January, 2008

Every where I turned today, people were discussing Starbucks $1 cup test. In case you hadn't heard, Starbucks is testing a $1, 8 oz. cup of coffee (appropriately named "short", but it probably more appropriately defines the amount time in which they'll test it before canning the whole idea), with free refils, in it's Seattle stores.(MSNBC link). I'm sure those who want to soak up the Starbucks atmosphere and do a little social networking will love the idea that they now have a bottomless cup. Yet, will the carmel-mocha-latte crowd like the idea of the average joe swilling coffee and lingering much to long in their coffee haven?

The MSNBC article notes that Starbucks Chairman/CEO Howard "Shultz said he believes the company’s main problem was it lost its
focus on customers in recent years as it concentrated on growth. He has
downplayed the threat from a growing cadre of competitors, saying the
company has always faced tough competition."

That excerpt is pretty telling. Maybe they haven't lost focus on their customers. Maybe they just had the wrong customer. Think about it. Starbucks has built is brand on the carmel-mocha-latte crowd and their willingness to pay just south of $5 for a 16 oz. coffee-flavored drink. Now, in an apparent effort to drive new business and stem losses, they're going to abandon their core audience in and attempt to attract the value-concious coffee drinker who has hours to spare to get full value for their money. I can see it now, Starbuck's locations filled from open-to-close with 75-year-old retirees sipping coffee from the bottomless cup and reading every newspaper in sight. Hmmm. Perhaps aging baby-boomers are the "right" customer for the next 20 years.

This $1 coffee strategy just made coffee a commodity again. If you really want coffee, just coffee, you've been able to get if for around a $1 for some time. Heck, you could even get a 16 oz. coffee in Starbucks for about a buck-fifty (only 50% more cost but 100% more coffee than this great new deal). If you're paying a $1 for coffee in today's culture, you probably don't care about atmosphere or really too much about taste. But to the carmel-mocha-latte crowd, Starbucks and it's coffee drinks represent the elite of coffee lovers. It's a place to get away and relax with friends in a comfortable environment. No, they're not going to like it much when the new crowd shows up and takes their space and drinks $1 coffee. It'll kill the whole experience forthe Starbucks core customer, and it'll likley kill the brand that Starbucks has worked so hard to build.

On second thought, maybe that's realy Shultz's plan. If you put all together, cheap coffee, decent atmoshpere, opportunity to hang out all day sipping coffee, chatting with retired friends and reading the newspapers, it doesn't sound so bad. Denny's does very well with that strategy.

I like to read, so it should come as no surprise that I keep an eye on new magazine launches. A couple of weeks ago I heard of a new magazine, Corporate Leader,which focuses on " the methods, disciplines, ideas and rewards of today's
corporate leaders – chairmen, CEOs, CFO, COOs, presidents and general
counsels."

Earlier this week I was in NYC for the National Retail Federation's annual conference. Ben Stien was the lunch speaker on Monday. It was an amazing speach that tied together the economy with retail in one, long, stream-of-conciousness kind of deliver that left me mezmerized and flabergasted all at the same time.

There was an interesting nugget in that mile-a-minute delivery, though. It was that the definition of a recession "was the decline in GDP for six consecutive months", and that we only had one month under our belt. Moreover, of the two recessions in the past 20 years or so, none lasted more than six months. So, we could be out of a recession before we really know if we're in one.

Whether it's true or not, it tells us something about growing our business. Recessions are about the past, not the here-and-now, nor the the future. Business growth comes not from what we did yesterday, but from what we do today and tomorrow.

Today and tomorrow, it really doesn't matter if we're in a recession. We still have bills to pay and mouths to feed. If we get too wrapped up in the economy, we lose site of our business goals and objectives...and blame our failures on the economic hardships. The fact is, if we devote time to meeting our customer's needs, values and expectations, it won't matter what's happening in the economy. We'll still succeed and so will our customers.

So, put the newspaper down. Turn off the radio. Concentrate on how to serve customers better. Focus on today and tomorrow to grow your business. Stop worrying about a recession. It only exists in the past.

Before I get started with my posts for the new year, I'm loading a number of posts to the old site. I know, some may be slightly dated, but I decided if I'm going to follow any trends these posts might be useful to reference.

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