How will Starbucks closures impact shared-space bank branches?

by bradywalen on July 2, 2008

It seemed like a no-brainer for some institutions’ expansion strategies: build branches near or adjacent to a Starbucks store; or better yet, take full advantage of the foot traffic generated by the coffee chain and share a retail space. Given the rapid growth and much-discussed success of Starbucks in recent years, it certainly seemed like a viable strategy.But as news comes today of

Starbucks’ plans to close more than 600 stores over the next year, how will financial institutions sharing space with Starbucks stores be impacted?While most of the planned Starbucks closures will be those stores opened since 2005, it doesn’t sound like the institutions referenced in this

Wall Street Journal article from 2005 will be impacted. But what about those institutions that may have followed their lead and teamed up with Starbucks with a shared-space since then? Or, what about those that were influenced in some respect by a Starbucks location when selecting a site for a new branch during the past few years? We’ve talked to quite a few institutions, especially those with branches near college campuses, who have aggressively pursued such partnerships with Starbucks.

It’s easy to see how the shifts in traffic patterns can certainly benefit many businesses, especially those that follow retail magnets like Starbucks or Wal-Mart, but what happens when they close their doors? I suppose we’ll find out which institutions, if any, will be impacted when Starbucks makes its announcement to its employees later this month about which locations will be closed.

{ 1 comment… read it below or add one }

Jim Perry July 7, 2008 at 1:45 pm

I think there was an important lesson for financial institutions imbedded in the announcement of Starbucks store closures, if you look closely at how Starbucks talked about the closures.

It was less than two years ago that Starbucks set a long-term goal of having 40,000 coffee stores worldwide. So I was especially interested to see that Starbucks’ press announcement made certain to emphasize the character of these 600 stores as “underperforming” and spoke about the closures as a “significant step toward improving long-term profitable growth.”

How often do financial institutions review the profitability of their branch network and make choices with an eye toward long-term profitable growth?

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