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

Howard schultz starbucksAPHoward 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.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.

Tagged In

retail-us warroom