Retailers, consumers and prices
The popular social networking website has a new champion among its brands: Starbucks.
With a combination of recent social networking promotions and front-page ads, the Seattle-based mega coffee company has attracted more than 3.6 million fans to reportedly passed Coca-Cola to become the most popular brand on Facebook.
While that huge fan base makes Starbucks the No. 1 brand, statistics compiled by the website Inside Facebook showed Starbucks as the 8th most popular “page,” behind Hollywood star Will Smith, President Barack Obama, and the current leader, Michael Jackson.
Facebook “pages” are public profiles that are designed to help companies advertise, and to also connect with the website’s users by sending them messages and interacting in conversations.
Starbucks will start selling a high-grade variety of fair trade-certified Rwandan coffee in Britain and Ireland next year as part of its effort to source more fair trade beans across East Africa.
The world’s biggest coffee chain has pledged to have all coffee sold in its 700 British and Irish outlets fair trade-certified, which would make it the largest purchaser of such coffee in the world.
One can only imagine that is what Nescafe was thinking when they saw Starbucks’ VIA instant coffee mix arrive in Chicago, Seattle and London. After all, Nescafe is nearly synonymous with instant coffee.
Perhaps he woke up one day and smelled his own coffee shops struggling in the weak economy. So, Starbucks Corp Chief Executive Howard Schultz is waking up to a fresh brew by percolating new business in the media world.
Starbucks has become the official naming sponsor of CNBC’s “Morning Joe” television show. The move is a throwback to the 1950s, when television programs were underwritten by manufacturers ranging from soap to cigarettes, and it comes as traditional advertising dollars are shrinking for publishers, television networks and other ad-reliant businesses.
Starbucks cafes in the United States are handing out a limited number of coupon books designed to drive its cafe customers to grocery stores where the coffee chain’s ice cream, bottled drinks and coffee beans are sold.
“We started in the coffee aisle. But the other aisles got jealous. So now, we’re all over the grocery store,” reads the little brown book of coupons, available now in company-operated stores.
Starbucks wants you to know that it is not the home of $4 coffee, and it’s launching a multimillion-dollar ad campaign to make sure you get the message that its brew is not an expensive luxury.
“Starbucks coffee does not cost $4,” Chief Executive Howard Schultz said this week when he announced the new ad blitz. The ad at left will run on Sunday in the New York Times.
Reuters checked out some of the stores that Starbucks is closing in California’s Inland Empire – an area well known for being a leader in home foreclosures.
Some of the coffee shop closures made sense, some didn’t and some had us wondering just what Starbucks was thinking.
Williams-Sonoma Home stores are a drag on profit for its parent company, but the San Francisco-based retailer is not giving up on it yet, even as it faces difficulty lowering some rents.
Williams-Sonoma Inc, which reported much better-than-expected quarterly earnings on Tuesday, said it is in discussions with landlords about potentially closing three underperforming Williams-Sonoma Home stores, which sell high-end items such as custom-upholstered sofas and formal china. But it is not yet at the point of discussing shutting down the 10-store chain completely.
“We’re really not at that point and it’s not something that we’re discussing at this point,” said Sharon McCollam, the retailer’s chief operating officer and chief financial officer.
“The focus in Home is profitability this year, not growth,” she said, adding that in the past the company had been pushing its namesake offshoot to grow, a strategy that would be difficult to continue in the recession, as consumers pare spending.
Like many retailers Williams-Sonoma leases its store space, and therefore faces obstacles when trying to close stores since mall operators may be loathe to have empty spaces. Yet Williams-Sonoma Chief Executive Howard Lester said there are not that many stores he would like to close even if he had the option.
“I would say that if we had our option, it would probably be somewhere around 5 percent of our stores today we would close, if we could,” he said on a conference call.
That translates to roughly 31 stores, since the company ended 2008 with 627 Williams-Sonoma, Pottery Barn, Pottery Barn Kids, West Elm, Williams-Sonoma Home and outlet stores.
“What we would rather do … is where we’ve had serious sales declines, like we’ve seen for the last year or so, and particularly since last fall, we would like to have rent reductions while we get through this,” Lester said. “I think that’s probably preferable to the landlords so that we can get through this period together, but leave the store there.”
That is often easier said than done.
Simon Property Group, the largest U.S. mall owner and operator, said in January that it does not always grant retailers’ renegotiation requests.
“Candidly, in many instances, we do not agree to give any kind of accommodation,” said Simon President and COO Rick Sokolov on a conference call in January. “These are not one-way negotiations. We’re going to be talking to them about what their prospects are, what rent they are willing to pay, are they willing to extend their terms.”
“There are a lot of other aspects of this, and happily we’re positioned … to be able to have these negotiations on a very even footing with the tenants,” he added.
For its part Williams-Sonoma said it is just continuing to push its case.
“I can’t say that it’s going as well as we’d like for it to,” Lester said. “With certain landlords we’ve had some real success and others are more difficult, but it continues.”
It’s not only Williams-Sonoma angling for a break on the rent.
Fast-food chain Quiznos said last week it has renegotiated more than 40 leases for its franchise owners, with an average reduction of 15 to 20 percent in lease payments, while other restaurant chains such as Starbucks and Rubio’s Restaurants said they are also negotiating leases.
Starbucks, which built its business selling $3 and $4 coffee drinks, is fighting to reignite growth in a tough recession and working to convince consumers that its products are a value and not a expensive indulgence.
We thought you might be interested in some comments from today’s chat with Starbucks CEO Howard Schultz.
Schultz told Reuters he hopes to bring out decaffeinated Via instant coffee this year. What was his drink of choice as he visited with us in Chicago? Colombian Via, which made its debut on Tuesday.
He admitted that “people might trade down on a size or come less often as a result of the economy.” But he says Starbucks is a place where people also seek refuge and a break.