Coffee, Cars and the Consumer

Your morning cup of joe may be a little harder to find now.

Starbucks announced to day that it is closing 500 stores nationwide, a sign of the times of the current economic turn down. This seemingly unstoppable company that couldn't open new stores fast enough ten years ago, is now realizing that people have come to their breaking point. Gas prices are now edging out the coffee drinks that made Starbucks so popular. No longer does a $4 latte taste as good when it takes $4 in gas to go get it.

It's estimated that about 12,000 people, or 7% of the Starbucks workforce, will be out of a job. That's a whole hec of a lot of barristas roaming the streets trying to find another job. And they're just one more group to join the masses faced with unemployment or a serious threat in their industry - mortgage brokers and loan officers are basically all unemployed, automobile workers and car dealers are seeing fewer sales and slower manufacturing output, restaurants are seeing almost a 25% drop in patronage and the list goes on. It seems that our economy has switched over to decaf during the past six months, and there's no caffeine in sight.

The consumer faces tough choices these days. No longer can we be flippant about extraneous items we use to purchase without much thought (think Frappacinos). When it takes almost $80 to fill up my car, I think twice about the places I really need to go. I'm much more price sensitive at the grocery store than I use to be. A year ago, a ten cent price difference between coffee creamer brands wouldn't even catch my eye. Now, I reach for the cheapest item on the shelf. My brother's company is cutting back on the air conditioning circulated in the office (no kidding - he actually said it's warmer in the office)! And he works at a billion dollar company in Research Triangle Park!

Is there a light at the end of the tunnel? I hope so. But I fear this economy is going to get much worse before it gets better. I fear more jobs will be lost. I fear the wrong person will win the presidency in November. I fear that gas prices will be $5 per gallon by the end of the summer. Everything is going up (except our salaries) and I fear that it's only going to get worse before it gets better. And more companies like Starbucks will start to close stores and lay off people just to survive, as consumers are forced to adapt to the new, decaffeinated economic climate.