Starbucks Evenings: A New Day in Coffee Shops?

Wine and Beer Service May Spark a New Retail Real Estate Trend

Will the 40 million customers who start their weekdays at Starbucks want to return post- 4 p.m. for wine, beer and tapas-style small plates? After four years of testing in selected U.S. cities, the coffee powerhouse is betting they will. Starbucks COO Troy Alstead announced that some 30 stores are now offering the expanded menu with 10 more expected by year end. Driven by the need to boost traffic in the slowest part of its day, Starbucks is planning for an eventual 1,000 hybrid bar-coffee shops in major markets. Currently 70 percent of the chain’s sales occur before 2 p.m.

“The Third Place Concept” Signals an Emerging Retail Real Estate Trend

Marketed as “Starbucks Evenings,” the expanded menu and beverage service is designed to create a “third place” in the days of the chain’s youthful, upscale demo, the other two “places” being home and work. The concept capitalizes on Starbuck’s brand image as a gathering place with quality beverages. Customers can expect a mellow environment where they can unwind and enjoy premium wines and beers with friends before heading on to their evening’s activities. With its Evenings concept, Starbucks is entering a niche, successfully pioneered by independent hybrid cafés in dozens of urban centers but adding to that its brand muscle and customer base.

Starbucks Evenings are offered by selected stores in metro Seattle, Portland, Chicago, Atlanta, Los Angeles and Washington, D.C. Several are housed in shopping centers, such as Roswell Marketplace (Atlanta), Seacliff Village (Huntington Beach, CA), Creekside Village (Calabasas, CA) and Streets of Woodfield (Schaumburg, IL). The Starbucks in Dulles International and LAX offer the program as well. Wine and beer offerings are tailored to the tastes of the individual market, while the food menu is standardized. Orders are placed in the usual Starbucks manner at the counter where the barista-produced coffee and tea service will continue.

New Starbucks Service Could Pose Questions for Retail Commercial Real Estate

Some skeptics say the expanded menu will weaken the Starbucks coffee-based brand and possibly alienate customers who don’t like a bar atmosphere. Given both the extensive testing and the careful selection of markets, those predictions seem unlikely to be realized. But challenges may be posed in leasing retail space to Starbucks stores in shopping centers. What will be the reaction of other tenants with liquor licenses? How will prospective restaurant tenants react to the presence of a Starbucks? Will existing Starbucks’ leases require revisiting to allow for potential liabilities regarding alcohol? While none of these are insurmountable, they’re worth considering.

 Will Other Coffee Chains Follow Starbucks’ Lead?

Levin will be keeping an eye on the effects of the Starbucks expansion. We recently signed a new 3,160-square-foot lease for Dunkin’ Donuts in our Clifton Plaza (NJ) center.  With its Baskin-Robbins merger, the franchise-heavy Dunkin’ Donuts seems firmly focused on catering to America’s sweet tooth. Like Starbucks, they want to fill their low-volume time slots but it is doubtful that we will see Chardonnay mixing with donuts and desserts in the late afternoon at Dunkin’ Donuts. One of the chain’s major franchisees in Jacksonville, Fla., may be setting another trend in retail real estate with a store renovation, conducted in concert with the corporate office as a market test. The upgraded, free-standing venue on University Avenue offers state-of-the-art Wi-Fi and other tech services, conversation areas with sofas, a high-tech music system, and a conference room that has proved popular with local businesses and on weekends for family movie-nights.

Have you visited a Starbucks that offers the Evenings program? Or the Dunkin’ Donuts on University Avenue in Jacksonville? What was your impression? Please share it with us.

 

When Going Backward is Going Forward

melissa

Clicks-to-Mortar Continues as a Retail Real Estate Trend

When Bonobos’ founder Andy Dunn launched his online menswear business in 2007, he pronounced bricks-and-mortar stores officially dead. Within five years of predicting that retail real estate trend, Bonobos was offline as well as online with a unique take on bricks-and-mortar – Guideshops – plus branded boutiques in select Nordstrom stores. Other big e-commerce names like Warby Parker, Piperlime, Birchbox, Proper Cloth and even Etsy and eBay are now dabbling in the concept of offline venues.

Migration to Bricks-and-Mortar Sounds Like Good News for Retail Real Estate

The Los Angeles Times recently reported on the debuts of on-the-ground boutiques by some of the hippest names in online-only retailing. Among these are Nasty Gal, now in the Southland Mall in Hayward, Calif., and JustFab in the Glendale Galleria. Former exclusive onliners say the major drivers of this “reverse evolution” are their need to build brand awareness and the shopper’s need for a tactile impression of merchandise, something that can’t be duplicated online (at least not yet). Shopping is a social experience, especially among the coveted millennial demographic, they acknowledge, and a physical venue provides just that. And shoppers want to try before they buy –something that even the onliner’s promise of “free shipping both ways” can’t seem to overcome.

Clicks-to-bricks also delivers a positive financial impact. Dunn of Bonobos says that he cut his online marketing costs in half through his Guideshops and that the average in-store transaction ($360) was close to double that of Bonobos’ average online sale.

“Reverse Evolution” Results in a New Kind of Retail Real Estate Venue

Bricks-and-mortar descendants of e-commerce sites are anything but traditional stores and more hybrids of offline and online. This retail real estate trend is producing smaller “showroom” style shops (sometimes as small as 800 sq. ft.) with shallow, sample-based inventory. In-store purchases are often made via the retailer’s website to be delivered within 24 hours (for the almost-instant gratification consumers crave). Both sales associates and shoppers in these hybrids have access to multiple computers to browse additional options and features and place orders. Typically, the showroom stores closely reflect the branding of the retailer’s website – The Gap’s Piperlime, a fashion site featured on “Project Runway,” decks out its flagship SoHo showroom in the color palette and graphics of its website.

What’s Next for the Click-to-Mortar Retail Real Estate Trend?

Traditional retailers continue to strive for online success. E-commerce pioneers seek a footprint in the real world. What’s next? Will we see more online retailers launching not only in trendy neighborhoods like SoHo and LaBrea but in malls as well? One thing we can count on, it’s not going to be business as usual. What are your observations about this trend? Please share them with us below.

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About Melissa Sievwright

Melissa joined Levin’s marketing department in 2010 and was promoted three times in less than three years to her current management position as Assistant Vice President of Marketing. With a strong background in graphic design and marketing, she heads the company’s corporate branding efforts, implements promotional campaigns for select client properties, and supports the firm’s leasing team in marketing vacancies within the company’s shopping center portfolio. Her current “big picture” goal centers on helping Levin leverage opportunities resulting from the rapid evolution of online marketing and the increasing technological savvy of the commercial real estate community – to project an image that marries the firm’s rich traditions with its modern approach to doing business.