Starbucks Isn’t the 3rd Place Anymore

Starbucks is over as a much-acclaimed “Third place.”

After home and work, Starbucks fashioned its locations with comfy chairs, Wi-Fi, and some coffee too. That was a decade ago, when retail locations cheaply rented space for just an expensive grande.

Sociologist Ray Oldenburg coined the phrase “third place” as environments like churches, libraries, and cafes as vital to encouraging social infrastructure and a stronger democracy. For a fascinating read about social infrastructure, check out Palaces for the People: How Social Infrastructure Can Help Fight Inequality, Polarization, and the Decline of Civic Life by Eric Klinenberg.

Today, Starbucks is migrating away from that cozy vibe. They are redefining themselves. Roz Brewer, chief operating officer and group president for the Americas, articulated that customers’ “third place is everywhere they’re holding our cup.”

While couched in positive language about technological advances and convenience, the underlying consideration is that renting office space for hours for only a $5 macchiato is not good ROI for Starbucks anymore. The music is slightly louder, the chairs less comfortable, and the outlets less plentiful. They are expanding drive-thrus and deliveries.

Retail is no longer only about buying things you can carry out in a fashionable bag. It’s experiential too. Retail this congested could easily be a story about real estate, and it is becoming one.

The race is on to design venues so intrinsically useful that people will pay for the right to sit there. More and more are happily paying to access to the ambiance, amenities, and feel — without the subterfuge of buying a Frappuccino first.

Made By We, New York City, NY
Made By We, New York City, NY

The We Company is revolutionizing office space.

WeWork offers shared work spaces and services to individuals, small business, and large enterprises. In January 2019, WeWork launched its first retail location called Made by We in New York City. Theoretically, it’s a similar idea to a Starbucks as a co-working space. This new storefront concept is WeWork’s take on the third place.

Whizzing with clinking ceramic cups, a trendy coffee shop abuts a wall of merchandise made by members around the world, like hats, water bottles, and device accessories. Past the painted pay line, anyone can plunk down for a few minutes, hours, or days and write their novel, run statistical regressions, or design a floorplan.

Why Pay for What Starbucks Offers for Free?

The first reason is that freelancers and others with flexible working arrangements “don’t want to feel guilty” for taking up a seat in Starbucks for too long. That’s what I heard from members and staff alike.

Made By We, New York City, NY
Made By We, New York City, NY

But on top of that, Made by We is designed to keep people working. They have two outlets per person, fast Wi-Fi, quiet phone booth spaces to take a call, and even printing services. As Starbucks distances itself from these amenities, Made by We dives in.

The displays are full of modern art and heavily curated books. The ambiance is perfect for creative thinking. Or, for sitting in a place that makes people feel like the cool kids. And pay for it.

Zera Coffee in Denton, TX
Zera Coffee in Denton, TX

On the other side of the spectrum from an international $47Billion company, others are getting into the revamped third space retail genre. Zera Coffee House in Denton, TX is a registered 501(c)3 non-profit offering a hip coffee joint and work space.

All profits support a men’s residential program. Customers feel generous when they buy a Mexican Hot Chocolate and a turkey wrap while then pen their next opus. One frequenter, Candace Penley said

“I go out of my way to get my coffee fix and work from Zera. I love that they are giving back to the community. It’s also completely equipped with a ton of outlets and space, so it’s an ideal, peaceful place to work. Win-win for all!”

As this theme catches on, it will threaten retailers who rely on shrinking margins from product sales to keep huge retail footprints open.

If you like, we can discuss it at the Borders Bookstore down the block. Who will be next to innovate the Third Place?

I wonder if Amazon, Netflix, Google or Target will mine their cloud-based customer purchasing, viewing, and demographic data to design the ultimate physical space.

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