What the “Starbucks Index” Says about Manhattan Shoppers

Manhattan is different than the rest of America in many ways. One of those is how people shop.

Much of America is designed to shop by car. You drive to a store, stock up and drive home. But in New York, you shop on foot. And for people who live here, much of that happens in their own small neighborhood.

Take my neighborhood- Hudson Heights. Within one block of my apartment, I have two grocery stores, two dry cleaners, a bakery, a coffee shop, a bar and a pharmacy. Everything I need for the week is right here.

But here’s the paradox for shoppers, Manhattan also has the best of everything in almost every category. Exotic foreign food- check. Remarkable bars- check. Luxury goods. You get the idea. And yet, people are loyal to their neighborhood stores and these local stores thrive. Why is this?

I think it has to do with the necessity of shopping on foot. You don’t usually drive to stores to shop and you have to carry stuff home. (I know- you can get stuff delivered- but that’s relatively new and the whole system was built for shopping on foot).

Do I take the subway 20 minutes to go to Zabar’s for the best smoked salmon? I have, and I like to, but I just don’t do it very often. It's also quite expensive.

The Starbucks Index

So I was thinking about how I could figure out how much business a neighborhood could actually support. I came up with what I’m calling the Starbucks Index. It’s the number of Starbucks locations per capita. If a neighborhood can support a Starbucks, that may indicate its overall fruitfulness for business.

Here’s the data: There are 235 Starbucks in Manhattan. That’s one per 6,944 people.

So the planners at Starbucks figured out that, on average, its profitable to place a store where about 7,000 people can support it. In Manhattan, that’s 10 stores per square mile.

Does the Starbucks Index explain why my block supports two grocery stores and two dry cleaners? Not exactly. But it helps.

This post was written by John Walker, Principal at J. Walker Marketing, a marketing consultancy. Contact John directly to discuss your marketing challenges.