Degression of Economic Value – Case Study Starbucks

 

Degression: a stepping or movement downward

A disclaimer. I have been a long-time “Starbuckian” and I have a minimum of 2 Grande coffee’s a week from my favorite Starbuck cafe. I enjoy the engagement of my local baristas and will continue being a patron of Starbucks in the foreseeable future.

Note of caution: Degression of economic value is driven by commoditization. When you reduce personalization and customization, you commoditize your economic offering. Progression is only achieved by making it more personal and customizable.

In the Experience Economy, Starbucks is, or was, an exemplar of how a Service provider could be an Experience stager. From the very begin of rolling out Starbucks Howard Schultz wanted to create a coffee lovers experience. As he even is quoted as saying, “Starbucks represents something beyond a cup of coffee.

By bringing the ideas of European coffee baristas and adding the elements of an experience, he created a unique and personal offering. In fact, Starbucks became the third place to gather in many people’s lives. It was much more than just a coffee shop it was a unique and authentic coffee experience. Howard Schultz believed this and even expressed this thought in a statement to the press, “People around the world, they want the authentic Starbucks experience.

Unfortunately, the fame and growth of Starbucks brings many challenges, especially from those willing to trim and standardize the custom experience. This was the beginning of the end of the Starbuck Experience as it was known. Over the years I observed many changes, some subtle some not-so subtle, but all impacting the experience.

The first noticeable shift was from the ceramic mugs to paper cups. I realize that it may have been about cost-cutting, cleanliness and consistency, but it was the first of many stones cast towards moving from the Experience to a Service model.

Next came the de-creativity and de-styling of the barista by introducing the practice of lidding the cup after creating the coffee. No more were there hearts and leaves drawn in the foam of the coffee, now there was just the plastic lid, the paper cup and the cardboard wrap. Speed became the critical factor. Move more coffee by reducing the time from purchase to acquisition.

Recently, technology has begun playing a role in this commoditization of the Starbuck Experience. Mobile apps and drive-up windows forced a control mechanism, the printed label. Quickly vanishing is the personalization and interaction of the customer and the barista for the speed and accuracy of customer’s drink pick-up. Clever hand-written names were replaced by mobile account names and printed mixes. Customers didn’t even have to engage the barista anymore. The experience is faded quickly away and been replaced by an expensive coffee service.

Finally, Starbucks has allowed the store design to seal the Starbuck Experience fate. The new cafe design actually creates the perfect assembly line production model. Four stations replace two all to improve the speed and efficiency. The first is the order station. Orders only please, no exchange of funds. Next comes the pay station. Then you verify your order with the barista, then finally, you wait at the pick-up station where you have to locate your order amongst the in-store and mobile orders that are stacking up in tiered racks. No longer is it about going beyond coffee and creating the third place. Its become about moving product as fast as possible.

Now I know there are those diehard Starbuckians like myself who would attempt to argue the issue, but one only needs to just stop, look and see that the Starbucks Experience that drew us in has been replaced by the Starbucks service.

With Howard Schultz away from the helm, an echo of warning to Starbuck’s future is not being heeded by those in control, “I am concerned about any attrition in customer traffic at Starbucks, but I don’t want to use the economy, commodity prices or consumer confidence as an excuse. We must maintain a value proposition to our customers as well as differentiate the Starbucks Experience. That is the key.

Can or will Starbuck’s regain the coffee experience it created inside the cafes excluding the Roastery? Only time will tell.

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