Starbucks’ escape from reality vanishing?

Faced with an oversaturated market and abysmal economy, the company will close 600 U.S. stores during the next year. That wasn’t particularly surprising for those who believe that $4 lattes are expendable in this economic climate. But Starbucks’ troubles were avoidable: A pricey cup of coffee should be able to weather — even flourish in — a troubled market.

The problem is that today’s Starbucks is not the same business that began in a single store in Seattle’s Pike Place Market in 1971. It’s not the same company that drew us into its heart during its first decade of growth.

Starbucks made the one great consumer mistake: It put its ego ahead of its fawning constituency.

It doesn’t take a marketing genius to understand the problem. Even a C Econ 101 student like me could figure it out.

Starbucks brought luxury to the middle class. A $4 latte isn’t just a cup of coffee; it’s an extravagance. It’s a 20-minute escape from a stressful business day, a reward for getting the kids all off to school or completing a sweat-inducing aerobics class.

I was the quintessential customer when Starbucks exploded in the ’90s. My part-time job provided a bit of disposable income, but not at the Martha’s Vineyard or Mercedes-Benz level.  My children were babies, demanding enough for me to seek some “me” time. Starbucks provided that escape, a simple pleasure of subtle lighting, relaxing music and comfortable chairs.

My mother always said coffee tasted best in a china cup.  I learned that it was outstanding in a white paper cup with green logo. I loved the way the cup radiated heat past the tidy java jacket and into my hands. Holding the cup became part of the allure. After a while, it had little to do with flavor and everything to do with the experience.

Marketing genius Howard Schultz, who arrived at Starbucks in the earliest days, developed the coffeehouse experience after touring espresso bars in Milano, Italy. His company, Il Gionale, which served coffee drinks created from Starbucks beans, acquired the mother ship in 1987. Schultz is credited with making Starbucks — named for the first mate in Herman Melville’s “Moby Dick” — synonymous with luxury coffee worldwide.

Starbucks soon had a following solid enough to survive plenty of competition. But at some point it lost sight of those Milano espresso bars and became a victim of its own success. By the time Starbucks opened its 1,000th store in 1996, the company had started selling CDs and later Frappuccino ice cream bars and soon after was selling coffee beans in grocery stores and hawking coffee makers in its retail sites.

Today Starbucks sells stuffed animals, Christmas ornaments and various knickknacks. The softly lit, sit-down stores of its early life share the brand name with mall kiosks and grocery store walk-ups next to the produce department.

It’s no longer an escape destination. It’s everywhere. And it no longer provides a predictable, consistent experience. One Starbucks offers lounge chairs and jazz; another is nestled between a jewelry store and pretzel shop at the mall.

Businesses must grow to prosper but somewhere along the line, Starbucks felt as if the white paper cup with the green label could go anywhere and do anything.

But movie tie-ins aren’t what brought customers to Starbucks. It was the experience, not the coffee.

Closing 600 stores puts nary a dent in Starbucks’ business. The company finished 2007 with 15,756 stores and 172,000 employees. Its other highlights of 2007 include new relationships with Paul McCartney, the film “Arctic Tales,” Apple Computer, Pepsi and the Hershey Company.

I’d settle for consistent brewing of a Venti dark roast.

Earlier this month, Schultz, who recently resumed the role of company chief executive officer, said: “We have always aspired to be a relevant part of the daily lives of our customers, a trusted brand and a place for people to enjoy the best coffee in the world, served by our passionate partners. We must hold true to who we are and have always been, and ensure that our customer’s experience is the best of what we have to offer … the highest quality coffee in the world, and the best people, who deliver our unique Starbucks Experience.”

Hopefully it’s not too late for that to happen.