Starbucks is reducing its offers of discounts and promotional deals.
The coffee corporation is lessening its promotional deals via the mobile app to motivate consumers to pay the full cost for their beverages and brews, as initially reported by the Wall Street Journal on Monday and subsequently verified by CNN. This adjustment is part of the new CEO, Brian Niccol's strategy to rebrand Starbucks as a luxury entity while simultaneously lessening the pressure on employees, who are often overwhelmed during periods of intense promotion.
In September, the business offered bonus loyalty points on Tuesdays and discounts on various drink purchases on Saturdays. This shift was from extensive discounts that occurred during numerous months earlier in the year, such as "buy one, get one free" and 50% off.
Starbucks also does not plan to introduce widespread offers during the holiday season but instead intends to advertise seasonal drinks instead.
Previously, Starbucks generally avoided coffee promotions but substantially increased them earlier this year to entice customers back.
However, Starbucks is now changing this strategy - one of the first significant moves under Niccol, who took over in September. Starbucks' sales have declined for two consecutive quarters.
Less frequent customers who predominantly visit in the afternoons and customers aged between 18 and 29 have distanced themselves from Starbucks lately, according to Bank of America analysts in a research note published last week.
Niccol wants to transform Starbucks (SBUX) into a traditional coffee shop rather than an online-oriented business.
Niccol mentioned in a letter sent out last month to staff and consumers that he aims to bring Starbucks back to its origins as a "community coffeehouse" with cozy seating, enhanced design, and a visible distinction between "takeaway" and "dine-in" service.
“There’s a collective feeling that we have veered off course,” he said. “We’re dedicated to enhancing the in-store experience, ensuring our spaces mirror the sights, smells, and sounds that personify Starbucks.”
The decline in sales for two consecutive quarters has led Starbucks to reconsider its promotional strategies, focusing less on business discounts and more on highlighting seasonal drinks. Niccol's vision for Starbucks is to transform it into a traditional coffee shop, moving away from its previous online-oriented focus.
