Starbucks and Barnes & Noble are two of the most popular businesses in the USA. Everyone knows that one sells coffee while the other one sells books and other educational products.
But despite being two different companies, it seems like there is a connection between them.
I mean, whenever you go to any Barnes & Noble store, you see the Starbucks section there.
Thus, it is understandable why people wonder about their association.
The relationship between Starbucks and Barnes and Noble is of strategic alliance only. It means both have partnered up to provide the best services to their customers, which eventually benefits their businesses.
But there’s much more to learn by studying their partnership. Their relationship can change the landscape of how businesses will be done in the future to become successful.
Continue reading to know about the details of this relationship.
Businesses often avoid strategic partnerships because they can create deadlocks and economic losses for them.
You also hear about the alliances that failed almost every other day. But the tale of Starbucks and Barnes & Noble’s partnership is different.
In 1993, Starbucks found out that they share almost the same customer pool as Barnes & Noble. Although both were different businesses, Starbucks still made the right decision.
The company realized that this information could boost its business. That is why Starbucks also started opening branches next to or near Barnes & Noble, and the beverage sales increased.
But Starbucks was not the only one that enjoyed the benefits. Barnes & Noble also reported an increase in the sale of books in those stores where Starbucks was next to or near them.
So, it is understandable why both businesses that sell two different things joined hands to deliver the best possible services to their shared pool of customers.
On 7 September 1993, both Starbucks and Barnes & Noble made a deal about partnership and announced that customers could now enjoy delicious coffees in addition to reading books.
Since Barnes & Noble was already on the mission to diversify the environment of their stores, they gladly accepted the terms of the deal.
In 1993, Barnes & Noble Barnes & Noble announced that they had purchased a license to sell Starbucks coffee in their stores.
The company made it public that its 36 stores would have Starbucks coffee. Furthermore, they also announced that their staff would be given “coffee training” to provide the best Starbucks coffee.
Starbucks also made the announcement that they would operate coffee sections within the book stores.
The first joint store was opened on 11 September 1993 in Bellevue.
Howard Schultz, the CEO of Starbucks at that time, commented that this partnership would begin a new era. Both businesses and customers would enjoy great value and satisfaction.
Starbucks and Barnes & Noble gained supreme benefits due to their deal in 1993. This deal is still in effect even after more than two decades have passed because it is helping them in different ways:
The profit of both Starbucks and Barnes & Noble got a huge boost because they gained access to new markets.
Starbucks fans know about Barnes & Noble, while Barnes & Noble fans know about Starbucks.
Due to this partnership, Starbucks’ net worth grew significantly, and the company was declared the fastest growing business by Business Week in 2001, a time of economic recession.
Similarly, Barnes & Noble continued to open new stores and spread their network’ all thanks to the 1993 agreement.
Their business got threats from the rise of Amazon, but luckily they not only survived but also thrived due to this partnership.
A brand’s reputation increases when another reputable brand endorses it. Since this deal meant that both Starbucks and Barnes & Noble endorsed each other, the credibility of both brands increased among the citizens.
Indeed no business can survive without having a good reputation, and the relationship between these two businesses helped in this matter.
Both Starbucks and books got under one roof, which saved money on purchasing new land and building infrastructure there.
Plus, both also save money on the advertisement too. Starbucks fans got to know about Barnes & Noble for free, while Barnes & Noble fans got to try Starbucks there and become fans.
Now, let’s see how this partnership works.
It’s true that Coffee and books really go well together. That is why the partnership between Starbucks and Barnes & Noble seems so natural.
People go to Barnes & Noble to get a cup of Starbucks coffee and then often roam around the store, and some of them actually buy the books.
But there’s more.
Since people like to drink coffee in the morning, they go to the store at this time when the sales of books and educational products are usually very low.
But the Starbucks in the store helped Barnes & Noble as the book sales multiplied in the morning.
Similarly, those who go to Barnes & Noble to get books also go to the Starbucks section to get coffee as a refreshment.
This works just the same as advertisements. For example, it was reported that old women who went to Barnes & Noble in 1993 to buy books tried Starbucks for the first time and became their fans.
They used to think that Starbucks coffee was for young people only. But when they tasted the drink, they also became regular customers.
That’s how this simple partnership boosted both of their businesses right after the deal was made.
But with time, more growth happened.
Barnes & Noble gained economic prosperity and began to open stores in different parts of the country.
They also opened stores in those locations where Starbucks had no intention to open their stores, like in the Midwest.
So, Starbucks helped Barnes & Noble to open a coffee section under their own license to sell coffee.
They sold Starbucks coffee there, and both of them earned a profit. Since many people there had no Starbucks, they quickly jumped to these places.
After some time, Starbucks also opened its stores, and it instantly became successful.
Conflicts arise between these two giants on the issue of Starbucks’ new locations. Starbucks opened their new stores in those areas where Barnes & Noble business was doing great.
The book retailer thought the coffee company was now becoming a competitor. But then both talked it through, and now their partnership is working fine in 2022.
Today, Starbucks owns a few retailers within the book stores. In comparison, Barnes & Noble operates more than 400 cafes in their stores, where they serve Starbucks coffee. People can either visit it from the roadside or within the store too.
Yes, the coffee you get at Barnes & Noble stores tastes the same as the coffee you get from a Starbucks store.
Since Barnes & Noble got the license to sell Starbucks coffee, they get the same ingredients, such as Frappuccino, caramel, sauce, etc., used in the Starbucks one.
If you want, you can taste coffee cups from both Starbucks and Barnes & Noble, and you will notice no difference.
The problem with the Barnes & Noble cafe is that you cannot order the beverages online like in the case of Starbucks.
You can see the menu from the official website, but you cannot place an order for your favorite beverage there.
In addition, the partnership does not mean that you can use your Starbucks coupons at Barnes & Noble. People often ask, “Can I use Starbucks promos at the cafes in Barnes & Noble?
Well, No, you can not. Despite the agreement, both Starbucks and Barnes & Noble are two separate businesses. They don’t accept the coupons or promos of other brands.
But still, they are partners, and their alliance paved the way for more partnerships, which led to more jobs and growth in the economy!
All-inclusive, the relationship between Starbucks and Barnes & Noble is a strategic alliance.
Both companies made an agreement in 1993 which generated tons of profit and saved a lot of money for them.
Both found that they share the pool of customers with the same mindset. Therefore, the two companies decided to work together.
Starbucks coffee was sold in the Barnes & Noble stores, which drove traffic. This was feasible for both as those who went in the store for coffee often purchased the books.
Similarly, those who went to the bookstore to purchase new books also bought coffee. This widened the customer pool, and both companies greatly benefitted from this alliance.
Even today, economic experts give the example of this alliance and advise other companies to follow in the same footsteps of Starbucks and Barnes & Noble.