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Recession Proofing Stock through Customer Loyalty

1 April 2008 - Features - Editor

“Check out Starbucks. There is a spike in media interest, and I want to know where we stand on this stock”.

This late Friday afternoon assignment was manna for our parched throats. Visions of lattes and bakes at company expense stirred the creative juices. We decided to troop out before the dragon changed his mind. There was the inevitable deadline. That is why we focused our research on baristas closest to where we could get shopping done before the weekend. Anyway, here is what we found about why Starbucks is still a stock to warm the heart:

1. Customer loyalty is a big deal for loyal customers. There is no rational business reason to value coupons for freebies so highly. The logic melts when you are recognized in person. We think the Schultz brainwave to reward returning customers will work magic for the stock.

2. It is not about beans. Even our dingy office has a machine. Starbucks enhances brand value beyond any material or generic recognition. The look-alikes only make you yearn for the real thing even more. We are as OK with McDonalds. Donuts are great for dunking too. However, no other affordable pit stop quite matches Starbucks. It is hard to explain but true. The stock looks safe for us no matter what the market may say.

3. A break becomes more valuable in tough times. Even 15 minutes of pure refreshment makes the grind easier to bear. Many of the folks who patronize Starbucks have weights of worlds on their shoulders. How often do you see an exit with a scowl? Starbucks stocks will do for your portfolio as the brew does for our collective spirit.

It only remains for us to trade checks for cash. The boss will not sign until responses show up below.

Bless you.

 


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