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Amid higher costs, longer wait times, and waning sales, Starbucks is ready for a brand refresh. The companys new CEO, Brian Niccol joins Rapid Response to reveal how Starbucks plans to go back to its roots prioritizing human connection and a local coffeehouse feel in the hopes of restoring the brands position in U.S. culture. Also, Niccol gives an inside look at the companys subtle name change, which aligns with this new strategy. This is an abridged transcript of an interview from Rapid Response, hosted by the former editor-in-chief of Fast Company Bob Safian. From the team behind the Masters of Scale podcast, Rapid Response features candid conversations with todays top business leaders navigating real-time challenges. Subscribe to Rapid Response wherever you get your podcasts to ensure you never miss an episode. You’ve called your strategy ‘Back to Starbucks,’ and it’s included the return of a condiment station, the return of handwritten names on cups. It can sound like a lot of small details. Is that all that’s requiredtuning the details? Look, I mean, we are in the retail business. We’re in the customer service business, and anybody that’s been involved with that knows the details do matter. And the reason why the details you just mentioned really matter for Starbucks is, frankly, those details are our point of difference. It’s how we get to another level of connection. It’s also how we kind of create a little bit of the magic, right? What turns the coffee and that craft beverage into something really special is the moment that potentially you have in our store, the community of the store, the moment you might have with our barista, or just the moment where you grab your cup and unexpectedly there’s a little smiley face on your cup. And it just changes the entire attitude of the customer. Obviously, you have to have a great product, you have to have a great experience, but if you have those little moments of connection, it just adds so much more. Well, it’s always interesting how, in food-related businesses, the product has to be satisfying, but so much of it is about the experience, about getting the experience to feel memorable and satisfying. Yeah, that’s right. And look, I think one of the things that veered Starbucks a little bit off was the whole mobile ordering, the COVID situation. I think it just really took a lot of the soul out of what this business is all about. And I’m sure, Bob, like me, you remember when the first Starbucks came to the neighborhood, and it was a moment for the neighborhood, right? I was living in Cincinnati, Ohio. I was working at Procter & Gamble at the time, and we were like, what a great spot. I really loved it when they were like, all right, Brian, grande Americano with an extra shot. And I’m like, yeah, all right, that’s me. I’m in. So, I think just what happened with mobile ordering is it kind of chipped away at a little bit of that soul and that connection because we went to labels and we stopped writing on the cups and we started looking at how you can remove seconds from the proposition as opposed to how you maintain the experience, the connection, and the integrity of what goes even beyond a great cup of coffee. There is this kind of impression that there was an earlier Starbucks heyday, but it’s not like the stock is that far from its all-time high. So, when you think of the life cycle of the company, what phase do you feel like it’s in? Or do you see phases ahead? Right now, the phase we’re in is we need to get things turned around, at least in the U.S. business. We need to get what I would call the soul of the business back, this connection back, and the partner experience back so that the customer feels the brand again, okay? And I think when we get that back, there’s tremendous growth ahead of us because, frankly, the reality is so many things isolate you as opposed to bringing you together. And I think people want to get out of the loneliness phase and get back to the connection phase. I’ve had the opportunity to travel around the world, and it’s true everywhere I’ve been, whether it was Italy, which was a little bit surreal because the whole Starbucks original idea came from Howard visiting Italy. Here I am back in Milan, seeing people walk around with Starbucks cups. And it just demonstrates this is one of those human truths that just connects people all around the world, connecting over a cup of coffee or connecting with your barista. It’s just a human truth. You mentioned Howard Schultz, the founder and multiple-time CEO there. Do you talk with him about what you’re doing, or are you kind of on your own? Howard’s been great. I think I’m fortunate that you still have a founder who can share the history of how Starbucks went from one store in Seattle to the iconic global brand it is. He doesn’t want to run the company. He doesn’t want to be involved in the day-to-day. He wants you to do that. But he’s available for me to inquire about his thinking when you introduced food into the cafe and how it competed with coffee, and ‘what was your thinking when we went from hot to cold,’ and it’s great to get that insight. During Starbucks’ life, there’s been an increasing proliferation of neighborhood coffeehouses. How much do you think about these hyper-local cafes as your competition? I was watching your new commercial, “That’s not my name.” And it ends with a tweaked name for you guys, a Starbucks Coffee Company, which sounds a little more local. Is that what you’re trying to signify? The reality is, Starbucks started as a coffee company, and at the heart, that’s what we are. Again, I went back and did a little history lesson, and when Starbucks first started, it had a very simple statement to be the purveyor of the finest coffee in the world. And we still believe that in a really big way. So I think it’s important to make that statement that we are the Starbucks Coffee Company. And what I want people to understand is we are so committed to coffee quality that we apply that same commitment of quality and craft to the food we do, the teas we might provide, but first and foremost, we’re a coffee company. And I think it’s important for people to be reintroduced to Starbucks from that point of view because I think we’ve forgotten to tell people that over the last, let’s call it last decade. I mean, it sounds like you need to focus more. Now you need to narrow down a little bit what you’re doing, get a little more streamlined. And then maybe once that is ligned, you could start adding things back again or adding new things. We’re going to continue to be an innovative company, but you’re best served to innovate when your core is strong. If you are innovating to try and compensate for a weak core, usually good things don’t happen. You end up just drifting. And my point is let’s have a strong, healthy core, and then we can innovate from there.
Category:
E-Commerce
President Donald Trump will sign an executive order on Wednesday designed to prevent people who were biologically assigned male at birth from participating in women’s or girls’ sporting events.The order, which Trump is expected to sign at an afternoon ceremony, marks another aggressive shift by the president’s second administration in the way the federal government deals with transgender people and their rights.The president put out a sweeping order on his first day in office last month that called for the federal government to define sex as only male or female and for that to be reflected on official documents such as passports and in policies such as federal prison assignments.Trump found during the campaign that his pledge to “keep men out of women’s sports” resonated beyond the usual party lines. More than half the voters surveyed by AP VoteCast said support for transgender rights in government and society has gone too far.He leaned into the rhetoric before the election, pledging to get rid of the “transgender insanity,” though his campaign offered little in the way of details.Wednesday’s orderwhich coincides with National Girls and Women in Sports Daywill involve how his administration will interpret Title IX, the law best known for its role in pursuing gender equity in athletics and preventing sexual harassment on campuses.“This executive order restores fairness, upholds Title IX’s original intent, and defends the rights of female athletes who have worked their whole lives to compete at the highest levels,” said U.S. Rep. Nancy Mace, a Republican from South Carolina.Every administration has the authority to issue its own interpretations of the landmark legislation. The last two presidential administrationsincluding Trump’s firstoffer a glimpse at the push-pull involved.Betsy DeVos, the education secretary during Trump’s first term, issued a Title IX policy in 2020 that narrowed the definition of sexual harassment and required colleges to investigate claims only if they’re reported to certain officials.The Biden administration rolled back that policy last April with one of its own that stipulated the rights of LGBTQ+ students would be protected by federal law and provided new safeguards for victims of campus sexual assault. The policy stopped short of explicitly addressing transgender athletes. Still, more than a half-dozen Republican-led states immediately challenged the new rule in court.“All Trump has to say is, ‘We are going to read the regulation traditionally,'” said Doriane Lambelet Coleman, a professor at Duke Law School.How this order could affect the transgender athlete populationa number that is incredibly difficult to pin downis uncertain.The Associated Press reported in 2021 that in many cases, the states introducing a ban on transgender athletes could not cite instances where their participation was an issue. When Utah state legislators overrode a veto by Gov. Spencer Cox in 2022, the state had only one transgender girl playing in K-12 sports who would be affected by the ban. It did not regulate participation for transgender boys.“This is a solution looking for a problem,” Cheryl Cooky, a professor at Purdue University who studies the intersection of gender, sports, media and culture, told the AP after Trump was elected.Yet the actual number of transgender athletes seems to be almost immaterial. Any case of a transgender female athlete competingor even believed to be competingdraws outsized attention, from Lia Thomas swimming for the University of Pennsylvania to the recently completed season of the San Jose State volleyball team. AP sports: https://apnews.com/sports Will Graves, AP National Writer
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E-Commerce
Shares in Googles parent company, Alphabet (Nasdaq: GOOG), are down nearly 7% in premarket trading at the time of this writing. The fall comes a day after Google announced its fourth-quarter 2024 earnings results. Heres what you need to know about those results and the likely reasons why GOOG stock is falling this morning. Google Q4 2024 results were a mixed bag Google saw both its revenue and earnings per share (EPS) increase in Q4 versus the quarter a year earlier. For the Q4 2024 quarter, Google posted nearly $96.5 billion in revenue12% growth from Q4 2023. However, in that previous Q4 2023 quarter, Googles revenue growth had been 13%, suggesting that growth is now slowing at the company, at least when comparing this quarter to the year-earlier quarter. Here are some of the most salient results from Googles Q4: Total revenue: $96.47 billion Diluted earnings per share (EPS): $2.15 Google Cloud revenue: $11.96 billion YouTube ad revenue: $10.47 billion Google Services total revenue: $84.1 billion Despite growing at a slower rate in Q4 2024 than the same quarter a year earlier, Googles revenue is still trending in the right direction. Yet, as CNBC notes, analysts expected Google to bring in $96.56 billion for the quarter. Google also missed analyst expectations regarding its all-important Google Cloud revenue. For the quarter, Google posted cloud revenue of $11.96 billion, while analysts had expected to see around $12.19 billion. While Google Cloud revenue was up 30% year over year, Reuters notes that the sector had grown 35% in Q4 of 2023. This, too, shows that the growth of one of Googles primary revenue sources is slowing. Massive capital expenditure increase rattles investors In addition to missing analyst expectations on many fronts, the main thing that has rattled investors is Google’s announcement that it will significantly expand capital expenditures in an effort to maintain any competitive lead it has in the artificial intelligence sector. Announcing the company’s fourth-quarter 2024 results, Google CEO Sundar Pichai revealed that the company expects to invest approximately $75 billion in capital expenditures in 2025. As Reuters pointed out, most analysts had expected Google to grow capital expenditures to $58 billiona modest rise from the $52.5 billion it spent on capital expenditures in fiscal 2024. The $75 billion in expected capital expenditures for fiscal 2025 represents a massive capex growth of 29%. Google said that the majority of the capital expenditure will go into building data centers and servers. These resources are to a large part aimed at helping Google expand its AI capabilities. Yet many investors seem to have balked at this significant capex increase in the wake of DeepSeek. Last month, the Chinese AI startup claimed that it trained superior artificial intelligence models for less than $6 million, stunning both Wall Street investors and American artificial intelligence experts. American tech giants like Google have spent billions developing their artificial intelligence offerings. Many investors now are questioning whether Google’s plans for additional expenditure are prudent considering what DeepSeek has achieved. On the companys financial call, Pichai conceded that the costs for using AI were coming down, but he argued that meant there would be more demand for AI in the future, and Google needs the infrastructure expansion to meet the demand. “The cost of actually using (AI) is going to keep coming down, which will make more use cases feasible,” he said. “The opportunity space is as big as it comes, and that’s why you’re seeing us invest to meet that moment. GOOG is still up for 2025 Despite GOOGs nearly 7% stock price fall in premarket trading this morning, the companys share price is still up slightly year-to-date. As of yesterday’s close Google’s shares were up nearly 7.8% since the beginning of January. The companys stock price has risen more than 44% in the past 12 months.
Category:
E-Commerce
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