Wednesday, July 02, 2008

Starbucks to Cull US Operations

Starbucks will close 600 stores and cut 12,000 jobs across the US. The closures will equate to close to 10% of its US operation and that is not a small number to cull. This follows on an announcement last week that they were to also reduce their in-store music offer down to just 4 CDs.

Perhaps, it’s the downturn in the economy. Perhaps, the streets and coffee market is getting over populated with coffee offers. Perhaps, its just time to draw breath, consolidate and to focus.

The sobering thing this says is that growth is not boundless and that even highly successful brands and market leaders have a bad day and have to focus. Many have seen the in-store coffee franchise as a bookstore crowd puller, but when credit squeezes everyone is chasing the same pound and the same customer.

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