It’s a recession and all, but there are some things that are to occur as sure as the sunrise every morning. One of those things would be the Starbucks Effect. It’s when retailers raise their prices during a downturn in the economy. Normally, the laws of supply and demand regulate the prices of items. Unfortunately, things just don’t work that easily when board members, shareholders, executive egos, and dwindling sales enter the picture.
Starbucks is a great example because its price hikes are always a big deal. It has a loyal customer base that purchases products frequently on a weekly basis. So, when a price increases on their popular items, it makes a significant difference in the long run. Recently, CNN Money reported that the coffee retail giant has raised the prices of its popular drinks by as much as twenty cents in its urban areas. Imagine the surprise for many customers who view the move as illogical. However, this is a simple cop-out that many businesses use in order to boost revenues.
Not only is demand lower for Starbucks, but the cost of supplies has been stable for quite some time. Milk and coffee prices are stable. Labor wages are stagnant, and there’s already been a flurry of staff layoffs. So, why the price hike?
Running from the Starbucks Affect
Starbucks like many other retailers was built off of the funds by their loyal customers. Once they relocate into their plush corporate offices and answer to Wall Street, the beat of their drum changes dramatically. If you find a company arbitrarily raising prices and hurting you in the wallet, it’s time to make some changes. It’s up to the customers to remind corporations of who has the power. We suggest the following three suggestions:
• DIY (do-it-yourself): Can you make the product in need or service yourself? If so, begin substituting your regular purchase with your own concoction. You’d be surprised at how many DIY videos exist to teach you just about anything imaginable.
• Small Business: We like small businesses that practice sound business tactics. Sound business practices are the key words here. In fact, there aren’t many big businesses that we go to for anything these days. We’ve found comparable or superior quality in smaller stores for better prices.
• Psychological Outlook: For some people, the idea of ending their patronage with a particular store signals the end of their lives, or so they think. There are countless people around the world who live without electricity, designer clothes, and iPods. Trust that there’s nothing that you can’t overcome. Discover the reasons that your dependency runs so deep. Make a list of all of the good things that will arise should you stop patronizing a particular store. We’ll start you off: increased wealth income.
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