Starbucks CEO Howard Schultz recently shared his thoughts with GeekWire about recent trends in consumer behavior, how they relate to the U.S. election, what he calls the "Amazon effect" and how Starbucks will stay ahead.
GeekWire quoted Schultz as saying: “I don’t think we’ve ever witnessed such concern about what could happen in the U.S. as a result of the election,” he said. “It’s very hard to cut through all of the noise and try and get access to the customer.”
Everyone's feeling the toll of an unusually brutal election season. Stocks and equities are sliding down, consumers fear their financial health will weaken and banks are bracing for a rough four years at least. “I think everyone is hoping that, post-election, there will be a return to a natural state of affairs in terms of consumer behavior,” said Schultz.
On top of election uncertainty, Schultz noted a dramatic shift in consumer trends. He noted “a significant drop in foot traffic on ‘Main Street’ and in malls, not only domestically and around the world as a result of e-Commerce, the web and what I’ll loosely describe as 'the Amazon effect.'”
As customers do more shopping from home, brands are more and more often announcing brick-and-mortar closures. “Over the next five years or so, we are going to see a dramatic level of retailers not able to sustain their level of core business as a traditional brick-and-mortar retailer ... There’s going to be a tremendous amount of changes with regard to the retail landscape.”
Despite the unstable political climate and the changing face of retail, Starbucks continues to do well. GeekWire reported Starbuck's earnings at $5.7 billion for Q3, a rise of 16 percent from last year. “We are going to be in a very unique position five, 10 years down the road because there’s going to be a lot less people competing for those customers. I’m not talking about the coffee category, I’m talking overall ... We’re playing the long game in everything we do.” Starbucks opened 2,100 stores worldwide in 2016.
Schultz contributed his success to Starbuck's continued innovation, including expanding the "roastery" experience from Seattle to Shanghai and New York. “As good as Seattle is, wait ’til you see what we’re going to do in New York and Shanghai. It’s going to change the company, the brand and everything we do.”