Joe Nocera’s New York Times article, written in the form of a memo to Starbucks Chairman, now CEO, and Founder, Howard Schultz is rich with skepticism as to whether Starbucks can be quickly turned around, coupled with advice on how to do it. Unfortunately, while advocating that Shultz revamp many of his strategic assumptions, Nocera incorrectly adopts many of the very same strategic assumptions that led to Starbucks’ demise.
Mr. Nocera makes the fundamental error of assuming that going back to the brand’s core equities means doing things the same way they were previously done. This is a wrong assumption. The smartest and best brands have always adapted their tactics precisely so they could maintain consistency and adhere to their core values! Recognizing shifts in consumer tastes, likes and dislikes is key to growing a business and in a brand driven business this means constantly adapting and sharpening the business’ tactics to maintain a consistent and proven set of core values. Changes in tactics can support maintaining a consistent message.
Chiding Mr. Shultz to “com [e] to terms with the new competition”, Mr. Nocera assumes that a fight between Starbucks and McDonald’s is inevitable and should be joined. I’m not sure that this is accurate or wise. The fact that the competition between Starbucks and McDonald’s is now being written about is already a measure of the deterioration of the Starbucks premium brand. Engaging in this battle elevates McDonald’s and will do little for Starbucks. Why would Starbucks or any premium player choose to compete against one of the very best and most successful mass marketers? Rationally, a competitor would avoid that competition. I haven’t read about any battles looming between Ralph Lauren and Old Navy.
Mr. Nocera applauds Schultz’ determination to focus “laser-like, on the consumer”. The applause should be reserved, however, until we see what Starbucks learns from this focus. Focus, by itself will not lead to a fix.
The real task is to ask the right questions and look to the consumer (and the market) for the answers that imply a strategy. The core mission is to deliver a premium coffee in a premium café environment. The questions are: What does today’s premium coffee drinker really want? What ambience should the stores have to attract and retain today’s consumer, who is likely to be better traveled and exposed to a wider variety of premium coffees than the Seattle consumer who initially supported the business? What does intimacy mean in this age of wi-fi, where the backdrop sounds of keyboards clicking has replaced the woosh of paging through newspapers and magazines?
Ultimately, the answers will come from market analysis, which poses thoughtful questions about the consumer and the market. I don’t know what this consumer would prefer, but the way to find out is through careful market analysis, not shooting from the hip.
Lastly, Mr. Nocera also rushes to conclude that Starbucks “insane growth” is a principal cause of its problems, that it needs to “drastically improve the food” and that the “stores should be clean and bright again”. Who says? If Shultz is to focus on the consumer, the focus should be on today’s consumer, not the consumer targeted when the business was started in Seattle.
And is Starbucks’ insane growth truly the enemy of intimacy in particular stores. Again, I’m not sure. Why should this be true? If you create an intimate “coffee café” environment in two, 3,000 square foot, stores, why can’t you replicate that environment in 1,000 stores? You can, so long as you don’t grow the individual stores.
Although the financial markets are looking for a quick fix for Starbucks, I suspect this is not in the cards. It took many years of neglect to bring the brand down to its present level. Maybe we should give it a couple of years to regain its stature.
