With soaring fuel prices, the $4 cuppa is probably unattractive as ‘everyday coffee‘. Starbucks plans to close 600 stores laying off 12000 employees. Downsizing and cost-cutting are popular moves exercised by Top Management to control costs in a receding economy. In most cases, the innovation function is also hurt badly owing to budget cuts and lay-offs, making way for quick and easy solutions that apparently, improve the upcoming quarter’s bottomline. But, in a weakening economy, should innovation really stall?
A while ago I wrote a piece about innovating around cost that is certainly one approach to the problem. Indeed this is a good time for Starbucks to further research their ‘everyday coffee’ product. Can they actually make the coffee affordable? Or should they focus on another demographic in this economy?
Another approach is to put their discovery competency into gear and analyze the new trends in more detail… what is the nature and distribution of rising food and fuel costs? Who wants coffee the most and what implications does this have about their business. Or is this really about coffee or something else?