Eight years ago, there was no such thing as a Starbucks coffee shop in Japan. Now they are part of the landscape; in the big cities, you can often find two or three of the ubiquitous stores with the round green logo within a couple of blocks of each other. That might sound like the ultimate definition of corporate success, but as Starbucks Coffee Japan Ltd. has learned, it could also represent a ticket to trouble. On Tuesday, the company revealed that it had lost customers -- and money -- last year, in part because it had "cannibalized" its own market by opening too many outlets. In an attempt to retrench, company President Yuji Tsunoda confirmed, it will sharply reduce the pace of new store openings in Japan this year.
How much should be made of this development? On the one hand, it could be just another example of corporate overreaching in a crowded market, easily reversed. On the other hand, this is Starbucks we're talking about: not merely a coffee brand but an idea, rivaling McDonald's and Disney as the world's most recognizable symbol of globalization. When Starbucks hiccups, financial analysts aren't the only ones to register the jolt. Cultural analysts perk up their ears, too, perhaps detecting a note of quasi-political protest in the wind.
But it is rarely a good idea to read too much into the leaves in the teacup, or in this case the grounds in the coffee cup. Starbucks Japan's recent setbacks are more readily explained in a local context than a global one, and there is nothing especially ideological about them. Opening too many stores too close together is certainly one cause. The strategy makes sense in a high-traffic neighborhood such as Tokyo's Shibuya, where Starbucks outlets are often so crowded that customers are forced to drink their lattes and mango frappuccinos outside or standing on the stairs. Elsewhere, however, the proliferation of stores puts the company at risk of generating brand fatigue. If there's a Starbucks on every block, how special or novel can it be? And in Japan, famous for its food fads, the quality of being special or novel is everything.