Will Starbucks Value Push Work Out?

Howard Schultz, as this article puts it, “wants to remind people what Starbucks stands for, and that most of its coffee drinks don’t cost $4.”So Starbucks is launching a major advertising campaign to let everyone know they can get a deal at the coffee giant. The measure was announced during yesterday’s second-quarter results, a period when the company experienced an 8% same-store sales drop, as well as a profit plunge of 77%, and closed 123 stores. The new direction of the chain is to cut its own costs and push the value message to consumers. This year Starbucks is opening about 20 stores, down from its original 2009 plan of 1,450, so we can safely say that its rapid expansion plans were scaled back. And the company launched some price-conscious promotions. A few industry observers out there are saying Starbucks is going on the right direction. This columnist says we should ignore its latest poor financial results and look at its future: “Starbucks continues to deliver a high quality product and is adjusting their business strategy to reflect the reality of weak consumer spending.”Do you buy that? Can Starbucks shake off the perception that it’s a luxury to weary consumers that have already traded down to McDonald’s or Dunkin’ Donuts?