Thursday, April 24, 2008

Starbucks - still got it wrong?

Less than spectacular earnings warnings coming out of Starbucks show that returning CEO Howard Schultz has a fight on his hands. However, blaming McDonalds & Dunkin Donuts for the company's woes is not going to fix anything. I don't believe that Starbucks customers are leaving in droves to buy their lattes at the fast-food counter, to paraphrase Bill Clinton, "it's the commoditization stupid." Generic stores filled with pricey bric-a-brac, the switch to super-automatic machines (which removes any differentiation) & third party locations with poorly trained staff & lackluster product have all served to undermine the core brand. At least Schultz is trying to remedy this but it may already be too late. The $4 latte genie is out of the bottle & I'm not sure if he'll fit back in there again?

Update : when you enter the search term commoditization into Google, the 4th hit (after dictionary definitions) is Starbucks!

No comments: