Starbucks has had a rough year with a steady decline of its stock and the media’s eye closely watching its every move. Some analysts are suggesting Starbucks is settling at a plateau with its heavy growth behind them, I on the other hand think its best days are ahead and here is five very public stories that fuel my belief in a come back.
Management Shake Up- Soon after former CEO Jim Donald was fired; Starbucks began the restructuring process of the top executives. Howard Shultz became the new CEO, while letting go two others from top level management. Few even got promoted in the mix-up; however these changes signal that Starbucks is focusing to shift leadership for long term growth and regain some lost ground with a back to roots emphasis.
Becoming Human- Howard Shultz’s first public action as CEO was to mend the broken hearts, to reach out a hand and let everyone inside his head. He sends out a voicemail to his customers and also to his partners to humanize the brand. Shultz was trying to indicate a conversation to calm the fears of investors and consumers alike. If both Starbucks and Shultz continue to listen and respond, they will gain trust and build a relationship with their following.
Cutting Bonuses- In the latest SEC filing it was released that neither Howard Shultz nor Jim Donald received bonuses last year due to failing to meet internal operating profit targets. This shows the company has firm set of accountability measures in place, and that they take profitability serious. Shultz even takes home a smaller salary then most CEOs and bases most of his package in stock options, this shows he is willing to commit and trusting in the long term profitability of his company.
Appealing to the Consumers - The one dollar cup of coffee at Starbucks was the story I shrugged off when I heard it, but it soon became a sensation. This story was first released by the Wall Street Journal and soon syndicated by every major news source (and news medium) around the world. If you haven’t heard about it yet, it is basically where Starbucks is test marketing in undisclosed stores an eight ounce brewed coffee for one dollar. Consumers practically lost their minds when they heard the news, it caused buzz of Starbucks lowering their prices or changes their tactics for a slowing economy. It got more people talking then any commercial or promotion, free advertising at its best.
Growing Internationally- With a potential slowing US economy Starbucks has changed their growth from the US to international markets. Starbucks is planning to take some of the capital originally intended for U.S. store growth and use it to accelerate its international expansion. Shultz has often said, “We have just scratched the surface.” and that “international expansion will be crucial to the company’s recovery.” Big companies can not grow bigger without expanding their borders, and in developing in new countries comes new profit strategies.
Boring Market owns Starbucks Stock.
2 responses so far ↓
1 Mike Panic // Jan 27, 2008 at 7:47 pm
When I read the AP story in my local paper, the only thing that really sounded good was the announcement that they would indeed be shutting down a good number of stores. Been to NYC? You can stand on one street corner in the lower east side and, within eye sight, see a half dozen Starbucks. They over saturated parts of the market, badly.
They’ve also lost some of the experience that Starbucks used to be about. I used to go in, talk to a barista, he or she would then make my coffee, espresso, americano, whatever it was I was getting. They’d grind beans, dose them into the portafilter, hand tamp, pull the shots, make the drinks. Now one person takes orders while a “barista” makes the drinks by pushing buttons on a super-automatic espresso machine - taking any talent that a true barista may have and doing away with it.
2 Phil // Jan 28, 2008 at 12:14 am
Up here in the NW (home of Starbucks) there is a lot of them everywhere just like NYC maybe more but every Starbucks is personable here. It’s awesome and everyone has a talent as “barista”, there are no buttons which is part of the reason Starbucks is a huge deal these days.
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