Thursday, March 24, 2011

Starbucks Eyes Grocery Stores, China, Digital Growth

USA Today: Starbucks had but one core item on the agenda at Wednesday’s annual meeting: growth — but in a very un-Starbucks-like way.

Still smarting from the lessons of the recession and about expansion, it’s clearly not growth in the traditional sense for Starbucks.

No one talked about building gobs of more stores in the U.S. — where it already has 11,000 locations. Instead, executives discussed substantial growth in the grocery store aisle; international growth, particularly in China; and continued growth in digital outreach.

“Put your seat belts on,” CEO Howard Schultz told 2,000 shareholders attending the 20th annual shareholders meeting that took a historical walk through the brand’s 40-year history. “We are just getting started.”

Here’s what’s on tap for the next year:

Grocery Growth: Building on its success selling everything from coffee to bottled Frappuccino to Via at the supermarket, Starbucks now has big plans to expand its consumer product portfolio. Schultz gave few specifics, but said new Starbucks-branded products could include teas, juices “and who knows what?”

“What we’re about to do is build a different kind of business model and a consumer brand that hasn’t been built before,” Schultz said. Starbucks, he said, will thrive as a brand that sells both from its own retail stores and from supermarkets. “We’ll introduce thousands of new customers to the Starbucks brand.”

He said the consumer products expansion will ultimately “rival” the size of sales at Starbucks retail stores.

China Growth: The near-term focus of international growth for Starbucks will be mainland China, where it currently has 400 locations. By 2015, that number will more than triple to 1,500, said Annie Young-Scrivner, chief marketing officer. Starbucks stores in China are “outperforming the U.S. in terms of average store profitability,” she said. “Even though we’re not yet in every city, Starbucks is recognized as one of the top 20 brands in China.”

Digital Growth: Starbucks already has 20 million domestic Facebook fans and 1.3 million Twitter followers; on Foursquare, some 4.5 million check-ins at Starbucks have been posted. “The way the consumer is getting access to information and how they’re making their buying decisions is different from the past,” Schultz said. Starbucks’ continued expansion into digital media, Schultz said, “will be dramatic.”

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