Starbucks is betting high on nostalgia.
The coffee giant has revealed a $ 1 billion restructuring plan that will close more than 100 coffees in North America, cut 900 not -related retail jobs and reform more than 1,000 locations.
The redefinition, said CEO Brian Niccol, aims to restore warmth and comfort – an effort to recreate the “third place”, which he has defended since taking over last year, the meeting point between home and work that made Starbucks a global brand in the 90s.
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Trying to recover generation Z
At the same time, Starbucks seems to be losing ground with generation Z, something that tacitly admitted to its last swing, when it decided to close the “pickup” stores exclusive to mobile, built for speed and “friction” transactions, which presumed that they would be a gimmick for a digital native generation.
Its market share between this audience has dropped from 67% to 61% in the last two years, marking four consecutive quarters of declines, according to Consumer Edge.
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Starbucks denies having lost strength with generation Z: During its recent quarterly results teleconference, Niccol noted that their customer value perceptions are at most almost two years, driven by gains between generation Z and millennials, which “make up half of our customer base.”
However, no doubt, like many restaurant chains, Starbucks has misunderstood the generation. Seeing its social shyness and preference for digital orders, the company erroneously assumed that it should structure its stores around these behaviors.
More heat and human connection
But Niccol told analysts in July that the exclusive mobile format was “excessively transactional and lacked the heat and human connection that defined our brand.”
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Generation Z, bets on Niccol, yearns for that old Starbucks sensation the same way as it longs for a “summer of the 90s kids”.
Nicknamed some as the most lonely generation, they are gravitating towards local and peculiar coffees that act as community centers and cultural meanings – the type you would see in programs like Friends or How I Met Your Mother show consumer Edge data.
Niccol thinks the answer lies in the original Starbucks innovation of “Third Place”.
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Bring back that feeling of Friends
The idea of “third place” comes from the 1989 book by urban sociologist Ray Oldenburg, The Great Good Place (The Great Place), which argued that society needs meeting places beyond home and work. Cafes, pubs, gyms, beauty salon – everyone tells.
Starbucks worked hard to be the epitome of this term; His CEO at the time when Oldenburg’s book was first published, Howard Schultz, he used so often in radio talk shows and interviews that people assumed he had invented him.
“Starbucks was remarkable for having spacious and comfortable seats in the early days,” Karen Christensen, author and collaborator of Oldenburg, told The Pourover, coffee newsletter.
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“It was the usual place to find a seat, Wi-Fi and electricity in a strange city, and a common place to find friends.”
However, this vibration has been harder to find in recent years. Drive-thrus and travel requests now surpass long stores in stores.
Six consecutive quarters of falling sales compared to existing stores suggest that customers are not getting around. Niccol said in his note that the goal now is to bring people back.
“Our goal is for each coffee shop to offer a welcoming and inviting space, with a great atmosphere and a seat for every occasion,” he told employees.
The company says the new investment will prioritize stores that can be transformed into “spaces of permanence”.
Expect more ceramic mugs, softer seats, outlets and layouts designed to make customers slow down instead of hurrying them out of the door.
Starbucks ended its fiscal year with about 18,300 locations in North America, but stores growth will not resume by 2026.
The “third place” of before and the future
The price is high: Starbucks predicts spending US $ 150 million on indemnity costs and US $ 850 million (R $ 4.5 million) with stores and renovations. The announcement follows a previous investment of $ 500 million (R $ 2.67 billion) in hours of barista through its “Green Apron Service” service.
But labor tensions hang on the company. Starbucks Workers United Union, which represents more than 12,000 barista, said it will require negotiation on the closures. Union leaders warned that the cuts are at risk of undermining their own community vibe that Starbucks says he wants to restore.
In addition to finance, what is at stake is cultural. As Oldenburg argued, the third places are vital to social cohesion – spaces where people of all kinds can live with. In recent years, many third places have disappeared, an accelerated trend by the pandemic.
“The public leisure space is critical to society,” notre Dame teacher told Gwendolyn Purifoye to The New York Times. “If you don’t build places to gather, it makes us stranger, and strangeness creates anxiety.”
