Following Starbucks' disclosure that customer traffic at its stores had declined for the first time ever â€“ which sent its shares lower â€“ the coffee giant announced plans on Friday to launch its first national television advertising campaign.
According to the Seattle-based chain's fourth-quarter earnings report released yesterday, average customer traffic fell by 1 percent at its U.S. stores but its sales still rose 19 percent, due to a 9-cent price increase on coffee drinks earlier in July. The decline in customer traffic worried investors, who sent shares falling nearly 4 percent on Friday.
In the wake of the most recent results, executives announced several steps for action today. Aside from a prime-time TV campaign between now and Christmas, district managers will be allowed to spend more time in stores. In addition, the chain will carry less varieties of drinks.
In an interview, Chief Executive Jim Donald called the campaign a very culturally sensitive, product-driven effort, according to the Associated Press.
He said Starbucks is getting into TV advertising because as we grow our stores, we're trying to reach out to this broader audience that maybe [has] not had a chance to experience Starbucks. Chief Operating Officer Martin Coles said the ads highlight factors that differentiate Starbucks from rivals.
Executives said the company had been hit by the same economic pressures that have hurt other retailers, including instability in the housing market and rising fuel costs. Starbucks also blamed rising dairy prices as a reason for their price increase.