News

Starbucks’ Schultz in emotional address on Charlottesville

BY Marianne Wilson

Howard Schultz, the politically progressive — and famously outspoken — founder of Starbucks Coffee Corp., weighed in on the rally and violence in Charlottesville, Virginia, and its aftermath in an emotional speech to company employees.

Speaking at a standing-room only employee forum, Schultz did not specifically blame or criticize the President, saying he would let his (the President’s) actions speak for themselves. But the legendary retailer left little doubt of how he felt.

"What we witnessed this past weekend … is against every sense of what is right," Schultz said. "My fear is not only that this behavior is being given permission and license, but its conduct is being normalized to the point where people are no longer hiding their face. We’ve all seen pictures of the KKK in the South … they were hiding because they were afraid to be outed. People are no longer afraid."

The forum, titled "Hate Has No Home Here" and held at the Starbucks Support Center in Seattle, was designed as a space where employees could share their thoughts on the tragedy in Charlottesville, Virginia. More than 500 associates attended, with an additional 1,000 people in overflow areas.

In his remarks, Schultz invoked the Holocaust, and passed around a rock that he brought back from his visit to the Auschwitz concentration camp in Poland some 17 years ago.

"I come to you as an American, as a Jew, as a parent, as a grandparent, as an almost 40-year partner of this company," Schultz said in opening remarks at the event. "I come to you with profound, profound concern about the lack of character, morality, humanity and what this might mean for young children and young generations."

Schultz went on to say that "the moral fiber, the values, and what we as a country have stood for is literally hanging in the abyss. We are at a critical juncture in American history."

Schultz told employees that it was hard to maintain an optimistic view about the future in light of the current storm, but he still is.

"I raise my hand, and I say I am optimistic about our country and the true promise of America," he said.

Employee forums are a tradition at Starbucks. Schultz and Kevin Johnson, Starbucks' new CEO, hold them quarterly at the company’s headquarters and regularly in regions around the world.

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FINANCE

Value-apparel retailer posts Q2 loss; pulls back on expansion

BY Marianne Wilson

The Cato Corp. swung to a loss in the second quarter amid continuing negative sales trends.

The apparel retailer reported a net loss of $0.9 million, or a loss of $0.03 per diluted share, for the quarter ended July 29, compared to net income of $15.9 million, or $.57 per diluted share, for the year ago period.

Sales for the second quarter fell 13% to $205.0 million, down from $236.7 million last year. Same-store sales plunged 14%.

"Negative sales trends continue to put severe pressure on merchandise margins and profitability as we continue to work through our merchandise missteps," stated John Cato, chairman, president, and CEO Officer. "It is taking longer to work through these issues than expected and we expect full year earnings to be significantly below last year."

Cato said it expects to open six new stores during 2017, down from its previous estimate of 13 stores. The company explained the reduction saying "the economics of opening stores is not as feasible with current sales trends."

As of July 29, 2017, the company operated 1,374 stores in 33 states, compared to 1,373 stores in the year-ago period.

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ECOMMERCE

Fast-casual chain steps up its mobile experience

BY Deena M. Amato-McCoy

Chipotle Mexican Grill is making a move to retain existing customers and attract new ones.

The fast-casual chain is partnering with Deloitte Digital to transform its mobile customer experience. The creative digital consultancy within Deloitte Consulting LLP, will redesign Chipotle's iOS and Android ordering apps, a move that will improve digital ordering and enhance the customer experience. The new apps will launch in the fall, with additional channels following by the end of the year.

The new mobile apps are designed to better reflect Chipotle's brand, while improving overall business performance and reducing friction in the ordering process. Functionality includes easier customization of meals, identification of nearby store locations and calculating pickup times. The redesigned mobile experience will also include enhanced payment options including Apple and Android pay, according to Chipotle.

Advanced mobile payment functionality will benefit the chain in the long run. When customers use technology to place an order with a quick service restaurant, average spend increases 20% per visit, and the frequency of visits to that restaurant increases by 6%, according to data from Deloitte.

"We're always looking to give our customers easier, more convenient ways to order and enjoy Chipotle food, and a great mobile ordering experience is right in line with that goal," said Curt Garner, chief digital and information officer at Chipotle. "Deloitte Digital brings the data, insights and technology needed to help us grow our digital channels, and meet our customers where they are with the same fast, friendly ordering experience they get in our restaurants."

This enhanced mobile customer experience is part of a greater initiative that Chipotle is investing in to help drive growth in the digital channel. For example, the company previously announced that it is redesigning ordering website, online catering, additional out-of-store payment options, "Smarter Pickup Times," and an integrated marketing campaign.

All of these initiatives coincide with the chain’s efforts to lure customers back to its restaurants following a chain of events that took a toll on the brand’s reputation and sales. These include a data breach this past spring, as well as a wave of food safety incidents in 2015.

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