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Starbucks lowering retail price, will others follow?

Starbucks will be changing the pricing on their bagged coffee, will other retailers follow suit? Will we see more prices dropping, even if slightly?

starbucks sign

starbucks sign

Starbucks changing bagged coffee price

We all have our guilty pleasures, and for those things that bring us the most joy, we can sometimes be persuaded to spend a little more money than we normally would – especially if it’s considered to be of high quality. Many retailers understand this correlation of price to perceived quality, and are able to rake in numerous sales even with a higher price point than competitors.

But businesses have to be careful to maintain this equilibrium of value to cost, because if prices are too high, sales taper off. This may explain Starbucks decision to lower its U.S. supermarket and retail coffee prices from $9.99 to $8.99 for a 12-ounce bag. This is a 10 percent price decrease for the Starbucks brand, and Seattle’s Best will follow suit with a 13 percent decrease in order to increase the frequency of sales, and bring in new customers who are attracted to the lower price point.

Starbucks brand loyalists may be accustomed to paying a little bit more for their favorite brew, but it can become difficult to substantiate these higher costs when consumers are facing tough economic times and begin to consider going with another brand.

Will other retailers follow suit?

I think that the falling prices will be a trend for other industries as well. Consumers are starting to really analyze where their money is going and carefully evaluating the luxuries they are okay with paying top dollar for versus ones that can be swapped for other offerings. Rather than have target consumers switch to another brand due to their wallets being stretched too thin, businesses that offer slight price decreases will allow consumers to still indulge in and purchase the brands they love, but a more economical price.

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Other companies that provide items that fall outside of necessary expenditures and more into discretionary purchases may also do price analyses and come back to the shelves with lower prices in order to maintain robust sales revenue and increase trial and adoption. While lowering prices just for the sake of it won’t save a product that’s on its way out, if you have a strong following that’s adopting a slightly tighter budget, listening to the market and reducing prices appropriately is a smart move.

Destiny Bennett is a journalist who has earned double communications' degrees in Journalism and Public Relations, as well as a certification in Business from The University of Texas at Austin. She has written stories for AustinWoman Magazine as well as various University of Texas publications and enjoys the art of telling a story. Her interests include finance, technology, social media...and watching HGTV religiously.

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