Tuesday
Feb262008

Starbucks, Starbucks everywhere but not a drop of coffee to buy

I think that we should congratulate Howard Schultz. He has just closed every one of the 7,100 Starbucks retail outlets in the USA. True the company is facing problems but they are not shuttering the stores permanently. This is just for a few hours. From 5.30pm to 8.30 pm and the rationale… to go back to basics and give the staff training. This will be from how to wash the glasses to creating the perfect shot and everything in-between.

 
Schultz has witnessed the decline in both sales and stock value over the past months. But perhaps more critical is the grumblings from consumers that the coffee and the experience is just not what it used to be. Poor quality, ambivalent service and resulting unacceptably high prices were common complaints in stores and across the internet.  The so called ‘third place’ not work and not home was a place that more and more people were abandoning - preferring cheaper alternatives with more utilitarian environments and experiences like…Dunkin’ Donuts and McDonald’s.

Not one to stay on the sidelines in a company where he was the public face Schultz has re taken control of the day-to-day operations and launched several initiatives to move the business out of reverse gear. This one is the latest.

So why do I think he should be congratulated…

He has realised that there is a real problem with the product and the customer experience. Unlike the norm today of trying the recover lost sales and margins by cost cutting alone, he recognises that improving the product and service is the best long term solution.

He has sent the strongest signal to the entire staff that what happens in the stores and with the customers is the number one priority of the organisation bar none. And put his money where his mouth is. How many times has staff training budgets been the first casualty of corporate cutbacks?

It is a sensational PR opportunity. Positively Bransonesque in its PR audacity. I suspect there will not be a newspaper, TV station, radio network around the globe that will not report on this story. Communicating both the problem and the solution.

 

Sure in the short term competitors will have done rather nicely from the closure but when the days tills have stopped ringing the long term benefits will, I feel sure, fall to Starbucks if and this is where the gamble must pay off the training works and the standards are kept up.
How many stores would you like to close until they get their service right…

 

David

Friday
Feb222008

Chicago Retail- Inspiring “Meaty” Ideas

 When searching the globe for inspiration, most major retailers plan a stop to Chicago. The city offers the high end (from Barney’s to Zegna) the high tech, (Apple, Nokia) and the bigger boxes (Target, Wal-mart,  and of course Costco). The Store has been busy this season taking cli ents and agency partners from around the world through to  see the range of US retail developments. 

But you can also get beyond the major retailers and see a vast assortment of funky, trendy boutiques.  This is where many retailers from Chile to South Africa are getting ideas. The Bucktown neighborhood is ripe with inspiring shops. Some have strong sustainability commitments. Most are just fun.

 

The one store tickling all our visitors is the T-Shirt Deli; this shop is simple, whimsical and just different.  I takes a basic commodity, T-Shirts and serves it up in a New York Deli atmosphere, complete with attitude.  The simplicity of this makes it idea larger retailers could emulate in a swing shop or more permanent department. 

 

 

-Gwen Morrison

Wednesday
Feb202008

Where has all the service gone?

 Well I arrived in LA and had a bit of time to catch up on the latest retail in Santa Monica. All the usual suspects were there. And there were a few new and interesting things to see. It is clear that US retail is suffering with a lot of stores on discount or with selected promotional offers. The offers look even more attractive at pound to dollar exchange rates and judging by the number of British accents I heard, many of my fellow countrymen are busy taking advantage.

The thing that struck me was the indifferent customer services received in the majority of stores. You used to go to the States and experience excellent customer service certainly compared to the service standards in Europe. Clearly, not any more.

Here is a lesson for us all. In times when retailers need to capture every dollar/pound/euro they can prize out of every cash strapped consumer, running a promotion or an innovative way of getting customers into a store is only part of the equation. There is no value in spending lots of discount and advertising money only to have customers put off, unhappy and frustrated by poor customer service and walk out of the store without purchasing or the retailer not being able to maximise the potential basket value. In troubled times customer service is even more important than ever, every customer is a valuable asset.

Customers spending their decreasing disposable income have to make sacrifices in other areas and want to feel that the stores they ultimately choose values them and treats them well in the store…if they don’t they will walk or click to those who do.

David

Tuesday
Feb192008

Terminal Oxford Street

I’m on my way to the USA for The Store event on Digital Retailing. It will be a great event with speakers from every aspect of the digital retailing mix. I am looking forward to learning about the latest thinking and practical applications of things digital, meeting WPP colleagues and will share highlights with you on the blog.

Getting to the airport this morning was the usual mix of stress with Monday morning traffic mixed with an accident on a key airport route. Once through the ever increasing security, long queues and baffling procedures…why do you need to take your computer out of your bag, I thought that the entire point of x ray machines was that they could see through things… When you enter the departure lounge at Heathrow you could be forgiven for thinking you had been transported back to London’s Oxford Street, for it is looking more and more like premium retail space than ever.

 

 Lots of leading brands and retailers have stores with their latest collections. Judging from the rents and the number of brands wanting to take space, passengers waiting for flights are a big market for high value sales with the allure of tax free savings. Although most retailers don’t break out the sales in airports I suspect that this is one part of retail that is holding its own at the moment.

But keep a retail eye out for the new terminal 5 due to open later this year. Its retail is going to be amazing with many new brands entering the arena for the first time. …Might have to leave even earlier get to the airport next time and it won’t be to allow time for the road works.

California here I come…

David