Cautionary Tale: How Starbucks Lost Its Edge

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  1

  Billwelter

  03/21/08 | Report as spam

  Starbuks in "late maturity" -- now what?

  Nothing stays fresh forever. Coffee is a commodity, furniture can be copied, store locations can be tracked, and everyone's servers can be taught to smile and give good service. Starbucks is a living example of the reality of the lifecycle affecting all products and businesses. They grew faster than McDonald's ever did and they hit "late maturity" sooner. That's simply a reality of twenty-first century lifecycles. New coffee machines and new flavors will help extend the mature phase of the lifecycle. Here's the strategy question: How can they "re-new" a portion of their business while mainatining parity with the mature portion?

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  bholstein

  03/25/08 | Report as spam

  That's interesting

  Somehow, in this crazy new era, businesses run through the normal cycles of youth, middle age and old age much faster than ever. BH

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  buffnrie

  03/21/08 | Report as spam

  RE: Cautionary Tale: How Starbucks Lost Its Edge

  I think that Starbucks took a major hit when they closed all of their stores in an attempt to "teach" people how to make coffee, lattes, etc. Each employer should know what people are capable of, and I believe that while Starbucks understands this, they are only going after the money...the money for a price of coffee, latte, whatever.
  
  I would be more inclinded to go to Starbucks if they provided a resonable price for their coffee, lattes, cappachinnios, etc. $4.00 for a cup of coffee is OUTRAGEOUS. I can get the same cup of coffee and bean elements at Dunkin Donuts or McDonalds...and it is warmer, both personally and economically.
  
  I would recommend that Starbucks re-think their strategic plan. You don't need to have a store on each and every corner...if people want your coffee and services they will walk/travel.

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  fowlbruce

  03/21/08 | Report as spam

  RE: Cautionary Tale: How Starbucks Lost Its Edge

  Natural occurrence. This happens to any organization as it goes through its life cycle. Can it be reversed? Maybe. If it returns to a management of coffee nerds instead of professional managers or legume enumerators and can refine its culture back to being a social environment instead of a food sales place. Both of these are very hard, as witness the continued banal performance and paranoid cultures of Fortune 500 megaliths and the Kultur wastelands that are chain restaurants.

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  lahollin

  03/21/08 | Report as spam

  RE: Cautionary Tale: How Starbucks Lost Its Edge

  I think (whether Starbucks wants to admit it or not), they're starting to suffer from the growing trend of brand indifference among consumers. Consumers don't care as much anymore about the Starbucks experience. They want a good product at an affordable price and are realizing that there are numerous providers out there that can meet those requirements.

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  hongell

  03/21/08 | Report as spam

  Consumers Indifference to Starbucks

  Each of the comments I read has merit to them; many good points. Starbucks did grow rapidly, did mature quickly, is mostly about the money, and has lost its appeal to a fickle economy that does like the commodity that many chains sell. Getting back to its roots might help. Having one on each corner is overkill. A strategic plan is a must. Forget about the consumer and the consumer will forget about you. Starbucks learned too late.
  
  Consumers have grown to expect new and better all the time; whether they need it or not. Starbucks has fallen victim to the system as many other companies have. If they are to remain an industry leader they do need to look to and implement internal change; and, once finding their new vision, remain proactive in maintaining and changing their strategy accordingly. This is what effective leaders in anything do and it is Starbucks only hope of re-cornering what they once dominated.

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  bholstein

  03/25/08 | Report as spam

  Brand indifference?

  If what you say is true about consumers developing "brand indifference," the entire marketing profession is up that well-known tributary without that well-known implement. There's no loyality...BH

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  SPelch

  03/21/08 | Report as spam

  STICK TO WHAT THEY DO BEST

  I've read all the postings, and agree with all...another important point I'd like to make (and forgive me if someone's already made it and I've overlooked it) is....do what you do best! What do YOU think of when you hear "Starbucks"? Coffee of course! Not, gum, pottery, coffee makers (have you SEEN the prices on those things???) and chocolate covered caramels. Make COFFEE (and Tea) and make the BEST! yes a cookie and/or pastry does go hand in hand with that....but all the other garbage...forget it! Also...VALUE...Starbucks has GOT to give the consumer a BREAK! Especially when gas (a neccesity) is getting too expensive...Everyone's cutting back, and the luxuries in life ARE the first thing to go...and lets face it, Starbucks IS a luxury. I vouch for this myself, a previous 4 latte's a day girl...now down to 2...I can't afford it anymore, with $3.30+/gal gas, and grocery prices like they are, and 2 teenagers to feed/drive around/entertain. Something HAD to go...soda pop went too, next the expanded cable tv service is going to get downgraded...Stick to coffee, and find a way to give customers VALUE...maybe a frequent buyer card type thing...where you get punches for purchases, or like many grocery stores do, some sort of card to track your purchases where you accumulate "points" (they could call them "perks" or something...anyways...they have to work with us here....and just WHO is buying $900 coffee makers anyways???

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  Hughparkes

  03/23/08 | Report as spam

  Stick to your knittting Starbucks

  I agree. Look at your business plan. It is the road map for your business. Stop to check the road ahead and look back to recall how you got to where you are. Then take the things you did right and improve on those items. Good quality at an affordable price mixed with good service. It is the same in all businesses. Keep the fun in the shop. Staff and customers must enjoy. You are there for a coffee break after all.

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  bholstein

  03/25/08 | Report as spam

  Economic pressures

  Another very useful insight. We hear about Wal-Mart and Home Depot being worried about gas prices and broader economic pressures on consumers. But Starbucks could be even more vulnerable than they are because it is seen as an optional purchase. Howard Shultz, are you reading us? BH

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  SPelch

  03/25/08 | Report as spam

  COST VS VALUE

  I think this is part of what I meant in my original reply....as fuel costs increase and as a result, the cost of everything we NEED increases- groceries, etc- most people are forced to get rid of "wants" so they are able to provide the "needs". I'm a die hard Starbucks junkie, and will probably give up breakfast in order to afford my Latte's...up to a point. I've already traded in the Jeep for the Suzuki SX4 with it's 30+mpg gas milage (great car by the way for anyone in the market) and I've been sure to consolidate my errands to hit as many places in one trip as possible...turn down the thermostat...etc...cut where you can cut...If Starbucks keeps their prices high, and doesn't find a way to give consumers a break, I fear there will be many more Starbucks closing as business dwindles...

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  ok2eme

  03/23/08 | Report as spam

  Starbucks

  Just finished reading the posts and wanted to say kudos to all! I think they all hit part of the problem. I cannot say for sure since I do not work for Starbucks but I would suspect that like all corporations that go through massive growth their communication chain broke down. Their store personel could and probably did see the problems but were not allowed input. If you do not get buy in from the people on the frontline all the ventures management tried were doomed from the beginning. If this is the case their new approach is great as long as they don't give the impression that the blame is on the store personell for "loosing focus". If that happens they have still not seen the bottom.

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  Michael Lee Stallard

  03/31/08 | Report as spam

  RE: Cautionary Tale: How Starbucks Lost Its Edge

  Starbucks' sales volumes increased over recent years while the number of
  front line employees grew at a slower rate. You might call this the
  "expanding the margin while ignoring the customer experience trap." As
  such, Starbucks' frontline employees had less time to connect with customers
  and keep the stores clean. Visiting Starbucks felt to me like entering a factory
  operation. I could feel the influence of Frederick Taylor. The workers were all
  task and no relationship. After a while, that type of task-obsessed
  environment shifts brain activity from the prefrontal executive portion to the
  more primitive parts of the brain that are less emotionally intelligent. In
  recent years some Starbucks employees haven't even bothered to
  acknowledge me or make eye contact when I'm ordering. I find that rude and
  insensitive. I started going to coffee shops where the coffee was just as good,
  the service was friendlier and the stores were cleaner.
  
  Howard Schultz is a great leader in my opinion and I hope he has learned
  this. I've already noticed a difference since his return and every store went
  through a re-training program. The challenge will be to develop the habits of
  frontline employees so that they consistently connect with customers (and
  keep the stores clean).
  
  Another factor is the supervisor to frontline employee ratio. Southwest
  Airlines lowered its ratio to 10-to-1 because it learned that supervisors who
  coached and encouraged frontline employees had positive impact on aircraft
  turnaround times. Some airlines have 40-to-1 ratios that make connection
  nearly impossible to maintain.