25 Apr 2022

Do technical solutions drag down the Starbucks brand?

The year was 2020 and the platform NRF: Retail Big Show in New York. Starbucks was the brand that the world looked at with fascination and envy. They were one of the brands that had succeeded with their digital transformation and highlighted as a success story. In the forefront was CEO Kevin Johnson with a clear message: people first.


Two years later, Johnson has stepped down and Starbucks stock price increased 7% the day after the announcement. There is no doubt that the brand is in free fall. The strong corporate culture is questioned, the union is chasing them, and customers do not receive the service that they are promised. The result is that more and more people choose other alternatives, in a segment where there are plenty of alternatives to choose from.


What happened?


The foundation of Kevin Johnson’s “people first” strategy was that technological development would give the staff more time to focus on the human encounter with their customers. By that, Starbucks could fulfill its old brand promise of being “the third place” for everyone.


But now, a couple of years later, critical voices are raised, both from the staff and the customers. Instead of increasing and improving the direct, personal meeting, Starbucks has moved more towards automation. Orders are placed in an app, and each employee has received higher demands on productivity behind the cashier than before. The stores focus entirely on take-away rather than staying in the store.


What happened to the investment that would make the visit more personal and more human?


Don’t get me wrong, I love technology and I’m the first to cheer on new, innovative solutions. Especially solutions such as Starbucks aimed towards, to streamline operational tasks with the help of AI, to give staff more time to take care of the customers. And the human interaction. Unfortunately, Starbucks seems to have fallen into the same trap as so many others, and instead started counting and focusing on the increase in efficiency at the expense of the customer meeting.


At a time when people are talking about the need for further digitization, it is more important than ever not to make this mistake. Technology is one tool among many, but it is not a universal solution to save money from personnel costs. Rather the opposite. If the belief in technology becomes too high, it easily also becomes the biggest focus. And if that happens, we are rapidly going in the wrong direction.


So – digitalize shops, cafes, restaurants, or whatever it is with technical solutions. But never, never, never forget about the personal meeting or the personal feeling. Sometimes technology is smart enough to both feel and become personal, but it can never beat a human interaction.


So, can Starbucks get out of this mess? It is not sure that they can. Or that they need to do it. But if they want to keep their brand promise of being the “third place”, they will need to go back to becoming a place where you want to both buy something and stay.


This column is written by our Marketing & Communications Director Monika Lindquist. Talk to our experts if you want to discuss retail strategy and how digital signage can enhance your visitor experience.


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