From Coffee to Cars

Fresno, CA Declining business and increased competition has Starbucks reacting. The company says it's closing 6 hundred stores nationwide. They haven't announced locations yet. But the big reason they are closing is consumers are simply buying less.

Kit Yarrow a Consumer Psychologist at San Francisco's Golden Gate University puts it this way," Because coffee is the luxury that everyone could afford. And you know it shows us how people feel about spending, and they are feeling practical. They don't want to have luxuries."

Another "luxury" many are giving up is big comfortable vehicles. SUV's top the list being traded in.

Jim Nauman the General Manager of the CarMax store in Fresno says drivers are trying to get rid of anything big, "Quite a few also full size V8 sedans and sports cars. Anything they're not comfortable with the gas mileage levels."

But with declining values for the gas guzzlers, many motorists can't afford to trade down. And, economic uncertainty is keeping buyers off of car lots. It's bad news for every car company. With sales dropping at an average of about 20 per cent for Toyota, Ford, GM and Chrysler. Only Honda and Hyundai showed slight profits over last year. With oil prices hitting a new record of 143 dollars a barrel gas prices are expected to continue their climb, putting pressure on the sales of cars, and coffee, but not for everybody. One customer at one of the two Starbucks at Fresno's River Park Shopping Center says, "No, I'm not gonna cut Starbucks. It's my worst habit."

Starbucks says it will move most of its affected workers to other stores, and offer severance packages to others. Again, no word yet on which stores will be closing where.

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