This article briefly discusses the changes which have taken place at Starbucks Corporation, with an emphasis on how the recession has forced the company to make adjustments to its upscale formula in order to address a growing demand for high quality products offered at an affordable price. Specifically, this article talks about the ways in which Starbucks is conforming in order to retain its existing customers by outlining a twofold growth strategy, which includes a focus on increasing the profits of existing stores and by making new strategic investments in key initiatives. (“Starbucks Details Strategy”, 2009).
Old strategy vs. new strategy
Traditionally, Starbucks has prided itself on offering not just a cup of coffee, but an experience to its customers. This included amenities like friendly, knowledgeable baristas that served superior coffee in an upscale atmosphere where people were allowed to relax, socialize, read the newspaper or work on their laptop computers. However, in the past few years, with many people making cutbacks in non-essential expenditures, Starbucks has seen a dramatic decrease in the value of its stock and a reduced demand for its high priced beverage experience.
A rapid decline in stock prices has caused the coffee chain to close over 600 stores nationwide and to reconsider its business plan, focusing on an increased demand for quality and value brought about by the recent economic downturn. (Adamy & Wingfield, 2009). According to Howard Schultz, the chairman, president and CEO of Starbucks, the rationale behind the change in strategy is that the company must respond to the needs and wants of its customers. At one of the company’s recent annual meetings, Schultz stated “Our customers are telling us they want value and quality and we will deliver that in a way that is both meaningful to them and authentic to Starbucks.” (“Starbucks Details Strategy”, 2009, ¶3).
