Starbucks' "big announcement" came earlier this week: Beginning in July, the world’s largest coffee chain will offer free Wi-Fi access as part of their menu. Two-hour time limits and online access fees will soon be dead, hopefully, never to return.
After drinking Starbucks for years, my only thought is too late.
I quit Starbucks a few years ago, a direct result of having to pay for online access. Depending on coffee choice, a visit to my local Starbucks ran between $5 and $10, not to mention the two-hour time limit. Feeling violated, I likened it to a bar charging to use the bathroom.
The free Wi-Fi offer is appealing, and I sorely miss Starbucks' attempt to maintain the hip and trendy coffeehouse image. Starbucks brand was built on the individual stores, and the company relied on word-of-mouth advertising to promote their brand.
The coffeehouse image, supported by an eclectic in-store music rotation and shelves where independent-label CDs were displayed, proved a stark contrast to SBUX, a publicly traded Fortune 500 that increased their standing by 20 spots this year.
While free WiFi was a big announcement, the company also revealed a combined Starbucks/Yahoo! initiative to deliver a "Starbucks Digital Network." Although it sounds cheesy, the SDN provides users great benefits, "exclusive content and previews, free downloads, local community news and activities." The press release lists a few content providers, including the The Wall Street Journal , The New York Times, USA Today, Yahoo!, and iTunes.
But wait, there's more.
The New York Times touted that the SDN will feature "an online section on business and careers that will include tools for people searching for jobs or writing résumés."
The digital network uniquely re-positions Starbucks, and the SDN promises benefits not found elsewhere. Starbucks is making a statement, reinforcing public perception of exclusivity and innovation. Need full access to the WSJ? Exclusive local content? Free downloads from iTunes? You won't find them at Dunkin' Donuts or Caribou Coffee.
Seemingly innocuous at first glance, are these recent brand/service enhancements indicative of a deeper commitment? The company's Wi-Fi access changed radically from "pay for access" to "all access paid" platform. Has Starbucks returned to their original consumer-based brand initiatives, "building one store at a time and one cup of coffee at a time?"
Assuming that Starbucks received a percentage of the online access fee, it's clear that someone at Starbucks is thinking outside the profit margin, opting to forgo their online "cut" in an effort to:
Increase same-store sales.
Re-engage lost customers.
Initiate trial among non-users.
Re-establish "exclusive, innovative" brand image.
Is Starbucks simply keeping up with the competition? If so, why didn't they initiate this plan when free Wi-Fi became available at Borders, Panera Bread, or McDonalds?
It's my hope that Starbucks has revitalized the strategic business model that built Fortune 500 entry No. 241, a coffeehouse with 16,706 locations and a presence in 50 countries that stays hip selling indie CDs.