Can Starbucks get its groove back?

So there seems to be quite a buzz going around after Starbucks had their annual meeting the other day.  I’ve been meaning to capture my thoughts on the whole Schultz as a White Knight thing for awhile, especially since the blogosphere has been debating what they need to do to change.  With today being a slow day at the office, I finally had to chance to organize my thoughts.

First, I have to give Howard some props.  He’s returning to the company he built and admitting they screwed up bad.    I respect a guy that says it like it is and promises to make things better.  I mean, coming out and saying “I promise you that this will not stand” is a pretty bold statement.  Also, I love that he isnt blaming a recession, but instead pointing the finger at himself.  As he said, “the problems we are facing have been self-induced.  That’s why I think we’ll be able to fix them.”  Here are a snapshot of what Schultz is proposing:

  • Return to making great coffee:  By mid-August, Starbucks will return to fresh ground coffee in their 7,100 company-owned US stores instead of relying on pregound beans.  With all the focus on “scent marketing” over the past year I have been shocked Starbucks didnt make this move sooner.  The smell of fresh coffee is a powerful, powerful thing.  They will also be improving their lattes with new machines, etc but that doesnt mean as much to me.
  • Launch a loyalty program: Details are just coming out on the loyalty program but it sounds like it will offer customization of espresso-based beverages, a free tall coffee with purchase of a pound of coffee and free refills on drip coffee.  I think these are great moves.  I love nothing more than sitting in a Starbucks doing work on my laptop but I HATE paying for cup after cup of coffee.  Now if only Starbucks would give free Wi-Fi as well….
  • Move into social networking:  The company is launching a new site called  I’ve actually been shocked that people are calling this “social networking”.  The site sounds more like P&G’s Connect & Develop program than anything else.  It is a chance to get feedback from consumers, not a chance for consumers to interact with each other.  The venture is doomed if SBUX tries to compete against Facebook, LinkedIn, etc.  But they have huge potential if they are creating the site to connect with their consumers for feedback and ideas.

This is just a small snapshot of the changes that Starbucks will be making but I am pretty excited about them.  I really think it will make the Starbucks experience better.  Will it have an immediate impact of sales?  Well that is tough to say.  But I really feel it will impact their brand equity.  Lately Starbucks has been the brand people love to hate (a complete change from five years ago).  However, I think these moves will change the tide on that and get people to think of Starbucks as a lovemark once again.


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