Our beloved Brew.

Our beloved Brew.
R.I.P. Big guy.

Monday, July 27, 2009

The Most Astonishing Month in US Soccer History.

Since you are reading this, I'll assume you are not media challenged, and have regular access to news sources. Ergo, it seems safe to assume you may have seen a rash of publicity about various soccer contests, or perhaps you are among the hundreds of thousands of spectators who attended international or national team games in the US this month, or pehaps you are among the millions in this country who witnessed these contests on television.

Most of this soccer enthusiasm is a result of two tournaments happening almost simultaneously around the country -- The CONCACAF Gold Cup, a regional title of little significance (not to be confused with CONCACAF World Cup Qualifying), and the World Football Challenge (WFC).

CONCACAF is an acronym for the region of North and Central America nations as designated by soccer's international governing body (FIFA). The World Football Challenge is an inflated title given to a "friendly"tournament among four prominent foreign teams touring the US as part of their preseason schedules.

As a tune-up to the WFC, Chelsea FC played a friendly on July 18 against the Major League Soccer (MLS) expansion team Seattle Sounders in front of more than 65,000 spectators. In addition, Chelsea FC who won the WFC played four matches before a combined attendance of 275,000 people ( an average of 68,700).

When playing each other, the remaining WFC participants: Club America (Mexico), AC Milan and Inter Milan (both of Italy) drew impressive numbers for their matches.

The Gold Cup showcased 12 teams playing in pool play through four groups with the winners advancing to a "knock out" round. The "knock out" round featured teams from Costa Rica, Honduras, Mexico, and the USA. Only Costa Rica used a team comprised of its best players. The US and Mexico excluded most of their best players from their rosters and fielded teams comprised of players with limited national team experience. Essentially, they competed with players trying to earn an opportunity to make the team.

Despite using largely unknown players, the semi-final games played as a double-header in Chicago, drew impressive crowds. To be clear, the reported attendance at game time for the US v. Honduras was 20,000. The second game of the evening between Costa Rica and Mexico had an announced crowd of over 55,000. While far from "near sellout" of Soldier Field as announced by the promoters, this was an impressive turnout driven largely by the huge Mexican population in Chicago and the Midwest. Note that the first game, with the host nation, drew less than half the evenings attendance.

The Gold Cup Championship game was played at Giants Stadium and sold out with over 82,000 spectators. Again, Mexico's participation was a key factor in this turnout. The outcome of the game, a 5-0 humbling of the US by Mexico, two teams usually well matched, is an indication of how lightly the US took this competition.

In the two tournaments, with four world famous club teams, playing the first games of their preseason training schedules, and a number of North and Central America nations playing less than their best players, drew very impressive numbers.

So what does this mean for soccer in this country? Hard to say.

This past week, MLS announced its attendance is down about 7% from last year, and this includes the spectacular numbers from the previously mentioned expansion team, Seattle Sounders who are averaging over 30,000 spectators per game. Take the Sounders out of the equation and MLS reported attendance is down double digits. This is especially troubling when you factor in the numerous media reports over time that MLS tends to inflate the attendance figures it reports.

MLS blames much of its decline on the economy. If that's true, some equal measure of the success of the two tournaments might also be attributable to the economy in that fewer people are taking vacations and attending these tournaments was a form of "staycations."

I suspect the tremendous numbers in attendance associated with these two tournaments is due largely to reputations of the international clubs and national teams who participated and is a trend toward visiting teams of fame, and will not translate into increased attendance for US leagues.

As an example, a week before the Seattle v. Chelsea game, the Sounders played Houston in a MLS league game that drew more than 32,000 people (about Seattle's season average). However, three days after the Chelsea game, Seattle played the same Houston team again in a U.S. Open Cup game that drew fewer than 5000 spectators.

The fledgling Women's Professional Soccer League (WPS) announces crowds somewhere in the neighborhood of 5000 spectators per match and as the season progresses, the numbers are getting worse, not better. WPS did a good job of sprinkling many of the best women players in the world and the US among its teams. It also put together a solid business plan, and works hard at forming relationships in the community. However, the caliber of play still leaves a great deal to be desired. They may be some of the best women players in the world, but they are not yet the best teams in the world.

What this says to me is, with the exception of a few superstars like David Beckham, the soccer paying public makes its decisions based on the reputation of the team, an opportunity to see foreign national team, and the anticipated caliber of play. As I was the first to predict in a national print publication, seeing David Beckham was a novelty that wore off after one or two times, and did not translate into improved attendance for anyone when he wasn't scheduled to appear.

With the proliferation of national and international competitions coming to this country, and the ever increasing television coverage of games from the overseas professional leagues, the US spectator is becoming more knowledgeable about the game, and more discerning. This could be a double edge sword for leagues in this country. By comparison, the US professional game in general still falls far short in terms of skill, and caliber of play of that of the best men's team in the world. Given the chance to occasionally see two world-class teams play is something Americans will pay to see, but that doesn't mean they will pay to see just anyone play.

Yes, Americans will pay to see the top six teams of England's Premiere League play from time to time, but who wants to see teams at the bottom of that table, or some second division team? If my instincts are correct, the floodgates are about to open as promoters of every stripe begin enticing foreign teams of varying skill and reputation to play in the US. The diluting of product will likely result in the abrupt end of what has started as a very promising trend. But trends do not make habits.

It is the rare opportunity and the high caliber of play that combine to contribute to the outstanding attendance at Gold Cup and WFC games. Sustaining that precise balance is the key to continued success, but even then, I do not see it translating into packed stadiums for US leagues. In those rare cases when powerhouse teams like those in the WFC, and others such as Barcelona FC, Real Madrid, Manchester United, Bayern Munich, et al, are involved, the crowds will come out. In other words, don't confuse passion for great soccer with passion for any soccer.

Friday, July 17, 2009


I stopped in our neighborhood Quiznos for the first time in many months. I noticed three things:
1. Their Torpedo product is essentially half the width of their previous sandwich and appears to be a total of three or four thinly sliced pieces of meat. 2. The width of their regular sandwiches has also been downsized by at least 30 %. 3. Prices have climbed by about 10% from what I remember.

A fellow operating the register, who I guessed was the franchisee was chatting with one of the food workers about all the attention the new Jimmy Johns was getting down the road. "They'll be back. Sure, everybody is checking them out, but once they realize that quantity isn't quality they'll come back." I watched the eyes of the worker and all I could read was "I wonder if JJ's is hiring?"

The handful of people in Quiznos, in the middle of the noon hour, confirmed he is feeling the competitive pressure. Just for the heck of it, I went down the street and saw the Jimmy John parking lot jammed. But out of curiosity, I went a block further to the Subway and found their parking lot as full, and the line of customers waiting to be served as they usually are. Directly across the street from JJ's is a Taco Bell that completed a major remodeling within the month. Looks like a brand new place. Some of the other adjacent fast food places were spruced up, with newly stripped parking lots, extra clean windows and fresh landscaping.

The Jimmy Johns has a prime location in the middle of "fast food" row, right next to McDonald's. Subway is just a short distance further past McDonald's. Quiznos is in the opposite direction from the major intersection, sits back from the road somewhat obscured by a bank that sits closer to the road, in a strip mall of "mom and pop" retailers. Although it has been in this location for more than a year, I give it less than a year before it goes under. Downsized product + rising prices + robust competition = poorer value. Note to Quiznos: location, location, location. Can't wait till Monday when I get to try Jimmy Johns for lunch.

Starbucks update

I posted the previous blog yesterday. Today, I read that Starbucks is testing a new concept in one of their stores by not using the Starbucks name. I may not have this name exactly correct, but it's something 5th St. Coffee and Tea. The point is, they are playing with their concept. I find it amazing that the Starbucks brand has never talked about coffee. In fact, their positioning has always focused on being a person's third destination (1.Home 2. work/school 3. Starbucks) which would position them ahead of Church and play as dedicated destinations. It will be fun to see how this plays out.

Thursday, July 16, 2009

The Decline of Starbucks

I'll try to keep this short and sweet rather attempt to detail the long and illustrious history of Starbucks that has been so well documented elsewhere.

A client made the observation the other day that he considered Starbucks to be a model brand because it established a value proposition and market leadership position while completely avoiding the typical trappings of retail competitive pricing.

This led to an interesting conversation since I couldn't have disagreed more with my client's position. Undeniably, Starbucks is a brilliant brand. I often use examples of Starbucks to illustrate points in my various workshops and speaking engagements. My usual references emphasis the various facets of its unique positioning, powerful brand, and the enormous growth the company achieved without having relied on consumer advertising, which most people consider a cornerstone of brand building. But I will leave that aspect of my opinions for another time.

While I am a fan (but not a customer) of Starbucks, I believe its market strategy has its flaws. To suggest that Starbucks avoided pricing as a cornerstone of its brand positioning ignores the recent and rather rapid decline of the company stock over the past couple of years. Dunkin' Donuts, and McDonald's have landed severe body blows to Starbucks in the battle for premium coffee supremacy by being "more affordable" and a better value than the industry leader. The situation grew so severe that the company founder came out of retirement to replace the CEO and rescue the enterprise.

In designing and adopting a positioning centered on self indulgence, meant to justify premium prices (some would say highly overpriced), the company has absolutely declared a brand centered around price.

My client argued that the current economy and consumer belt-tightening have more to do with Starbucks' decline, and while there might be some truth to that, if we were just talking about a sales decline, I might agree. But I believe market share has definitely, and perhaps permanently shifted to the lower cost alternatives. If the Starbucks' value proposition was genuinely based on something other than premium pricing, the decline in sales and market share would not have been so rapid or so severe. At no time did Starbucks' customers, or the public fail to recognize this was an expensive/overpriced cup of Joe. In flush times, people were more accepting, but make no mistake, the rub was always there.

Starbucks greatest challenge is ahead. Once this economy shows signs of recovery how will it explain what I believe will be a continued decline in its business? Once people have altered their behaviors, it is very hard to win them back. Starbucks is yet another example in the marketplace of how consumer behaviors, based on little more than instant self-gratification will erode.

One of my favorite expressions (I think it comes from Tom Peters) is: "Every condition necessary for your best customer to leave you is in place and moving full steam ahead." The challenge of any management team is to forestall that exit by adapting while still keeping the brand authentic, relevant and consistent.