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Starbucks Incoming President Brings Consumer Insights to Coffee Culture

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LONDON (Reuters) – Laxman Narasimhan may not have run a coffee shop before, but when he takes over Starbucks as he steps down as CEO of British packaged goods group Reckitt, consumer habits will change. It will give you insight into change.

While honing relationships with retailers ranging from Walmart (WMT.N) to Tesco at Rekit (RKT.L), which makes Strepsil throat lozenges and Dettle floor cleaners, Narasimhan, 55, has made radical changes. However, he spearheaded the unfinished business reconstruction. (TSCO.L).

Narasimhan, who will join Starbucks in October, will have to focus on serving the millions of people who step into the coffee chain’s approximately 32,000 stores each day.

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But analysts said his background, which included spending several months as PepsiCo’s (PEP.O) chief commercial officer in 2019, should ensure a smooth transition to Starbucks.

“We don’t believe he has materially impacted the operation of our direct-to-consumer business or retail network,” said Eamon Ferry, an analyst at Credit Suisse.

“He has no direct experience with coffee, so that might be questionable. But he has a deep understanding of the consumer, which is much more important,” Ferry added.

Narasimhan will succeed interim CEO Howard Schultz, who has rejoined the chain for the third time since former CEO Kevin Johnson retired this spring.read more

Starbucks identified Narasimhan as a possible successor to Johnson more than a year ago when it was strategizing the coffee chain’s future and evaluating internal and external candidates, a source familiar with the matter said.

Charles Tribbett III, CEO of Russell Reynolds Associates and co-head of the board advisory business, led the search for Johnson’s successor, sources said.

The world’s largest coffee chain is restructuring its business model from café-centric to mobile pickup and delivery, while facing rising food and labor costs.read more

Seattle-based Starbucks is also facing a labor movement, with more than 200 stores across the United States joining unions in the past year, with employees demanding better benefits and wages.

Mr. Narasimhan spent nearly 20 years at McKinsey & Co., a consultancy and turnaround firm known for his 6 years at the company, before taking the helm as Starbucks CEO in April 2023. You need to figure out your business in months.

Analysts and investors say his track record and attention to detail suggest he will use that time to research all aspects of the business.

“Narasimhan is seen as doing a good job so far,” said Jack Martin, fund manager at Oberon Investments, a Reckitt shareholder. He added that he had “stabilized the ship” over time.

rejuvenation to reinvention

At Starbucks, Narasimhan will oversee a “reinvention” plan that the company said will include paying better baristas, improving employee benefits and the customer experience, and reimagining stores. It is included.

His track record at Reckitt suggests he is ready to make painful decisions early on.

Shortly after becoming Reckitt’s CEO in 2019, he commissioned a strategic review and promised to spend £2bn ($2.3bn) over three years to ‘revive’.

Early in the plan, Reckitt took a hit on its margins, funded new investments and refocused its health, wellness and nutrition brands. This approach eventually proved popular with shareholders.

“Under Luxman, Reckitt has gained new confidence, and investors seem confident that everything is going in the right direction,” said Bernstein analyst Bruno Montein. Told.

“He glows, he oozes and he’s confident,” added Montein.

Narasimhan’s exit leaves a huge hole for Reckitt.

For now, Nicandro Durante, a longtime Reckitt board member and former chief of British American Tobacco (BAT), will lead the Lysol surface cleaner and Durex condom makers.

“When Luxman made his intentions clear, they thought it best to act quickly,” said Patricia O’Hare, Reckitt’s global head of communications and government affairs. She said Durante piloted a larger company, BAT, through his own transformation.

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Reported by Richa Naidu. Additional reporting by Jessica Dinapoli. Edited by Alexander Smith, Louise Heavens and Lisa Shumaker

Our standards: Thomson Reuters Trust Principles.

Richa Naidu

thomson Reuters

London-based reporter covering retail and consumer goods, analyzing trends in supply chains, advertising strategies, corporate governance, sustainability, politics, regulation and more. Previously, I wrote about US-based retailers, major financial institutions, and covered the Tokyo 2020 Olympics.

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