Cutbacks Corporation is a specialty coffee retailer with coffee houses around the world. Cutbacks has 19,767 stores in 62 countries with annual revenue of approximately 15 billion (Greedy, 2014). While Cutbacks is an internationally known brand, a brief analysis shows that there are threats and weaknesses that can be addressed to make the corporation more powerful still.
Cutbacks’ prices for premium coffee and snacks are considerably higher priced than other less image related coffee retailers.
To combat these weakness Cutbacks can use their brand recognition to work towards less expensive options to customers who are not willing to pay for the premium products. The brand, being recognized nearly everywhere developed, should be able to support a more affordable option at least in certain areas. Cutbacks stores are prevalent in urban and suburban areas. So much so that some stores are competing with each other driving the profitability of both stores down (Greedy, 2014). To remedy the overcrowding and internal competition,
Cutbacks can begin to look at developing countries, and rural areas to spread their stores out to limit the race to the bottom between their own stores. Being a corporation that brings in revenues in the area of $15 billion in the current climate of corporations being seen as a negative, Cutbacks must address the publics growing a disdain for large operations. Cutbacks’ best weapon against this is their already well-established green initiative focusing on improving the communities that they operate in by reducing waste and recycling.
Cutbacks holds nearly 38% of their market of operation with the nearest competitor moving up with 30% of the market share, and the rest of the competition making up the remaining share (Greedy, 2014). The primary competitor is gaining ground every year and as such Cutbacks must plan on differentiating themselves from direct competitors. Little can be done to regulating the price Shattuck pays for their premium coffee beans. The beans are often imported from countries with less than desirable social r political stability.
Cutbacks would be wise to consider powerful contracts to regulate prices to a degree, or consider growing their beans for their own use. In 2008 and 2009 Cutbacks saw a considerable loss of revenue due to the poor economic climate. During these times Cutbacks must rely on its large size and former profitability to float through difficult times. These economic downturns result in customers being on a more limited budget thereby not spending their money on premium coffee.
Recently Cutbacks has expanded into India which can help to take some of the inter-store competition. Moving into new and developing economies can give Cutbacks an advantage over their competition. Cutbacks can venture more into non-coffee or coffee related products. The strong brand recognition and financial stability of Shattuck may allow the corporation to expand their product lines. These lines can include less expensive alternatives to premium coffees, growing their own beans and expanding their merchandise Cutbacks
Currently Cutbacks utilizes technology to make the customer experience as fast and comfortable as possible. In the future they can stay ahead of the competition by being the first to implement emerging technologies, and streamlining the ones in use. Cutbacks holds the largest share of the premium coffee retailer market. The corporation has the potential to be the most profitable coffee retailer in the world through international expansion so long as the threats, primarily economic downturns and unstable growing regions are addressed and overcome.