By: Andrea James
Starbuck's is closing 600 stores across the United States due to a weak economy and slow sales. Patricia Edwards comments in this article. It read:
"It's normal for a rapid-growth retailer to step back and evaluate profitability at individual locations. McDonald's Corp. and Wal-Mart Stores Inc. have done so, said Patricia Edwards, a retail analyst at Wentworth, Hauser and Violich in Seattle."
"'It sounds like they're getting serious about return on investment,' Edwards said. 'It actually makes a lot of sense. You almost have to applaud them. It's the retailers and the restaurants that take the correct yet painful steps first that do better in the long run.'"
"The fact that the closures are mostly new stores is also logical, she said. A company starts by opening in fabulous locations and then less fabulous once the best spots are taken."
"'Build all the A's first, then you build the B's,' Edwards said. 'By the time they got as big as they were, they had to be looking at a lot of C, D, E and F locations.'"
"'The question is, is it about cachet anymore, or is it about selling and making good return on that investment in that store location?' Edwards said. 'This is not the era of $4 coffee. We're in the era of $1.50, $2 coffee. They've got to make sure that special pot that they've got is absolutely phenomenal.'"