Wednesday, October 10, 2012

STARBUCKS: REDUCTION IN OUTLETS

Over-expansionary policy is responsible for Starbucks predicament

Around 70% of the stores that are on the red list were those opened after 2005; clear indications of a ‘wrong’ over-expansion drive. And as situation for consumers in US worsens, a preferential move away from premium coffee was a natural outcome, a fact revealed by a January 2009 Adage survey which reported that 90% of Americans have trimmed their consumption of expensive coffee during these recessionary times (43% of whom were loyal to Starbucks!).

Consumers are only too happy to switch from Starbucks’ premium coffee to McDonalds’ cheaper alternative, especially at a time when liquidity has become dearer to them, similar to the drift of shoppers from Target to Walmart stores. “We will continue our efforts to elevate the Starbucks Experience and stay true to our core value,” asserts Wendy Pang, Spokesperson for Starbucks when asked about Starbucks’ future strategy. Clearly, the company for now is ‘not’ considering any price reductions to counteract the reduction in customer base... It clearly should think along logical lines, and price changes to revive demand is what comes to the mind of the informed! What say, coffee lover?
 

Source : IIPM Editorial, 2012.

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