News
DAY 3 @ ICSC
May 25, 2011
| Forgive the headline shorthand, but swapping 30,000 business cards is exhausting! Another guy who's earned a break? Starbucks CEO and chairman Howard Schultz, who brought his company back from the brink (and kept grande Caramel Macchiatos in our lives). |
 |
| During yesterday’s lunch keynote, Howard shared some insights from his recent bestseller, Onward: How Starbucks Fought For Its Life Without Losing Its Soul. The ubiquitous coffeehouse has grown to 17,000 stores in 50 countries. He says for years, it was on a carpet ride and everything it touched—every product, store, city, and country—“almost turned to gold.” But in '07, with the global financial crisis brewing, Starbucks for the first time posted negative comp store sales. Howard stepped down as CEO to become chairman, overseeing international expansion. He later added CEO back to his title to address the company’s “self-induced” mistakes. One of them: embracing growth as a strategy as opposed to a tactic. |
 |
| Starbucks became the poster child for excess, but what troubled him the most was that the one thing Starbucks stood for, “the integrity and the quality of making a perfect cup of coffee,” had been compromised. The company took the unparalleled step of closing every one of its stores to retrain 125,000 employees. Months later it held a $32.5M meeting in New Orleans to remind 11,000 managers about the company’s values and culture of giving back, donating 55,000 hours of community service, mostly in the city’s hard-hit Ninth Ward. After all that, 2010 turned out to be Starbucks' most financially successful year ever. |
 |
| Four retailers rose to the top when ICSC surveyed its 55,000 members and asked them to vote on retail imagination and creativity. Actor and return ICSC RECon comedian Carson Kressley (of Queer Eye fame) interviewed the winners. Fossil retail prez Jennifer Pritchard, center, says her company will add 75 to 100 stores globally this year. Other honorees: women’s activewear brand Athleta, which is about to open stores on NYC’s Upper East and West Sides and in LA and will have 50 or more launched by ’13; food-not-frills grocer Aldi, which plans to open 90 to 100 a year and has a $360M capital expense budget this year (targets: NY, Florida, and Texas); and Smashburger, which estimates it’ll grow from 100 locations to 500 within five years. |
 |
| We snapped Carson interviewing play center/restaurant Cool-de-Sac CEO Jose Luis Bueno (while ICSC prez Michael Kercheval chaperones). Cool-de-Sac has locations in Mexico City and Miami and plans to expand. SoCal's organic, low-sugar juicemonger Nekter Juice Bar intends to grow nationwide—and rapidly. And casual Mediterranean eatery Crazy Pita is targeting Nevada, California, Arizona, and Texas. ICSC named all three as retailers to watch. |
 |
| It’s hard to talk about the hot retailers without talking about the “not” retailers, though, Carson says. Remember the New Coke and Doritos-with-Olestra fiascos? Add to them British breast milk ice cream purveyor Icecreamists and its “Baby Gaga” offering; famous NYC dessert joint Serendipity 3’s recession-boggling $25k sundae; the e-cigarette; and the melatonin-laced Lazy Cakes. |
 |
| All these expansions bode well for the US franchise industry, which last year had 765,000 establishments accounting for 7.6M jobs and $760B of economic output. Huddle House CDO Mark Whittle (400 locations), National Restaurant Development CEO Aziz Hashim, Dunkin’ Brands CDO John Dawson (16,000 locations), and 7-Eleven franchise development director Mike McCormick (42,000 locations and growing by 500 a year) say establishments and jobs will grow 2.5% this year and economic output 4.7% (adding new meaning to “America Runs on Dunkin”). Franchises accounted for 36% of last year's 80M SF of retail absorption. |
