Starbucks has faced mounting challenges after decades as a seemingly untouchable coffee giant, in part due to its heavy focus on transactional growth at the expense of loyal customers who helped make it an iconic brand.

“In trying to scale faster, Starbucks has drifted away from the emotional core that built its global following,” Amazon Business Analyst Saswat Sidhant Prusty told Coffee Intelligence.

External pressures, including economic uncertainty, rising operational costs, a slowdown in consumer spending due to inflation, and ever-evolving industry trends, have also impacted the company’s overall financial performance, mirroring the struggles faced by the broader foodservice sector.

After learning from its missteps, Starbucks has begun implementing significant changes across its business through the “Back to Starbucks” turnaround plan, aiming to rectify its mistakes.

This time, however, the company is making a surprising move by expanding into an unexpected category that has nothing to do with coffee.

Starbucks enters the fashion and beauty business

Starbucks (SBUX) has hired Neiv Toledano as its new Head of Fashion and Beauty for the Brand Activation team. While the company has collaborated with fashion and beauty partners in the past, this newly created role is the first of its kind, since it’s dedicated solely to the development of strategy and execution in the space.

Toledano brings her experience working with major consumer brands across social media and marketing. She previously served as a senior manager for brand marketing at E.l.f. Beauty and as a social media manager for Chipotle, according to her LinkedIn profile.

Although Starbucks has launched several collaborations with fashion and beauty-related brands over the years, most have been released in its international markets. The addition of this dedicated position could signal that the company plans to further invest in these types of limited-time releases, particularly for its U.S. customers.

Starbucks’ previous partnerships with fashion and beauty

  • Starbucks x alice + olivia: Released designer merchandise multiple times in Asia with the fashion brand.
    Source: Starbucks
  • Starbucks x Vera Wang: Collaborated with the fashion designer on a limited-edition merchandise line in Asia.
    Source: MEGA Magazine
  • Starbucks x FARM Rio: Launched a tropical-print merchandise collection with the Brazilian fashion brand in the U.S., Canada, and Latin America.
    Source: WWD
  • Starbucks x Diane Von Furstenberg: Worked with the fashion designer on a drinkwear collection in Asia.
    Source: Starbucks
  • Starbucks x Stonebrick: Partnered with the cosmetics brand to release a limited-time makeup line in Korea.
    Source: Zula
Starbucks expands into the fashion and beauty business with a new leadership role to boost sales.

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Starbucks’ new strategy to stay relevant

Starbucks’ push into fashion and beauty extends beyond marketing; it is a cultural strategy aimed at strengthening its relevance by staying current with trends and fostering a deeper connection with consumers. These collaborations could help attract new audiences, increase brand visibility, and boost sales.

The move is also part of Starbucks’ “Back to Starbucks” turnaround plan, designed to reverse declining sales by returning to its roots and creating a more personalized coffeehouse experience rather than remaining transactional.

Limited-time merchandise releases have already proven effective for Starbucks. On November 6, the day of the Bearista launch, Starbucks’ visits increased by 37.8% above the daily average for the last 12 months, outpacing even the brand’s successful August Pumpkin Spice Latte debut, which drove a 23.1% spike in visits, according to Placer.ai.

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Even after the initial rush, traffic remained elevated for several days as customers hunted for remaining inventory, which ultimately sold out. The sustained demand shows that the launch was more than a one-day phenomenon, prompting Starbucks to roll out a second drop.

“People lining up to pay $30 for a bear-shaped glass – albeit a super-cute one – wasn’t on anyone’s bingo card this year,” said Placer.ai Industry Expert Lila Margalit in the study. “Even in an era of trading down, consumers are still willing to splurge on items that feel special – especially those that offer a sense of belonging to a cultural moment. Value matters, but it isn’t everything.”

Starbucks continued to face broader challenges

Despite the momentum behind these merchandise initiatives, financial recovery and regaining lost customers will take time to show results. In the meantime, Starbucks continues to face challenges as it manages high restructuring costs and ongoing sales declines.

In the fourth quarter of fiscal 2025, Global comparable store sales increased by 1% year over year. However, comparable store sales in North America and the U.S. remained flat, offset by a 1% decline in comparable transactions.

Operating margin contracted by 1,150 basis points to nearly 3%, largely due to restructuring costs associated with Starbucks’ turnaround efforts.

“Q4 was a milestone quarter in getting ‘Back to Starbucks,’ having delivered global comp growth for the first time in seven quarters,” said Starbucks CFO Cathy Smith in the earnings report. “We know this continues to be a multi-year turnaround. We remain focused on driving our topline while managing the costs that are within our control to deliver durable, sustainable growth and long-term shareholder value.”

Nonetheless, traffic has shown improvement. Starbucks visits rose 0.7% year over year in the third quarter, marking the first visit growth in 2025, according to Placer.ai.

Rival chains dive into retail merchandise

Other quick-service restaurant chains have also launched their own merchandise lines with exclusive collaborations and limited-time seasonal drops to diversify revenue streams, keep customers engaged, and turn fans into walking advertisements.

Rival food chains launch merchandise collections

  • Chick-fil-A: Operates an online merchandise shop featuring apparel, accessories, home goods, and gifts.
    Source: Chick-fil-A
  • McDonald’s: Runs an online merchandise shop offering apparel, accessories, and seasonal drops.
    Source: Golden Arches Unlimited
  • Paris Baguette: Sells branded apparel, accessories, and home goods through its online shop.
    Source: Paris Baguette

Related: Starbucks closes more stores in a key market