Former Starbucks CEO, Howard Schultz, has put forward several strategies to rectify the company’s decreasing quarterly earnings. He believes that elevating the in-store experience is the key to attracting and retaining customers. Such improvements could range from consistently offering high-quality products and services, to maintaining cleanliness, to creating a cozy atmosphere for customers to enjoy their coffee.
In addition to store improvements, Schultz also proposes a revamp to the company’s mobile app. Simpler navigation and personalized suggestions based on each customer’s purchase history will make the app more user-friendly. The third strategic change Schultz recommends is to emphasize on customer interaction, which include training baristas to understand personal customer preferences and making them feel valued.
Starbucks’ critical markets, North America and China, have been reporting severe sales declines recently. According to Schultz, focusing on improving the company’s domestic operations is the strategy to flip this descending trend. Key modifications should aim at improving the customer’s in-store experience.
Schultz, being a significant figure in elevating Starbucks into a globally recognized brand, has served multiple terms over 20 years as company’s CEO. During his tenure, Schultz strategically increased the company’s value through a business culture that prioritized providing high-quality coffee and excellent customer service.
Schultz’s strategy for enhancing Starbucks’ performance
Now he is giving back through his vision of prioritizing experience over transactions and fostering rewarding relationships with the baristas, suggesting it could bolster the company’s market position.
Lastly, Schultz recognizes the increasing significance of mobile app orders and thus, recommends an overhaul to the Starbucks app. His proposal is to enhance the app’s functionality, creating a smoother experience for the customers. Schlutz believes, with such improvements, orders through the Starbucks app could account for up to 50% of all transactions. In wake of these suggestions, Starbucks has already begun implementing strategies to help manage the workflow.
Despite the company’s valiant efforts to increase profits and customer satisfaction, the latest quarterly results are reflective of a stark reality. Starbucks’ net revenues have fallen by 1.8% to $8.56 billion, largely due to a reduction in foot traffic from infrequent customers. In North America, there was a 3% decrease in sales, while the revenue decline in China was even more significant with an 11% drop in the same-store sales and an 8% decline in the total revenue. As a result, Starbucks’ share prices shrunk by nearly 22%, marking almost a one-third fall compared to the previous year. Sharon Zackfia of William Blair, considering these alarming figures, deemed this a significant shortfall in the company’s performance.
