Starbucks Corporation (NASDAQ:SBUX) CEO Howard Schultz is taking a step back from the normal operations of the company so that he can divert his attention to the new strategy which will revolve around creating premium locations.
The new strategy aims to enhance the company’s coverage of the premium coffee markets. Reports have revealed that Starbucks plans to launch more than 500 coffee shops that will concentrate on selling rare types of coffee. The new plans have been outlined in the company’s strategic plan that was revealed on Monday. The new plan will be handled by a business group known as Siren Retail. The business group is responsible for setting up standalone shops for Princi as well as growing the Teavana tea business.
The CEO wrote a letter to Starbucks employees emphasizing the need for the firm to come up with new innovations designed to improve the customer experience. Schultz stated that he will divert more attention towards the company’s overall long-term strategy. He also mentioned that the company will launch more roasteries especially in major cities. The new announcement also highlights some of the executive changes in the company. Analysts believe that it might be a sign that Schultz might soon step down from his leadership position.
While Schultz focuses on premium shops and roastery expansions, President and COO Kevin Johnson will helm the day to day activities of the company. Schultz stated that he would still continue to collaborate with Johnson on some of the firm’s daily activities. The new changes have been viewed as a positive step for the company considering that it reported slow sales globally in the recent quarter.
Sales in North America and South America were particularly unattractive because it recorded roughly 4% growth in the last one year compared to 8% growth in the previous year, though much of South America is currently going through severe economic convulsions due to heavy State economic interventions and overspending. Starbucks executives claim that the slow sales were an anomaly. The company has however established that it is running out of room for growth and thus the need to re-evaluate its strategy.