Starbucks closing all Teavana retail stores
Good, I have to walk past one every day to get to the subway and it always emits the most horrible artificial smell. They also keep their door open during the summer, wasting tons of electricity for their A/C.
If they’re closing down the website, that seems like a really bad use of $620 million and a horrific business strategy.
Related to a Facebook group discussion of this issue someone mentioned an article that claims to explain it. It’s not so different than the Forbes summary, just a little more detailed in spots, about decreasing mall traffic and such. Per the input from people in that discussion the teas were overpriced, not addressing the highest quality range of versions; of course it doesn’t mention anything like that.
I’ve never actually stepped foot in a Teavana myself since I’ve been living in Thailand for the last decade, so I can’t provide any first person input. It seems odd that Starbucks couldn’t sell the brand or at least the space to a company like T2, under Unilever. This article author rejects the idea that declining mall traffic is the main problem, and more or less claims the business model for the product type just didn’t work.
Thanks for sharing.
“I also don’t believe this announcement signals weakness in the market for Specialty Tea. 80% of Americans drink tea, and 50% do so on a daily basis. The Specialty Tea segment is growing at nearly twice the rate of the overall US tea business, and demographic trends suggest the industry has a long runway of expansion as younger consumers are more inclined to favor tea over coffee than their parents.”
Eh…I don’t know if I believe half of all Americans drink tea on a regular basis. If so, I’m betting things like Nestea and sweet tea are included in those numbers .. and not loose (or even bagged) tea specifically.
Right; no way that’s about loose tea. It didn’t seem like that article was really addressing the specifics of tea demand, tying what Teavana was selling back to changes in demand and awareness for different types. It seemed like that content may have represented some gaps in really capturing consumer perspective, focusing on a marketing analyst take that may or may not have been completely valid related to the an individual making a choice between shopping at Teavana or using an online source. The closest that article ever gets to mentioning actual Teavana products doesn’t relate to dry tea sales at all, but instead at an attempt to implement drinks sales to complement that range of products:
“The third strategy, leveraging Starbucks strength in hand-crafted beverage to drive incremental sales within existing Teavana stores, also required a significant shift in business model and customer behavior. Teavana’s mall stores typically have one register, limited foodservice equipment, no seating, and no space to add either the infrastructure or lines of customers required to make beverage service profitable. Trying to add several hundred prepared beverage transactions per day on top of shoe-box sized stores that are built to process less than one hundred $50 retail transactions proved exceptionally messy.”
I always thought that Teavana’s business model was flawed. In the Boston area, they are located in high-end malls, with extremely expensive rents. This pushes their costs up to the point they are forced to charge 2 or 3 times as much for their tea as their on-line competitors. If they had lower prices on-line, their customers would just browse/sample then buy on-line, so they had to price themselves out of that market.
I don’t know where Starbucks is going with them now, but I guess that they wanted tea of a quality commensurate with their coffees, and stash just wasn’t there. Since Starbucks is all about the in-store experience, the tea will be too. I don’t know how well this will work, since tea culture doesn’t seem to combine well with coffee culture. Also, my impression was that the Teavana stores made their real money selling tea in bulk, not single servings.
I don’t know how many people drink tea but David’s Tea is in the same mall and it does quite well from what I can tell. I also go by a mall with very little in it and the DT there also does well. So I wouldn’t say it was because of decreasing foot traffic in malls. I think Starbucks just doesn’t understand tea, they are after all a coffee company.
I’m hoping that we will see more David’s in mall locations. They are not my favorite tea brand but I like their tactics a lot better than Teavana. Maybe they can reuse the infrastructure too?
It seemed like Unilever would be the right company to try that, based on already owning T2, and exploring tea store options in NYC branches after original location only in Australia.
Well Davids’ Tea keeps popping up in places around here these days. While I don’t like a lot of their teas they have a few that are good. It’s also easier than online because I can taste it in store. Also when I have a craving it’s easy to pick up. We don’t have too many tea stores here. It was mostly DT and Teavana. Maybe one or two other places and that’s it.
I stopped by my local Teavana store today and the worker there said they expect to be around for another six months but that they will only be given 30 days notice of closing. The main thing I have stocked up on is their rock sugar. Bought a bunch online and four more pounds today. I now buy mostly herbals from Teavana which I think they generally do well. They don’t sell my favorite tea anyway which is puerh but I do drink a lot of herbals.