Starbucks encountering a problem on closing 600 stores in the United States due to its limiting the growth of the company. As the owner try to mention on his letter that his stores no longer exist as it should be. It differs now in many ways and limits the growth of it. Starbucks has a premium price but it should be having a special experience which is now gone. They need to limit the distribution of their store or become exclusive like other brand that is stable or cut the price but it will affect the cost structure.
There were 3 major issues that was also presented in this case. First, its the early adopters who loved the club like atmosphere but suddenly they feel less valued and just having a cup of coffee that is why some of the veterans now switching to a different brand. Second, Starbucks offered many new variety of products which cause baristas to have a hard time than before. This became a problem that other people switch due to other brand like McDonald’s and Dunkin Donuts offered less price for a good coffee. Starbucks provide many new products but the waiting time increased and it cost bad experience that Starbucks don’t like to have. Third, Since they have many store that are newly opened or starting up, Stores was focusing to increase their sales year by year at one customer at a time. When suddenly a new store opened nearby it makes a competition for both stores to get a good sales but if they dont have too many stores or opened nearby there will be no cannibalization that will happen and just good sales with good customer experience.
Innovations or Strategies set by Starbucks to add value on its growth was adding new stores, improving or also adding new products on their menu and speeding up the process on making coffee. After this implementation, this cost its performance to go low. They monitor their performance by checking the sales per year, and knowing if they are still the number one choice after work or class by other people. They checked the results after all this innovations if still the store or the product still provides premium price coffee but with a good and special experience. Since they already evaluate the issue, they need to privatized or limits its distribution as they are planning to closed 600 stores to make the experience worth it than before and also to increase its chance to be the first choice again of many people.
The distribution was gone out of control for Starbucks. The more they want to innovate, the more it falls on providing quality and good experience for each of their coffee for their customers. They made a mistake on making things bigger because the more they compete with themselves the more less it will provide. If they stick to old school process like one store for nearest place and still stays with less products, their baristas will mastered the steps and can provide interaction due to that and also since no competition internally, each store can perform to peak every time.
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