Globalisation: Global Markets
Starbucks is once again looking to ________, but this time will be different.
It is not aiming for seven new stores a day, a rate it reached three years ago after setting a goal of 30,000 stores ________. That dream died a year later and just over halfway there with sales and profits sliding before other retailers really felt the recession. The Seattle company has since closed nearly 900 ________ and eliminated more than 34,000 jobs.
The new, slimmed-down Starbucks wants to expand in areas that historically took a back seat to its explosive U.S. growth and that can be tapped with less upfront investment.
Foreign-store strategy
Starbucks' foreign stores are not as profitable as those in the U.S., which could be one reason why it relied on the lucrative U.S. market for so long.
Being stretched thin, with 5,500 foreign stores in 51 ________, eats up some of the money Starbucks saves by having business partners run more than half those stores. The chain still must oversee its far-flung locations and find ways to get them coffee, mugs and black sesame green tea Frappuccinos in the case of China, which CEO Howard Schultz has said will become Starbucks' biggest foreign market.
Right now, the largest are the United Kingdom, Canada and ________.
"There's tremendous opportunity to go much deeper in our existing ________," said John Culver, Starbucks' president of international operations. "We have a very small share of the global coffee market, in the low single digits."
The chain plans to add 100 new stores in the U.S. and 200 internationally this year.
For the most part, it will add stores in countries where it already has them, an efficient way to ________ sales. Notable exceptions are markets such as India, which Starbucks has salivated over for years, and Vietnam, which Schultz recently said the company has its eye on.
New products
________stores present challenges, but they also create synergies, like the advent of green tea lattes in Japan that later made their way to the U.S. and other markets.
"We're thinking of markets in a holistic manner," Culver said. "We want to provide a consistent experience for customers across all channels."
Starbucks' turned around its U.K. business during the past 18 months, in part by cutting costs and by finding uniquely local ways to please customers.
In addition to time-tested marmite and cheese paninis, U.K. menus now include a frothy drink called the flat white that was popular at independent cafes, and all espresso is now ________, a certification that carries a lot of weight in Europe.
Investors like the new plan. Annual capital spending will be half the $1 billion Starbucks once spent, and some of that extra cash is going toward a dividend, announced in March. ________ now trade above $25 for the first time in more than two years.