Starbucks is at risk of commoditizing itself, losing its unique brand experience that once set it apart, wrote B. Joseph Pine II of Strategic Horizons LLP and Louis-Étienne Dubois of the Toronto Metropolitan University for the Harvard Business Review. This concern follows disappointing quarterly earnings, including a significant drop in same-store sales and a decline in brand loyalty. Howard Schultz, Starbucks’ founder and former CEO, has publicly called for the company to rediscover its core purpose, reflecting sentiments that the Starbucks experience has diminished.
The authors claim that Starbucks’ shift toward efficiency and cost-cutting measures has eroded its in-store experience. Changes such as the removal of cozy seating, a reduction in personal interactions, and a focus on mobile orders and drive-throughs have detracted from the brand’s “third place” concept, where customers could relax and socialize. The authors also highlight the company’s loyalty program, which has moved away from emphasizing customer experience to a more transactional focus, potentially alienating loyal customers.
To remedy these issues, Pine and Dubois recommend that Starbucks reinvest in the in-person customer experience, including redesigning its loyalty program to offer unique experiences rather than just discounts. They advocate for a clearer distinction between in-store and takeout customers, suggesting that Starbucks could introduce membership fees or higher prices for on-premise experiences. Strong leadership, similar to Schultz’s passion for the brand, is crucial for Starbucks to regain its unique position in the market.
