Wi-Fi Continues Its Extended Coffee Break - InformationWeek

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1/4/2006
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Wi-Fi Continues Its Extended Coffee Break

Several years after the first coffee shops and cafes started installing wireless networks. more merchants and customers are discovering why they're a good idea -- particularly the free ones -- helping to put customer butts in empty seats.

With as many as 95 percent of laptops shipping with Wi-Fi support, use of Wi-Fi hotspots has, by most reports, been growing quickly. This trend gives many businesses an opportunity to differentiate themselves in the marketplace by offering Wi-Fi service.

Or, more bluntly, it gives retail businesses like coffee shops and cafes a tool for putting customer butts in empty seats. Some, like Starbucks and Borders have long offered Wi-Fi access -- for a price. But, increasingly, smaller book stores and coffee shops, as well as other venues, are trying to compete by offering free access.

Can this strategy work for these smaller businesses? And is the "free-is-better" approach hurting places like Starbucks? More than three years after some retailers started offering Wi-Fi access, some answers are starting to emerge.

Putting Butts In Seats

Starbucks is, perhaps, the highest-visibility retailer offering Wi-Fi service. It started its fee-based Wi-Fi service in August, 2002 and, today, the service is available in more than 4300 stores.

According to Starbucks spokesman Nick Davis, the coffee chain began offering Wi-Fi because they were hearing from customers that they wanted to stay connected while away from the office.

“We saw a real need for Internet connectivity. By offering Wi-Fi, it allowed us to meet [our customer’s] needs and enhance the experience at our coffee houses,” Davis said.

But it's not surprising that many users prefer free service to service they have to pay for -- Starbucks charges about $10 for daily access. That seemingly obvious fact was quantified last summer by a Jupiter Media report that found, at that time, only 20 percent of online consumers had used Wi-Fi hotspots and, of those, only nine percent were willing to pay for the service.

Enter national restaurant chains like St. Louis-based Panera Bread, with 825 bakery cafes in 36 states. It began rolling out free Wi-Fi in summer, 2003. According to Julie Somers, spokesperson for Panera, over 700 of the stores now offer the free service.

She says the company originally decided to offer free Wi-Fi, as a way to separate itself from the competition and to provide a friendly, welcoming environment. She says having Wi-Fi helps foster an environment where people want to stay, and if they buy food, all the better.

“We are the kind environment where all customers are welcome to hang out,” Somers said. “They can get a quick bite or a cup of coffee and read the paper or use a computer and stay as long as you like. And in the course of staying, people may have a cappuccino and a pastry or a soup.”

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