Coffeenomics

By MIKE MILIARD  |  December 11, 2009

But as seems usually to be the message in this country — remember President George W. Bush's post-9/11 exhortation to go shopping? — it's much harder to work to fix or create something than it is simply to buy something. "It would take a lot to create global justice," says Simon. "So often we're content with just the gesture."

0912_bux2_main
VENTI MISTAKE: Moving toward a menu of fluffy new products like the Frappuccino (above) opened up new markets for Starbucks, but also diluted the brand.
Spaced out
Simon's book is most intriguing when it explores how Starbucks has shifted notions of public space. You may have heard the term "third place" — a sociological concept that refers to a locale, separate from work and home, where people can gather.

Starbucks has seized on this idea, marketing itself as a meeting spot and impromptu office, and providing the necessary amenities: soft-music, electrical outlets, free Wi-Fi (two hours worth, at least), a fireplace, comfy chairs.

That "vision of the third place — a consumer experience that added value way beyond the physical quality of the cup of coffee, for which you could then charge a price premium" — was key to Starbuck's massive success, John Quelch, a professor of marketing and business administration at Harvard Business school, tells the Phoenix.

But not everybody is able to take advantage of these corporate-sponsored social hubs. "One of the things that Starbucks was really good at was creating a predictable space," says Simon. "By using the price filter to narrow out the poor, by locating [stores] in primarily white middle-class neighborhoods, they sort of managed diversity."

That gets at another, "more fundamental point about the nature of America," says Simon. "We're only really willing to gather when we know that the people there are going to be relatively similar to us. What Starbucks did is manage who goes there. You make the product cost enough that only the people who can afford it will go there . . . [and] you only locate where the people you want are actually gonna be."

The ramifications of such subtle social engineering extend beyond the coffee counter. "Growth went to the places that already had a Starbucks," says Simon. "Real-estate agents would advertise condos by how close they are to Starbucks."

(It's not a coincidence that, of the hundreds of stores that closed, a good many of them were in boom counties gone bust in California, Nevada, and Florida.)

While Starbucks "talks all the time about creating community, making life better for people, what it did is reinforce an economy and geography of haves and have-nots," says Simon. "It's pretty amazing how it left out large spots of rural America, and neighborhoods of color."

For its part, Starbucks supplied the Phoenix with a statement: "We are not sure that we agree with the premise of Simon's book. Our experience is that Starbucks has been and will continue to be a place where communities gather and we are proud to serve as that place," adding that one of its "guiding principles" is to "embrace diversity as an essential component to the way we do business."

Buy and buy
This much is certain: hundreds of locations may have closed, but there are still thousands upon thousands left — just look across the street or down the block.

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