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Cities Need More Starbucks, Not CityTargets

These people "call" 1-800-Flowers.com (FLWS) on Mother's Day. The florist has become obsolete, thanks in large part to its passive approach. It allowed itself to become little more than a distribution center for online business. It requires a dingy warehouse, not prime real estate in the heart of a thriving city.

Like every Starbucks that opens in Santa Monica, this one will draw a crowd. The company recently popped up 0.6 miles away from 11th and Wilshire, at Lincoln and Broadway, as part of a mixed-use development (retail anchoring apartments). And guess what? What was a once a run-of-the-mill corner, now has life. The tables on the plaza in front of the Starbucks always have people sitting at them drinking coffee and chatting among the city dwellers who have seemed to pop up out of nowhere.

Newsflash: They were always there. They have just had no reason to be public. Starbucks gave them one. It provided a venue for urban theater to unfold. Now they have a Starbucks -- and plenty other old, new and yet-to-emerge businesses -- that serve the several square blocks that operate as their neighborhood. In a relatively dense, walkable environment like Santa Monica, it's not overkill to have a Starbucks every half mile, even with other cafes and coffee shops in between. It's not even close to overkill. People live the day-to-day within very close proximity to where they live. Or at least that's the goal of many.


For as much as Starbucks contributes to the life of a city, it also stands out as an innovator in an otherwise dead retail sector. It provides an always-evolving experience that not only separates it from the pack, but creates the type of bond between consumer and company that only exists at a handful of other non-traditional retailers -- the Apples, Teslas (TSLA) and Lululemons (LULU) of the world.

Starbucks doesn't just talk about mobile and digital innovation. It delivers like a tech company. From its most recent earnings conference call on April 25 (via Seeking Alpha:

In Q2 we introduced new innovations and initiatives that further demonstrates Starbucks leadership in consumer card, loyalty and mobile payment experiences as more and more of our customers choose the Starbucks card as their preferred method of payment. Consider the following statistics; today, nearly one-quarter of all U.S. transactions are made by My Starbucks Rewards loyalty members and nearly one-third of all U.S. in-store transactions are prepaid.
Our mobile apps now have more than 10 million active customers and we are approaching 4 million U.S. global payment transactions per week, accounting for roughly 10% of total U.S. tender. To put this in perspective, Starbucks card tender now exceeds $3 billion annually in the U.S. and Canada, a scale that rivals many premier U.S. banks.

Go to a Starbucks in Manhattan; it's not an overstatement to say that almost everybody pays with the smartphone app. And Starbucks has merely reached the tip of the iceberg with regard to how it intends to evolve the mobile/digital experience. This is more than a coffee shop to many; it's a way of life. It's an ecosystem in the spirit of Apple, Amazon and Google (GOOG).


Target doesn't come close. It banks on notions of habit and necessity. When somebody comes along to further disrupt retail -- adding to the pain Amazon has already caused -- Target (and most of its peers), like the newspapers and radio stations that came before it, will be woefully unprepared to respond.

If you choose to not disrupt today, expect to be disrupted tomorrow.

-- Written by Rocco Pendola in Santa Monica, Calif.

Rocco Pendola is TheStreet's Director of Social Media. Pendola's daily contributions to TheStreet frequently appear on CNBC and at various top online properties, such as Forbes.
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