'Cannibalising'
Mr Schultz has himself been brutally honest about where Starbucks has gone wrong, admitting that it now has too many outlets in the US, which is "cannibalising" sales between branches only a short distance from each other. | It was all but inevitable that after such aggressive expansion that its sales growth would eventually stagnate
Brian Morgan, Cardiff School of Management |
Also bemoaning a dilution of the "Starbucks experience", he said the firm had lost its focus.
"When you succeed at this level for so long... you get a little soft," says Mr Schultz.
"We have to get back to what made this company great, and that is to have the courage and curiosity, and commitment, to do things that have not been done before."
Image problem
Such market saturation has changed how Starbucks is viewed, with many consumers now mentioning it in the same breath as McDonald's and Burger King. |
It may not sell burgers and fries, but the perception is that the bigger and more corporate Starbucks has become, the worse customer service and quality have become.
As a result, once loyal US customers have migrated to its growing army of competitors, such as smaller but more fashionable chains Caribou Coffee and Peet's Coffee & Tea, despite Starbucks also expanding into selling CDs.
Mr Schultz himself has admitted that the brand risked becoming a mere commodity, and needed to better focus on the consumer.
Starbucks has further been hit by the likes of McDonald's and Dunkin' Donuts greatly improving the quality of their own coffee, which is generally also cheaper.
So while Starbucks' white collar American customers are moving to more exclusive coffee chains, blue collar drinkers are getting their posh coffees cheaper at the fast-food chains at a time of growing fears of recession in the US.
Mr Schultz appears to want to win back both sets of customers.