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Starbucks Tries Cozying Up to Customers
May 16, 2008 9:58 PM
by
findingDulcinea Staff
Starbucks is introducing new, customer-friendly features at its locations as the company tries to revive its ailing share price.
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In an effort to combat falling stock prices and a dwindling customer base, Starbucks will soon be adding new coffee machines to their 15,000 stores, the company announced at its annual shareholder meeting.
The new coffee machines, which are smaller than the ones currently used, will make it easier for baristas to interact with customers.
The machines are just one of several customer-friendly measures Starbucks will adopt this year, including customer loyalty cards, free brewed coffee refills and a new blend of coffee.
The coffee giant has even launched a new Web site, www.mystarbucksidea.com, specifically geared towards customer feedback.
Early reactions suggest that the new measures could work to Starbucks' advantage. Bloomberg reports that some financial analysts recommend holding or buying its stock in light of the recent announcement.
Starbucks share performance has dropped 48 percent over the past year, but company founder Howard Schultz, who returned as CEO of the company in January, is urging stockholders to keep the faith.
"I humbly recognize and share both your concern and your disappointment in how the company has performed and how that has affected your investment in Starbucks and I promise you, this will not stand,” he said at the shareholders meeting.
The new coffee machines, which are smaller than the ones currently used, will make it easier for baristas to interact with customers.
The machines are just one of several customer-friendly measures Starbucks will adopt this year, including customer loyalty cards, free brewed coffee refills and a new blend of coffee.
The coffee giant has even launched a new Web site, www.mystarbucksidea.com, specifically geared towards customer feedback.
Early reactions suggest that the new measures could work to Starbucks' advantage. Bloomberg reports that some financial analysts recommend holding or buying its stock in light of the recent announcement.
Starbucks share performance has dropped 48 percent over the past year, but company founder Howard Schultz, who returned as CEO of the company in January, is urging stockholders to keep the faith.
"I humbly recognize and share both your concern and your disappointment in how the company has performed and how that has affected your investment in Starbucks and I promise you, this will not stand,” he said at the shareholders meeting.
Headline Links: Starbucks introduces new customer friendly features
With falling stock prices, the mood at this year’s Starbucks annual shareholders meeting was “less triumphant than in past years, with shareholders commiserating about their stock losses as they sipped lattes and munched pastries,” writes The Wall Street Journal. But CEO Howard Schultz said new espresso machines, customer loyalty cards and a new coffee blend could turn things around for the company.
Source: The Wall Street Journal (subscription may be required)
Financial analysts report that the new Starbucks features, particularly the loyalty cards and lower prices on food and drink combinations, may win back customers who are anxious to pay lower prices in today’s bleak economic climate. “Clearly the Starbucks Card is going to be an important component to getting people in the store and keeping them coming back,'' said Howard Penney, an analyst at Friedman Billings Ramsey in New York. “You want your most loyal customers to come back more often.''
Source: Bloomberg
Opinion & Analysis: Is Starbucks a wise investment?
Todd Wenning at The Motley Fool questions whether Starbucks stock is a “value or value trap?” A few years ago, the market believed Starbucks could deliver outsized earning growth, but now things look “a lot grimmer,” he writes. “For one, Starbucks has lost most of its competitive advantages. In coffee quality, competitors such as Dunkin' Donuts, McDonald's (NYSE: MCD), Panera Bread (Nasdaq: PNRA), and even local coffeehouses have ramped up their quality and selection—often at lower prices.”
Source: The Motley Fool
Steven Mallas writes on the investment blog BloggingStocks that it may be too soon to tell if Starbucks stock, which has performed poorly over the past year, is due to come back strong. “Keep this one on the watch list, but be careful about putting money to work here just yet. In my opinion, I'd rather see some strength in the stock before stepping in with my portfolio's capital.”
Source: BloggingStocks
Related Topic: Starbucks may boost independent coffee shops
A Slate article arguing that the presence of a local Starbucks can boost business for independent coffee shops prompted disbelief and angry responses. Against expectations—and to the chagrin of the ubiquitous franchise—the appearance of a Starbucks increased demand among its competitors, writes Taylor Clark.
Source: findingDulcinea
Background: The return of Schultz
Starbucks founder Howard Schultz returned this year as the company’s CEO, a role he relinquished to Jim Donald in 2000. The company needs to boost sagging sales and stock prices. Starbucks share performance has dropped 48 percent in recent months.
Source: findingDulcinea
Reference: Starbucks and its new site
Starbucks’ Web site is already publicizing some of the upcoming changes, including new additions to the Starbucks Card, such as syrup and milk options “on the house,” brewed coffee refills at no extra charge and a complimentary tall beverage with the purchase of whole coffee beans.
Source: Starbucks
The new Starbucks site
On Starbucks’ new site, customers are invited to log in, share suggestions and ideas, and vote on other people’s ideas.
Source: www.mystarbucksidea.com
The Wired blog offers a brief critique of the new Starbucks Web site: “The site is a little clumsy––the front page's title is "mainLayout," there's a broken Flash object atop every post, and little niceties like logging in don't work too smoothly--but I suspect it'll be used primarily by people sitting at Starbucks with a laptop and a peeve. Its aim of getting free press for the corporation is working, at least.”
Source: Wired blog network
© 2008 Dulcinea Media, Inc.
