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Friday, September 29, 2006

Starbuck's: The Department Store (SBUX)(GMCR)(BGP)(BKS)

Word is that Starbuck's will begin selling books, which is perhaps the beginning of a competition with Barne & Noble and the struggling Border's.

The coffee retailer now sells breakfast sandwiches, lunch, fruit drinks, coffee cups, and music. That may not even be an exhaustive list.

The theory behind selling more items is that each customer has more to buy than a cup of coffee and the yield-per-visitor goes up. That may or may not be true.

What also may or may not be true is that music and book stores have started selling coffee. Barnes & Noble sells Starbuck's in many of its stores. But, investors have to wonder whether the book chains might move to to another brand like Green Mountain Coffee Roasters which is highly unlikely to become a retail competitor.

As Starbuck's moves onto the turf of companies that are currently partners, it needs to worry about whether they will push back.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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