Post on 06-Jan-2018
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Why Did Starbucks Cross the Road?
Yangming Liu, Laura Lukowski, Mark Longfellow, Anthony Marcello
How Many Stores Are There?• As of November 2006:
– 7,102 company-operated outlets worldwide
• 5,668 in United States• 1,434 in other countries
– 5,338 joint-venture and licensed outlets
• 3,168 in United States• 2,170 in other countries
– Total worldwide: 12,440 Beijing, China
Why So Many Starbucks?
• Long lines cause customers to leave
• Several stores in one area reduce long lines
• First discovered in Vancouver, 1990
Why So Many Starbucks?
• Customers do not want to travel far for coffee• Will travel only a few minutes, 6-8 min. max• Location matters: across the street or around a
bend in the road• A new store may take away sales from original,
but will increase total sales overall
Why So Many Starbucks?
• Demand for specialty coffee is growing fast
• Adding stores only to keep up with demand
• Majority of Starbuck’s profits come from opening new stores in same area that has high demand
Why So Many Starbucks?
• To capture spur-of-the-moment customers
• If a customer sees a store nearby, may buy a cup of coffee even if they were not planning on it
• Maintaining growth is key to keeping stocks high
• Opening new stores nearby is retail equivalent of basketball’s boxing out
Expansion of Locations
Expansion of Locations
• Multiple size designs– Floor plans vary greatly in square footage– Small designs of 250 square feet (small
stands inside bookstores, gas stations, or hotel lobbies)
– Large designs of 1,600 square feet (typical size of a stand alone location)
– Allows new stores in a wide variety of locations
Expansion of Locations
• Closely study real estate trends• Large part of sales is dependent on spur-
of-the-moment purchases• Build in high traffic areas (malls, theaters,
hotels, etc.)• Customer work schedules
Starbuck’s Décor
• Arthur Rubinfeld– executive of real
estate• 80% of design was
standard issue• Focus on what
costumers see
Starbuck’s Décor
• Stained wood front, plastic in back
• Dark color ceilings• Regular floors• Curtains and
murals
• Sofas and soft chairs
• Round tables• Every store is
unique
Maintaining Interest
• Added drive-thru in 2004• Customized buildings for customers• New stores on major highways and in
smaller towns• Additional bathrooms for travelers
Future Plans
• Open 10,000 new stores in next 4 years
• Open stores in lower-income, more diverse communities
Questions?