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Starbucks places it’s faith in humanity

December 15, 2008

There’s a lengthy profile piece in last weekend’s Financial Times discussing the fall from grace of Starbucks, it suggests that humanity might be the thing that helps the brand to re-invent itself.

The supporting evidence for this point of view is the following excerpts.

1. It’s Not About the Coffee

He(Schultz) stood very still, in the centre of the stage, hands clasped in
front of his chest, as he assured the assembled employees that he had
not come to give them a speech. Instead, he said, he had come “to talk
from my heart”. He began a story about a Starbucks customer he had met
in a store in downtown Los Angeles a few weeks earlier: a plainclothes
policeman with a gun in a holster on his waist. The man’s name was
Officer Kevin Coffey. “This is honest-to-God his name … C-O-F-F-E-Y.”

Coffey’s
partner on the beat had been killed in a train accident three weeks
earlier. The pair used to stop at Starbucks daily, and it had been her
last stop-off before boarding the train. The man told Schultz that when
his wife had asked him to consider giving up Starbucks in an effort to
cut costs, he’d told her: “This store meant so much to us … I can’t
give up Starbucks, because it’s not only about the coffee.”

2. People Making Coffee

He is spending tens of millions of dollars on new coffee machines. One,
called the Clover, makes brewed coffee – for which Starbucks will
charge a premium because the Clover requires both more beans and more
labour (the beans are “scooped, weighed, ground and brewed to order”).
Another machine, called the Mastrena, makes espressos. Although
baristas are still only required to push a button, it grinds coffee
fresh for each cup, and is smaller and prettier than the Verismo
machines now in use, allowing customers to see the baristas making
their drinks.

3. Corporate Social Responsibility

Nancy Koehn, a professor at Harvard Business School who published a
case study on Starbucks earlier this year, believes that when the
financial turbulence under way in many parts of the world eases, a new
set of consumer values could emerge. She predicts that after the “shock
and awe” of the recession dissipates, Starbucks has a good chance of
re-engaging with consumers who want to buy products from companies with
a social conscience. “This brand,” she argues, “has much more room in
it to absorb these new values than McDonald’s or Dunkin’ Donuts.”

The reality is that people quickly get bored and used to things, if you don’t encourage change to both the product and the experience you get stale. Humanity and social responsibility will help the brand, but experience and product innovation will be critical.

For many people, Starbucks is now considered a luxury and this will be a tough barrier to get over for the next 12-24 months, but it needs to use this time to re-invent itself and perhaps even re-position itself as a new entity with a new role. The product and the experience are the brand and Schultz and his team need to work hard on getting this bit right.

Posted by Ed Cotton

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