Pass or Fail?

Want inspiration? Look no further than your local Starbucks. The coffee retailer has managed to keep its growth strategy intact during these trying times.

"They're cheap entertainment," says TCU's Minor. "Why not go to the Starbucks with your friends rather than go to the movies?"

The company's keeps its image in pace with society by providing wireless Internet access. "Every third [Starbucks] is a technology store now," says Scott Van Winkle, an analyst at Boston-based investment firm Adams Harkness & Hill. "Anytime you get ahead of a trend and create a new form of retailing, there's success."

Still, the main ingredient in Starbucks' success is its java. "A dollar fifty for a cup of drip-although 50 percent above other cups of coffee-is still only a 50 cent differential, which most people can afford," says Mitchell Speiser, senior restaurant analyst at Lehman Brothers in New York City.

"I think that in life's simple pleasures, there's opportunity," Speiser says. "Even in tough times, certain products do well."

Chris Sandlund writes about business from Cold Spring, New York.

Contact Sources

• Adams Harkness & Hill
  (617) 371-3900, www.ahh.com

• Barnard's Retail Consulting Group
  (973) 655-8888, www.retailtrends.com, kbarnard@retailtrends.com

• Center for Women's Business Research
  (202) 638-3060, ext.13, www.womensbusinessresearch.org

• Delta Road Inc.
  (303) 282-9001, www.deltaroad.com

• Jupiter Media Metrix
  (917) 534-6900, www.jmm.com

• Ladenburg Thalmann & Co.
  (212) 409-2000, www.ladenburg.com

• Morningstar Inc.
  (312) 696-6000, www.morningstar.com

• National Small Business United
  (202) 293-8830, www.nsbu.org

• Starbucks Corp.
  (206) 318-7310, mbehrbau@starbucks.com

• The Step2 Company
  (330) 656-0440, tmurdough@step2.net

• Texas Christian University
  (817) 257-5608, d.minor@tcu.edu

• Toy Industry Association Inc.
  (212) 675-1141, www.toy-tia.org

• University of Southern
  California(213) 740-0648, wgartner@marshall.usc.edu

• WhyRunOut
  (949) 460-7300, www.whyrunout.com

This article was originally published in the December 2001 print edition of Entrepreneur with the headline: Pass or Fail?.