UK Starbucks Coffee Shop Chain Struggling its Way through
Starbucks is the largest coffee chain in the whole world with its headquarters in Seattle in US. Outside of US, Canada and UK is the largest customer base of Starbucks and hence it becomes all the more important for it to regain its growth story in these two countries. Undoubtedly, Starbucks is facing the worst ever economic scenario and which have considerably slowed its ambitious expansion plans. The problem of recession has tightened the purses of its regular customers and Starbucks had to close shutters of its several stores scattered within UK alone.
The problem gets compounded with the rival coffee chains introducing their own cheap coffee drinks and cutting into the customer base of Starbucks. It is quite obvious that during recession all households tend to cut their extra expenses and this would mean to cut their frequent outdoor visits to their favorite haunts like Starbucks too. Further, the global coffee roasters have raised the prices of their raw ingredients by 10 to 15 percent and so also the prices of raw beans which reduce the margin as Starbuck cannot indefinitely go on raising the prices of its coffee.
Although the Starbucks Company maintains that it is not much affected by the recession in UK, it still has not been able to gain its previous customer confidence level. Wilson- Rymer, the Managing Director of Starbucks UK is all smiles and exuding confidence, yet the company hasn’t been able to avoid the closing of several stores in UK. The excuse which the management gives is that the company is trying to shift its stores to better market areas and to avoid skyrocketing rents for its stores.
This may or may not be quite true yet there is ominous signs that all is not well with the world’s leading coffee chain stores. Hence, the primary objective of this study is to determine whether Starbuck is really feeling recessionary pressures and would have to change its present strategy to an even more proactive strategy that would focus on increasing its customer base to areas which it hitherto not exploited to the fullest extent.
The second objective of the study is to determine whether Starbucks can capture a sizeable share of the market share if it reduced the price of its coffee without compromising on the quality. Again, with UK economy reeling under the pressures of recession it is quite certain that consumer’s first priority would be to reduce their debts rather than cling to their habits like taking espresso coffee on a daily basis.
Although UK has somehow crawled out of the recession the growth figures isn’t much to bring about a substantial change in consumer spending habits. True, the Starbucks customers in UK are mostly upper class women and professionals, yet they too are increasingly feeling the heat of the downturn and would like to reduce their overall debts rather than go about spending freely. There is no significant reduction in customers at its store, yet there is an overall decrease in the orders placed.