Published on: June 2, 2008
In an interview with the Los Angeles Times
, Starbucks chairman/CEO Howard Schultz, conceding that his company “led a pretty charmed life” for the past 15 years, got specific about the challenges facing Starbucks.
For the first time in our history . . . we have less traffic in our stores this year than we did last year,” Schultz said. “The frequency of visits is being directly linked to the consumer not having as much disposable income as they did in years past. If you talk to the economists -- people much smarter than me -- they are saying that the next six to 12 months could be worse than the last six to 12 months.
“Across the board, consumers have less money than they had before, they are quite concerned . . . and as a result we have to be better than we were before to capture that market and to satisfy the customer … We have to be ultrasensitive to providing value for our customers. And 50 million customers a week are coming through Starbucks stores.
“We have to innovate and provide more value to the customer, but the customer comes into Starbucks not only for coffee, [but also] the sense of community, the sense of humanity in our stores. We really have become this third place between home and work. We have managed through different downturns in the economy before, and we will again.”
Beyond the “third place” approach to retailing, Schultz said, the company will be focusing more on new product introductions. “There's more innovation coming at Starbucks over the next six to 12 months than we've had in the last five years,” he said. “In July we will introduce a fantastic new summer product in Los Angeles. . . . We found a fantastic new cold-beverage platform in Italy, and as a result of that we are bringing it to the market. It is a product that is both indulgent and refreshing. . . . It is steeped in Italian heritage.”
Speaking of innovation…
While the LA Times
story doesn’t mention it, there is a story in the Puget Sound Business Journal
saying that Starbucks “is experimenting with selling espresso drinks from a machine, sans barista … The machines, which grind their own beans, crank out lattes, mochas, chai teas, hot chocolates and drip coffees. There are 86 machines installed in Albertsons stores and other groceries in Washington, Oregon, Idaho, Utah, Illinois, Wisconsin, Maryland and Tennessee. The machines take credit and debit cards, cash and coins.”