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Editor's Blog: Starbucks running out of luck
Fri, 07/04/2008 - 10:08 — colinlim
Starbucks has announced that it will close 600 stores and cut up to 12,000 jobs in the United States, validating critics who feel that the coffee house chain has been overexpanding in recent years.
Starbucks had previously announced that 100 underperforming stores would be closed, but it's this latest decision that reveals the extent to which business has been affected by the economic slowdown.
Some analysts have praised the chain for finally taking drastic but necessary measures, but I think this doesn't take away the fact that even a global brand name like Starbucks is vulnerable to market forces. After all, why should people continue to pay for overpriced lattes when they can barely keep track of how fast fuel prices are rising?
Could this be the beginning of the end for Starbucks? Only time will tell, but I can't help wondering if the same thing could soon happen to other household names like McDonald's...
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Comments
hope this happens to
hope this happens to wallmart
long time no drink...
Didn't realise the frapacino is $6.40 a cup now for the tall version, ie the shortest one... my gosh...
All in one
Drinking coffee no longer considering just to keep us awake for the day. But instead coffee have connected with people and become a social place. To me Starbucks not only provides me a place to enjoy my favourite coffee but also a "third place" for me to relax and spend my time before heading home. I applause Starbucks providing such a wonderful place for people to relax.
Beans price went up so do the coffee
Yea, I understand currently the whole market is going through a pricing structuring and of course most of our staples food prices went up too. Well you beg, coffee no exceptional in this case.
As Starbucks Fan, I can see their business point of view, no choice I still patronise Starbucks. Actually I am at Paragon Starbucks while typing this comment.While enjoying their in house jazzy music, surrounded by coffee aroma , hearing ppl laughing and barista performing behind the counter preparing the perfect espresso, wow i really feel relax. Haven!!!
Nah Starbucks is too big to
Nah Starbucks is too big to die. When you're that big, it's natural that you will have some "extra baggage" that's pulling you down (I mean loss-making joints and redundant staff etc) The "downturn" is a great excuse for them to get rid of the non-performing assets. It's the smart thing to do :)
Starbucks Forever
Today I was at one of the Starbucks outlet at Orchard area, I have a chat with one of the baristar, "said currently in Singapore nothing have change and business remain as usual" I was delighted to heard that, so to say, business here is still strong and many customers still partonise and buy their favourite coffee despite the ERP hike.
So no worry, I will still your number one Fan.
Keep it up Starbucks Singapore, you guys rock!!!!!!!
Starbucks Forever
I understand the recent down turn in US had affected most businesses in the States, of course Starbucks will have to look into their business strategies in order to stay profitability for long term goals.
I do not agreed Starbucks is running out of luck, instead as business perspective they are just re-engineering the whole business plan. As I am a Starbucks Fan's I visits them at least 3 times a week to get my favorite, daily brew black coffee.
Each time when I step inside any Starbucks Store, I always greeted with warm smile from Starbucks baristar, making me feeling important and relaxing especially after a hard day work. I started to patronise Starbucks back to 1st Jan 2000, I still remember vividly it was my first date with now wife. Sweet memory that never fade and still vividly fresh in my mind.
That how I have made myself connected with Starbucks ever since till today, my wife and I still goes back to the same outlet to talk about our first date.
Social Behaviour
2-3 issues back, The Edge commented on Starbucks and the challenges the chain is facing. In their commentary it is a sign of the public (in US) cutting down on expenses, inevitably signalling the onset of recession.
In such a climate, businesses which can innovate and offer other ''necessities'' at a cheaper price on top of their main line will survive.
Starbucks vs ERP
Yup, with new 'revisions' of ERP rates and new gantries setting up, i know where my $5 for a Starbucks latte will go to ....
See it in context
I think SBUX has 16000 stores. So 600 is really rationalization where they are cutting away those stores that are too close together. In USA, there are starbucks stores which are all in 1 block. whats more they are facing competition from Mc Donalds and also the general downturn in USA. I believe SBUX will rebound back very strongly once their current round of rationalization is done and when the economy rebounds. Their international business is still turbocharged.