Bumhood. He installed several overstuffed chairs and sofas, decorated the walls with (awesome!) artwork done by local high school students, and started serving home-made pastries with the very excellent coffee.

It took a couple of years of VERY hard work, but he now has a thriving business. And his store is very much appreciated by those of us who enjoy good coffee and want to sit in an unhurried, comfortable atmosphere in which to consume it.

RacerX said...

That guy hit everyone of my points, especially the work part. Hate to get on my soapbox, but small business is where job growth generally comes from. Support your local guys too!

Nothing wrong with big box retailers (I work for one)but it doesn't meant the little guy might not offer value!

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