Over-expansionary policy is responsible for Starbucks predicament
Recession is casting its depressive effects on stress buster lattes and cappuccinos too! Yes, at least the American born, world’s largest coffee-chain Starbucks, is proving the same. The coffee chain is passing through a lean tunnel and has further decided to cut on further fat, errr... Starbucks outlets. It announced to follow the slimdown policy over the forthcoming quarter, on a worldwide scale on January 29, 2009. Here is where the question arises: why the reduction, for isn’t coffee retailing recession-proof?
Starbucks has announced a closure of 300 stores (200 stores in US) and a further reduction of 7,000 names from their employee base. Add this to store closures announced in July, and we would stand witness to 991 outlets doing the disappearing act! Further analysis of this problem makes clear the fact that the issue at hand is clearly self-inflicted; a problem that worsened at the onset of recession as even Howard Schultz, CEO, Starbucks confessed. Around 70% of the stores that are on the red list were those opened after 2005; clear indications of a ‘wrong’ over-expansion drive.
Recession is casting its depressive effects on stress buster lattes and cappuccinos too! Yes, at least the American born, world’s largest coffee-chain Starbucks, is proving the same. The coffee chain is passing through a lean tunnel and has further decided to cut on further fat, errr... Starbucks outlets. It announced to follow the slimdown policy over the forthcoming quarter, on a worldwide scale on January 29, 2009. Here is where the question arises: why the reduction, for isn’t coffee retailing recession-proof?
Starbucks has announced a closure of 300 stores (200 stores in US) and a further reduction of 7,000 names from their employee base. Add this to store closures announced in July, and we would stand witness to 991 outlets doing the disappearing act! Further analysis of this problem makes clear the fact that the issue at hand is clearly self-inflicted; a problem that worsened at the onset of recession as even Howard Schultz, CEO, Starbucks confessed. Around 70% of the stores that are on the red list were those opened after 2005; clear indications of a ‘wrong’ over-expansion drive.
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