Starbucks More Like Ahab?

In pursuit of ever-higher profits (apparently its white whale), Starbucks has made a couple sizable gaffes in recent years that threaten its brand identity as a high-quality, socially-conscious purveyor of coffee.

The first was to stop paying attention to customer service (a common problem for companies that rise too quickly too fast). So serious was the decline, that Starbucks closed all of its locations for three and a half hours on February 26, 2008 to retrain employees in customer service. The company also (perhaps unwisely) turned it into a media event which was much-lampooned in the media.

The second was to engage in union-busting; firing a worker here in Grand Rapids and another in Spain - actions that recently generated a world-wide protest. For a company that has taken various other actions in pursuit of a commitment to fair labor practices, environmental sustainability, and purchasing its product from fair trade producers (though it only amounts to around six percent of the total coffee Starbucks purchases) - this move could be especially damaging as it stands directly counter to the company's purported brand identity (and thusly, the views of the audience they've courted while building the brand).

Though it's hard to parse out what is stimulated by the suffering economy, there are already potential signs of potential consequences for Starbucks' actions; they've been losing market share to McDonald's line of specialty coffees, and the company just announced that it will close 600 locations in response to falling demand.

It will be interesting to see what measures the company takes to rebound. Now that the fast food world is in the specialty coffee market, one would think that Starbucks would want to concentrate even more on the core identify of its brand (IE a high quality experience and social responsibility) to differentiate itself given that it cannot compete on price and availability with chains like McDonald's.