Starbucks CEO Howard Schultz Perfectly Sums Up Retail’s Biggest Problem

January 26, 2014 Leave a comment

Starbucks CEO Howard Schultz Perfectly Sums Up Retail’s Biggest Problem

ASHLEY LUTZ

JAN. 24, 2014, 2:39 PM 9,911 13

Howard Schultz, Chiarman & CEO of Starbucks, established the company’s European headquarters in Amsterdam in 2002

Huge companies like Macy’s, JCPenney, Best Buy, and Wal-Mart all suffered sales that were short of expectations this holiday season.

They blamed a shortened holiday shopping season, cash-strapped consumers, and the U.S. government shutdown.

But these explanations “ignore a larger fundamental truth,” Starbucks CEO Howard Schultz said in a recent earnings conference call.

Elaborating, Schultz perfectly sums up what’s really going on in retail:

“That truth is that traditional brick and mortar retailing is an inflection point. No longer are many retailers only required to compete with stores on the other side of the street. They are now required to compete with stores on the other side of the country.”

As Schultz points out, e-commerce has completely changed the retail game, meaning that weak holiday sales can’t be explained by calendar changes or inflections in the economy.

Traditional retailers will have to learn to compete in this new environment in order to succeed, Schultz says.

Starbucks boasted a 4% increase in traffic during the holiday season.

The company has aggressively invested in a new mobile app, loyalty program, and drive-thru service.

Filed under Macro Trends

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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