Caribou Coffee Finds Silver Lining in Store Closures

Three Questions with Coffee Marketer and CMO Strategy Summit Speaker Alfredo Martel

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Alfredo Martel
Alfredo Martel
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Caribou Coffee knows it will likely never be as big as Starbucks. That's why the Minneapolis-based coffee chain has been focusing in recent years on the customers that know and understand its brand best. It hasn't been without its hurdles.

Earlier this year Caribou closed some 80 stores and rebranded another 88 stores as Peet's Coffee & Tea, decreasing its retail footprint by a significant amount. Alfredo Martel, senior VP-marketing and product management, said that such a move helps position the brand better for the future.

Ad Age caught up with Mr. Martel, who will speak at Ad Age's CMO Strategy Summit in San Francisco October 16, to discuss how the company has refreshed its brand strategy and what marketing tactics and platforms it will focus on moving forward.

Ad Age: How has the brand strategy changed over time?

Mr. Martel: We wanted to heighten our differentiation from Starbucks. And that was big, to really change the color palette, change packaging design, so that our branding would be more differentiated and more cohesive, with the retail as well as CPG. We were a fragmented brand because we didn't quite look the same way across our lines of business. We have continued to innovate around our coffee quality and beverages, and we expanded our line into non-coffee drinks and expanded and elevated our food portfolio significantly from 2010 until now. We've been on the journey of branding differentiation and product differentiation, and now a customer-experience journey, which will be the effort of cohesive branding and value proposition, a cohesive product platform, updated store design and technology.

Ad Age: You've said that new media is a priority. How much of a role does it play and how does it help you differentiate the brand?

Mr. Martel: In 2010, we made sure the Web site is logical and navigational. Now with the development of [our loyalty program] Caribou Perks and e-gifting and gamification, we're trying to move the brand presence from a Web site or mobile site to a permanent presence in your smart phone. [We started thinking about it in terms of] if we could be the bridge between your Facebook and your real life, where would that happen? Well, a coffee shop is a great place for that -- meet new friends, meet new significant others, meet a mentor, etc. A coffee shop can be many things to many people. We can create a brand platform, but leverage it in many ways digitally.

Ad Age: The company earlier this year announced it was going to close many stores. How will this affect the brand strategy and marketing? Will it affect the brand experience?

Mr. Martel: We closed the stores, but what this does is reinforce even more so the need for all these elements [we're talking about here] because we're operating in a regional or geographic space. …The brand was well understood in the Minneapolis area. In non-Minnesota markets we struggle because the functional aspects were not well-developed, and so our brand maturity was not quite there by the time it was decided to close some stores.

So now in the markets we are operating, we have a great opportunity to leverage a loyalty program and high levels of engagement with digital platforms and mobile phones, because we're playing in the region where our brand is well understood and accepted. We don't have to spend time on the functional aspects, we can spend time on the lifestyle aspects of the brand. It's an opportunity to play from a level of strength, rather than a position of playing, 'Hey, we're the little guy and we have to go fight Goliath.' It's an area that's a lot more balanced for us.