It's been pretty well documented since the beginning of the Great Recession that while consumers may have cut back spending on big-ticket items, they have often found smaller luxuries to reward themselves in the course of their ordinary lives. It's also known that there is value to scarcity for driving sales, with the McRib sandwich and Hostess Twinkies coming immediately to mind. Now, Starbucks, the company that convinced consumers to pay more for coffee drinks than they had ever done before, is appealing to the small luxury mindset along with the allure of limited supply to get consumers to pay $7 for a 16-ounce cup of coffee.
The coffee, which Starbucks will also sell for $40 for a half-pound bag, is Costa Rica Finca Palmilera grown from rare Geisha trees. The coffee will only be available in 46 locations in Portland and Seattle, the chain's Roy Street Coffee & Tea in Washington as well as a licensed store in Idaho. An online offering has already sold out. Starbucks has said it will not expand distribution of the coffee beyond its present locations.
"We have loyal reserve customers who are interested in any opportunity to try something as rare and exquisite as the Geisha varietal," Lisa Passe, a Starbucks spokesperson, told Bloomberg News. "We are now offering more reserve coffees than ever before because of customer demand."
Late night talk show host and comedian Jimmy Kimmel has a different take on Starbucks' new coffee. According to a Los Angeles Times report, Mr. Kimmel said on his show, "I feel like this is a test to find out just how stupid we are. Although, while it's ridiculous to spend $7 on a cup of coffee, it's actually not that much more ridiculous to spend $4 on a cup of coffee."
How effectively, on the whole, have retailers used scarcity as a means to differentiate from competitors?