It's that time of year when we look back over the best and worst moments of the previous 12 months. There are probably plenty of candidates for the worst retailing debacle of the year, but one incident jumped to mind for me -- probably because I'm a Starbucks (Nasdaq: SBUX) shareholder and therefore pretty sensitive to wrong turns the retailer might make.
Back in September, Starbucks had to pull an email campaign that had gotten out of hand. What had started out as an offer for free drinks for Starbucks' employees' friends and family in the southeastern U.S. had turned into a viral campaign that was spreading far and wide over the Internet. So Starbucks had to eat a little crow and discontinue the offer, leaving some fans out in the cold when they tried to redeem their online coupons. But the mess didn't quite end there.
The incident -- and Starbucks' reaction to it -- added up to a few negatives for the coffee giant. First, rival Caribou (Nasdaq: CBOU) jumped on the chance to provide free drinks to anyone who brought in the defunct Starbucks coupon. Then, one peeved customer filed a lawsuit (one angling to be a class action lawsuit, no less), alleging that said customer felt "betrayed" when the coupon wasn't honored. It sought a whopping $114 million.
While I said at the time I believed the lawsuit was frivolous (and silly, to boot), as a Starbucks shareholder, I wasn't wild about the idea that the company had left itself wide open to such attacks. Although Starbucks pulled the Internet coupon, with the explanation that it had spread far beyond its original intent, most of us know that just about anything distributed on the Internet these days has a statistically strong chance at becoming a viral phenomenon that spreads far and wide. In fact, many companies actively seek such viral campaigns these days.
And, of course, silly little missteps like this can also make an investor wonder: Is the company in question getting so big it's more likely to make silly mistakes, which may one day venture into far bigger ones? My Foolish colleague Adrian Rush wrote about another "oops" in 2006: Starbucks was selling mugs that played off the spelling-bee theme in Lion's Gate's (NYSE: LGF) film Akeelah and the Bee, which Starbucks had a hand in promoting. Each mug featured a word actually used in a past National Spelling Bee. As clever as that idea may have been, Adrian pointed out that, unfortunately, the word on one of the mugs was bungled -- it was misidentified as an adjective instead of a noun.
I am still optimistic about Starbucks' long-term growth prospects as a shareholder (and loyal customer, too) -- it's not like I'm going to defect to Caribou or Green Mountain Coffee Roasters (Nasdaq: GMCR) over a few silly mistakes (and no company is above some silly mistakes). However, I must say: Here's to a 2007 in which Starbucks doesn't make too many blunders where its shareholders might be tempted to ask, what were you thinking? Starbucks has always had the rep for being a smart company, and many of us hope it always stays that way.
Stock up on some caffeinated word on Starbucks:
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Alyce Lomax owns shares of Starbucks. The Fool has a disclosure policy all year round.
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