Starbucks to double number of China locations

Starbucks Corp plans to add more than 12,000 new stores globally by 2021, including doubling the number in China to 5,000.

The world's largest coffee company outlined its growth plans at its biennial investor conference in New York on Wednesday.

Seattle-based Starbucks said it continues to expand briskly in existing markets like the US and newer ones like South Korea and China. The global goal of 12,000 new stores would bring its total store base to 37,000, a 48 percent increase from the current level.

Starbucks entered the Chinese mainland in 1999, and at the conference it unveiled a partnership with Tencent Holdings Ltd's WeChat social media platform, China's equivalent of Facebook, to create a social gifting and digital payment system for China on the instant messaging service.

The world's biggest coffee company plans to open at least 1,000 Starbucks Reserve stores, featuring varied brewing methods and artisanal foods created by its new Italian food partner Princi.

The Starbucks Reserve Roastery in Seattle will also serve as a linchpin of the company's strategy. The roastery and tasting room serves as a gateway to the company's upscale approach that includes specialty coffees, food and a dramatic setting to maintain its status as a sought after meeting place.

Belinda Wong, CEO of Starbucks China, said a similar roastery in Shanghai is scheduled to open in late 2017 and will become "an enticing destination in China."

Wong said China is the fastest-growing international market for the company. Soon Starbucks will have more than 2,500 stores averaging five million transactions a week and over 35,000 employees or partners, she said.

"Over the next five years we intend to double our scale to more than 5,000 stores in over 200 cities," said Wong.

Tea is still the preferred beverage of choice in China, and Wong said Starbucks' Teavana lineup of specialty teas and related products is helping to build the brand on the Chinese mainland.

"Teavana offers a modern but respectful tea experience," she said. "When coffee consumption becomes a daily ritual in China in the next few years, our opportunity for growth will be unlimited," Wong said.

Mobile payments through smartphones and other devices are becoming very popular in China. To build on that development, Starbucks will accept the WeChat Pay mobile payment system for purchases at its stores in China. Consumers in China will also be able to purchase and send Starbucks gift cards and other items to friends and family using WeChat.

Consultancy firm Euromonitor estimated that Starbucks had a 73.3 percent market share in China in 2015, compared to 9.3 percent for McDonald's McCafe and Costa Coffee's 9 percent.

Howard Schultz, chairman and CEO, said at the conference that the company remains committed to achieving "a balance between profit and social impact".

Schultz, who will hand over CEO duties to President and COO Kevin Johnson in April and then become executive chairman, said Starbucks is positioned to not only survive the dynamics that are changing retailing, but also thrive in the industry's new emerging paradigm.

As a result of the huge growth in electronic and digital commerce, Schultz said it is clear that foot traffic is likely to either stagnate or slip at physical store locations for many retailers. To preserve foot traffic, retailers will need to become a destination, he added.

This trend is already emerging in mature markets like the US, noted Schultz. Starbucks will be able to withstand this shift and continue growing by expanding its premium coffee experience and embracing a robust mobile ecosystem that includes the latest technology in delivering products and service, he said.

Starbucks will "no longer rely on intercepting foot traffic but instead become a destination," he said.

paulwelitzkin@chinadailyusa.com

(China Daily USA 12/09/2016 page1)