Corporate Governance

Starbucks, Social Responsibility and the Global Fund

By J Robert Brown Jr et al.

We have long pointed out that Starbucks needed to recast its strategy if it intended to fight back from the declining sales and the onslaught of competition, most noticeably McDonalds.  We have criticized the emphasis on gold cards (although we were rewarded with one during an experiment in Denver) and free flavors, noting that the approach did little more than treat lattes as commodities, a losing strategy.  The winning strategy was to make a Starbucks latte an experience, to give people a reason to seek out its product rather than go to one of the many other dispensers.

As part of that, consumers needed to know that a purchase at Starbucks would make a difference.  Social Responsibility in short.  Free coffee on election way provided some evidence that this was a winning strategy.  We have held up Chipotle (a chain begun here in Denver) as an example of the successful use of this strategy.  The burritos at Chipotle are not cheap but consumers are likely aware of the organic nature of the ingredients and the commitment to free range meat and poultry.

With that in mind, we note that Starbucks seems to be moving in that direction.  A Friday purchase at a Starbucks in Dummont, Colorado, right of Interstate 70, revealed, on the sleave of the chai, that the purchase of certain drinks would result in the contribution of 5 cents to the Global Fund, a highly respected organization combating a number of diseases including AIDs.  A subsequent email (the same day and inserted below) repeated the offer.  So does the Internet, where the location of participating Starbucks can be found.

The approach is a good beginning but very limited.  The contribution only occurs upon the purchase of three drinks, Espresso Truffle, Gingersnapp Latte, and Peppermint Mocha Twist.  The program also, apparently, expires on January 2.  It would be far better for Starbucks to create a culture of Social Responsibility that applied to all purchases in the stores.  In other words, customers would know that every purchase made some type of positive contribution.  But hopefully Starbucks will see some type of improvement in sales as a result of this promotion.  Maybe then the company will realize that it needs to by a much broader, systematic approach to the Starbucks experience.

And, maybe, Starbucks will finally realize that it needs to provide free Internet.

 

 

 

Full post as published by The Race to the Bottom on November 29, 2008 (boomark / email).