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A story in Forbes reports on a meeting that Starbucks CEO Howard Schultz had with New York stock analysts in which he assured them that “the company will emerge from an environment in which consumers are no longer as willing to spend on small luxuries like $4 lattes as a stronger, leaner and more socially conscious company,” and that the company will “be a stronger company for having gone through it.”

However, Schultz also said that in key to the company’s survival is a commitment not to abandon its core values and become a discount-driven brand.

"This is not the time, after 30-plus years, after building one of the most recognized brands in the world, to throw the baby out with the bath water," he said, adding, "We are not a fast-food operator … We are not a discount business."

The story notes that in addition to facing the economic woes that are afflicting so many retailers and consumers, Starbucks also is facing off against lower-cost competitors such as McDonald’s and Dunkin’ Donuts, which are using lower priced lattes as a way of driving incremental sales.

In addition to closing under-performing stores and trimming labor costs, the story notes, “Starbucks is also attempting to brand itself as a more socially conscious company through initiatives like donating money from sales of holiday drinks to the Global Fund to help raise funds for and awareness of AIDS in Africa.”

KC's View:
Putting aside for a moment whether or not Starbucks is going to be able to survive the recession and the perfect storm of circumstances that has put it back on its heels, I agree that the company has to find ways to compensate for the economic downturn and yet remaining true to its core values.