Starbucks 'new CEO vigorously cuts discounts!

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Recently, the Wall Street Journal reported and confirmed by CNN that after two consecutive quarters of disappointing sales, the Seattle-based coffee company will make several strategic changes, one of which is to cut promotions.

Starbucks has long touted itself as a boutique coffee brand offering few discounts, and founder Holtz has said Starbucks should be cautious in its sales promotion. However, in order to attract customers back, former CEO Nasihan tried to arouse consumers' interest and drive product sales through "buy one get one free" and "drinks at half price" promotions.

There is no denying that such activities have improved the decline in same-store sales to some extent, but Starbucks as a whole still lags behind the same period last year, with sales falling for two consecutive quarters and a worsening share of the US market.

As a result, since the new CEO Nicole took office in August, Starbucks has quietly reduced its previous frantic price-cutting promotions. At the same time, in order to ensure that customers come back to buy, Starbucks began to introduce activities such as extra points for members' consumption every Tuesday and special offers for a few drinks on Saturdays, replacing the previous big discounts.

The Wall Street Journal also pointed out that Starbucks does not plan to launch large-scale promotions during the holidays this year, but will focus on promoting seasonal drinks through advertising.

In the current environment, although this change runs counter to the price reduction and promotion trend of other brands such as McDonald's, it has been recognized by many analysts.

Bank of America analysts have found that Starbucks customers who usually visit Starbucks in the afternoon are no longer frequent, and customers between the ages of 18 and 29 are gradually moving away from Starbucks. The reason for this may be that Starbucks' business model has gradually changed from a sitting cafe to a fast and takeout chain, or even an online sales-oriented company, contrary to consumers' impressions and expectations of Starbucks.

As a result, Nicole said in a letter to employees and customers last month that he wanted Starbucks to return to its roots as a "community cafe" with comfortable seats and continuously sophisticated design. and a clear distinction between takeout and on-site service.

In addition, CNN pointed out that Starbucks reduced its promotions not only to change its brand positioning, but also to reduce the pressure on employees. The report mentioned that the previous wave after wave of discount activities of the brand Fang greatly increased the workload of the staff, and some Starbucks employees said that the endless activities sometimes made it difficult for the store to predict the number of customers and the number of people to be dispatched, thus putting a burden on the operation of the store.

The new CEO has launched a bold new strategy to reverse Starbucks' poor performance, while main also hopes to reinvent Starbucks as a "community cafe", but for consumers, cutting discounts may discourage them from paying for the original coffee and opt for alternatives that they think are more cost-effective.

At present, measures related to reducing discounts are mainly taking place in the US market of Starbucks, and it is not clear whether the global stores will be popularized in the future. However, there is media speculation that Starbucks stores in some areas are not directly operated, but managed by franchisees, so the discount reduction strategy may not necessarily be adopted by local operators.

Picture from: Internet

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