Corporate Governance

Starbucks, WalMart and Social Responsibility

By J. Robert Brown

We have written often about the competitive threat about to be unleashed on Starbucks from McDonalds, which will insert baristas into its 14,000 franchises.  Starbucks needs to transform from a commodity to an experience. 

While Starbucks had attempted to address the threat with customer loyalty cards and better espresso machines, it has shied away from the most likely solution:  Increased emphasis on social responsibility.  Customer loyalty would be stronger from a program designed to demonstrate that the purchase of Starbucks coffee was socially responsible, good for the environment and so on.  Starbucks does some of this, as its web site indicates, but it is not a big part of the Starbucks experience.  We have often held up Chipotle, the burrito maker, as a model.

Today we note that coffee and social responsibility has not been lost on another major player, WalMart.  WalMart has announced that it will sell its own line of organic,Rainforest Alliance and fair trade certified coffees.  In other words,  WalMart thinks it can profit from selling socially responsible coffee.  Starbucks may eventually discover that if and when it promotes socially responsible coffee, the field is already crowded with competitors and that the advantages have been seized by others.    

Full post as published by The Race to the Bottom on April 03, 2008 (boomark / email).