In a recent interview, Starbucks announced a shift in its pricing strategy that has sparked mixed reactions among its customers, particularly in the Chinese-American community. According to a Wall Street Journal report, the coffee giant is planning to cut back on discounts as part of an initiative to position itself as a premium brand. Some patrons are concerned that with the reduction in discount offers, enjoying a Starbucks beverage may become less accessible.
The Wall Street Journal highlighted that the Starbucks mobile app will feature fewer promotions, meaning consumers might miss out on certain discounts when purchasing their favorite tea or coffee. This change is the brainchild of the new CEO, Brian Niccol, who aims to elevate Starbucks to a high-end coffee brand while also alleviating employee workload. Employees have reported being overwhelmed during periods of significant discounts.
Traditionally, customers ordering through the Starbucks app could enjoy various discounts. For instance, in September, the major promotions included extra points for coffee purchases on Tuesdays and discounts on certain beverages on Saturdays. Previously, customers had access to more attractive deals like “buy one, get one free” or “second cup at half price.” The Wall Street Journal indicated that such deals may become a thing of the past, even during the upcoming holiday season. Instead, Starbucks plans to focus on advertising to promote new products.
In recent years, significant discounts from Starbucks have been few and far between. However, during the first half of this year, the company offered better promotions, hoping to lure back lost customers. Unfortunately, sales did not see the expected uptick. With Niccol’s ascension to CEO, Starbucks seems to be reverting to its former pricing policies, which entail phasing out substantial discounts. Notably, the company has reported two consecutive quarters of sales falling short of projections. In July, CNN revealed that same-store sales in North America have declined by approximately 6% for locations open for over a year, attributing this downturn to consumers struggling to afford an average coffee price of around $6.
In Southern California’s San Gabriel Valley, regular Starbucks patrons have noted that prices have consistently risen. One customer remarked on the price increase of the seasonal favorite, Pumpkin Spice Latte, which has jumped from about $5.50 a few years ago to over $6 today. This customer expressed concern that if significant discounts are eliminated, she may have to cut back on her Starbucks visits.
According to Money website, the price of the Pumpkin Spice Latte has doubled since its debut. When it launched in 2005, a grande size cost around $3.35; today, the average price has reached $6.50, with some locations charging even more.
A recent analysis from Bank of America revealed that Starbucks is losing customers, particularly those who visit infrequently in the afternoon and younger patrons aged 18 to 29.
Brian Niccol envisions transforming Starbucks into a community-centric coffee shop rather than primarily an online ordering business. In a letter to employees, he expressed a commitment to returning Starbucks to its original mission: becoming a community coffeehouse with distinct boundaries between in-store consumption and takeout options.
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