Starbucks and their ascendancy to the top of the retail coffee world has been nothing short of remarkable. While coffee served at its stores has been its primary focus and product for all of its existence, its ability to diversity its product lineup and how far its product reaches into the daily lives of its consumers is stellar. Indeed, there are the usual customers who just the coffee, others that love the tea offerings, others still that get the sandwiches or other food treats that are present and Starbucks also has a heavy presence in the single-serving self-service coffee machines such as the Keurig and Starbucks’ own personal machines. Even so, there are concerns that the market is saturated and that Starbucks has nowhere to go but down. This report shall focus on their current plan and the possible or perceived efficacy of the same. While Starbucks should not get cocky or complacent, they seem to be on the right track.
Analysis
The current strategic plan that Starbucks is traveling through was revealed at the 2014 biennial convention that Starbucks put on in December of 2014 (Tobey, 2014). The plan had seven main foci and was set to lay the pattern for growth for Starbucks over the last four years. The plan is about thirty percent into its lifespan as of the writing of this report. The seven facets of their strategy include to be the employer of choice, to lead the coffee industry, to grow their store portfolio, to create new occasions, to expand the Starbucks brand, to heavily push and build the Teavana tea brand and to increase loyalty through the use of mobile commerce methods and applications. Of course, these seven facets are applicable to both domestic stores in the United States as well as other stores and outlets throughout the world (Starbucks, 2016).
Of course, the presence and actions of the management team are part and parcel of how well this strategy for growth will perform. The plan itself has to be realistic and executable and the managers that are spearheading the plan must know what they are doing. There is indeed a lot of “top-down” movement of change and ideas via this strategy but any good manager will listen to the feedback and concerns of employees who might find fault or imperfections with the strategy. However, the general idea that must be followed and enforced is that the change will be happening unless a good reason to alter or cancel the change comes up and that the employees and lower managers will have to be a proper face of that change. Failure to comply with that, of course, is not an option that could or should be extended unless the concerns or resistance rendered is done in the right way and in good faith. Those that are concerned that Starbucks would be in a proverbial pickle due to this fact should have at least some of their concerns allayed by the fact that the very first item given in the strategy portfolio is to be an employer choice. The order in which they are listed in the December 2014 report is the same order that they are listed in this report. Of course, employees should give feedback and Starbucks management and executives should listen. However, both sides should go about it and process this feedback in the right way (Starbucks, 2016).
As for the efficacy and standing of the Starbucks strategy, the mention in the Starbucks report about market saturation is real. Indeed, there are concerns that there are too many coffee joints in general. Others suggest or try to prove that even Starbucks locations end up cannibalizing each other in terms of their reach in the neighborhoods in which they reside. For sure, Starbucks does need to be careful about that. However, they have a lot of headway that they could make in terms of offering new and different products and other methods. A great example of the “different products” method of growth is the ever-increasing product line of tea that the chain offers. Indeed, there is Teavana, the Refresher line and so forth. Starbucks has even started selling tea for people to brew at home if they so choose. Beyond that, the Refreshers and coffee products, just to name a few, are also available at retail stores in many forms. As for expanding through alternative means, the embracing of mobile commerce is just one example of this. Social media was the method de jour for quite a time but now it is all about mobile pay applications options like Apple Pay, Samsung Pay and Android Pay, the latter formerly being called Google Wallet. A firm being “hip” and up with the latest and greatest technology is something that gains and keeps a lot of fans. Of course, Apple and firms like it have made a mint off of doing that and Starbucks obviously aims to do the same. Starbucks has been very consistent in keeping things new, fresh and inviting. Whether it be old mainstays like offering free Wi-Fi at their locations or whether it be something newer like the introduction of coconut milk, rather than dairy milk, as part of one of their iced coffee offerings. Other recent products that have gained many accolades are the S’mores coffee options and their constant cycle of offering seasonal options during the last few months of the years such as pumpkin, peppermint and egg nog coffee blends (Starbucks, 2016).
Starbucks has proven that their strategy thus far is working. There is not a coffee chain that is even sniffing the echelons that Starbucks currently inhabits. There are some brands here and there such as Caribou and such. However, even other nameplates like Seattle’s Best are actually owned by Starbucks. Starbucks is the brand in question when there is a presence in retail or grocery stores such as Target, any of the myriad Kroger chains around the United States (e.g. King Sooper’s, Dillon’s, etc.) and so on. Even though some may feel that coffee machines like Keurig (and others that have since fallen away) would threaten them, Starbucks has been able to co-opt Keurig to sell their products while not sacrificing their own machines or their store or retail options already present. Essentially, they are trying to push their reach further and further and basically choke out any attempt that others might make to usurp their market share. Sure, there will always be the regional bit players and local shops. However, anyone not averse to a national coffee chain is quite likely going to go to Starbucks. Not unlike the way that McDonald’s enforces the idea that a Big Mac could be and should be the same thing no matter where it is bought, the same thing seems to be employed with Starbucks. So long as they continue this methodology and do not get too complacent or sloppy, the dominance of Starbucks will probably continue for the foreseeable future. However, they are not invincible and no one should think otherwise. As the home food/coffee industry evolves, Starbucks will need to be careful to not become another Blockbuster Video in that they fail to evolve. Indeed, Blockbuster had a chance to buy Netflix and they really should have given the sharp turn towards Netflix for those that stream and kiosks like Redbox for those that do not or cannot afford it (Chong, 2015). Starbucks seems to be doing the opposite in that they are trying to get their tentacles into every coffee avenue that one might be around including in Starbucks stores, retail stores where a coffee shop is present and even in the home. So long as Starbucks continues to evolve, change and follow the arc of where the industry is really going (rather than a simply wrong guess), Starbucks should be fine. Even so, McDonald’s and other former/current industry giants have lost their luster and this could absolutely happen to Starbucks if they are not vigilant and careful (Starbucks, 2016).
A successful manager at Starbucks, regardless of level, needs to have a strong attention to detail. This trait is the linchpin for being able to track progress, find problems and fix them properly. Whether it be monitoring employees and how well and quickly they do their jobs, the tracking of sales figures both at a high level and when it comes to individual products, whether the supplies and raw materials in the store (e.g. coffee, milk, etc.) are being stocked at the right levels to balance lack of waste while not running out of product and so forth, all of these require accurate tracking and the proper reactions to events, expected or otherwise, that might come up. As for sustainability, the propensity for Starbucks to keep things as modernized, streamlined and efficient as possible is a huge asset to have. The company’s commitment to “fair trade” coffee and the proper use of suppliers is yet another. Starbucks has taken some slings and arrows when it comes to the pay of their barists and their benefits. However, industry giants always take some sort of heat in this regard and to compare Starbucks to firms like Wal-Mart and others would be fairly unfair given the body of work that Starbucks and CEO Howard Schultz has made visible to all (Starbucks, 2016).
Conclusion
As noted before, it is entirely possible that Starbucks could get tripped up by a bad business decision or being called out for bad business practices. However, there are always going to be detractors that always vilify large businesses and industry leaders and many claims those people make are incendiary and specious. However, perception is reality to many and that perception, wrong or not, must be dealt with.
References
Chong, C. (2015). Blockbuster's CEO once passed up a chance to buy Netflix for only $50
million. Business Insider. Retrieved 21 July 2016, from http://www.businessinsider.com/
blockbuster-ceo-passed-up-chance-to-buy-netflix-for-50-million-2015-7
Starbucks. (2016). Investor Relations. Starbucks Coffee Company. Retrieved 21 July 2016, from
http://investor.starbucks.com/frame.zhtml?c=99518&p=irol-presentations
Tobey, J. (2016). Starbucks' new strategy: 7-step plan for 5-year growth. Forbes.com.
Retrieved 21 July 2016, from http://www.forbes.com/sites/johntobey/2014/12/31/starbucks-
new-strategy-7-step-plan-for-5-year-growth/#5c01f16c6b44
