I Told You So
Four years ago to the month, Walker Tea Review covered the grand opening of Teavana’s flagship store on New York’s Madison Avenue. Then back in July, Starbucks announced the scheduled closure of 379 Teavana stores. “But why?” you may ask. There are several factors (and opinions) at play here.
Shriveling Shopping Malls
Some blame in on the death of the American shopping mall. This is a factor, but not necessarily the primary culprit, as Charlie Cain explains. 75% of Americans go to malls at least once per month, and large shopping centers drive 50% of all US retail sales. I give Charlie a lot of credit here as he has worked in tea (and was a Starbucks exec), but I’m not convince the numbers work out. How many cups of tea do you need to sell to weekend mall traffic to make a worthwhile profit? Does half of all US retail sales- spread across multiple shopping center locations (and across multiple shops within those shopping centers) mean these marketplaces are healthy? Not sure about that one either. On the other hand- I know tea shops being contacted by shopping mall agents with enticing proposals to lure them into the slots Teavana is exiting.
Bloated Brick and Mortar
American retail stores are bloated in overall square footage. In 2015 the estimate was 25 square feet of retail space per American vs. 2.5 per European. The result has been vacant retail properties with no new business coming in- the store’s footprint is too big and the rents are too damn high.
Tea Trumping Coffee
Many people want to point out that tea is growing faster than coffee, and that some age groups are drinking the same/more tea than coffee. Maybe so- it depends on what kind of coffee you’re talking about. I haven’t seen the studies that examine the growth of specialty coffee vs specialty tea. American consumers are just waking up to the taste of higher quality espresso drinks and single-origin coffees. Comparing declines in the prolific consumption of drip coffee to the slight rises in loose tea use doesn’t tell enough of the story.
Selling Tea, Or The Cup?
The model has to be right. In the original article 4 years ago, I noticed that the store layout indicated 2 sales models trying to compete in the same space. A consumer can only buy so many novelty teapots and teaware. Teavana mall stores push teaware- this makes developing frequent return customers challenging.