Bitterman’s Rule of Retail Growth

There should be a rule for growth in the retail sector. Malcolm Gladwell starts out the discussion in his “rule of 50” (or something like that) in The Tipping Point, in which he argues that communication and overall order in organizations and groups that number greater than 50 begin to break down rapidly. My idea goes beyond this, but there is definitely some measure of oversaturation in the retail market (I just haven’t yet figured out how to quantify it.)

You can see example after example in retail history:

The Gap, once upon a time, the überhip, and übercool store was kind of hard to come by. There wasn’t one in every mall. Now the Gap is on nearly every other block in Manhattan and in every store it’s boring, boring, boring.

Starbucks today announced that they plan to close about 9% of their retail outlets. (see http://dailybriefing.blogs.fortune.cnn.com/2008/07/01/starbucks-has-a-bitter-plan/) They’ve definitely reached the saturation point. But in the case of SBUX, it’s WAY more than that. They’ve lost their edge. They’ve lost their cool, and once that’s gone, it takes YEARS to get it back. We’ll come back to that in a moment.

Levis are another example. Back in the day, you could pretty much only buy Levi’s at the Gap and a few select stores. The Gap dumped them like a hot rock, and guess what? Levis, the once fabric of American legend, became hopelessly uncool. Only recently have they begun to make a comeback — nearly 20 years after the Gap dumped them.

JetBlue is walking periously close to the line of uncool. They’re hitting a saturation point, and they’re beginning to get really sloppy about brand management. Just check out their new commercials if you have any doubts. I still think they can do well, but someone needs to snap that company to its senses before it drowns in its own blue-blinded fantasy.

The intricacy of brand management is super-carefully tied to the saturation point. It’s kind of like heart and lungs of a business. You can’t really have one without the other. That’s why brands like Target do well. They maintain enough scarcity to protect their allure, while maintaining strict brand standards. You don’t see a Target at every shopping center, do you? Let alone do you see a Target in every city. They’re playing is cool, and as long as they keep that pace, they will remain cool.

So Starbucks is struggling. It’s probably struggling more than it’s apparent (usually that’s the case) and it’s pretty apparent that they’re in a mess. Why?

Because someone dropped the ball when it came to brand management. They got sloppy. Whomever decided it would be a good idea to “reinvent” or “relaunch” the original Starbucks logo should be committed. What a dumb idea. Let’s take a kind of struggling company with an iconic brand identity, and screw with the identity. Dumb. It wasn’t only a dumb move but a poorly timed move as well, and one that pulled in scads of bad press to boot. My guess is that something is rotten in coffee land. The current strategy is regressive and not future forward. Forget trying to cultivate “the coffee experience” and face facts: Starbucks is the McDonalds of coffee. That’s nothing to be ashamed about, but let’s call a spade a spade. So my advice, kick the crappy logo, go back to the green one. Quit trying to cultivate an in store experience, and just give me my damn coffee, quickly. Be a good corporate citizen. Offer free wi-fi. Stop trying to sell cheap crap made in China (at least at your urban stores, that crap probably flys out of the suburban stores). Allow for a little localization, and do what you do best, make coffee.

Let’s see where it lands.

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