Excitement is brewing for Starbucks’ prospects in China in 2018, with promising figures revealed in the Q4 earnings call and a successful launch of its Shanghai Reserve Roastery, reports Emily Lewis
On 6 December, Starbucks opened it’s Reserve Roastery in Shanghai, China. It was billed by Starbucks as an “immersive coffee experience”, in which customers are greeted by a “multi-sensory coffee experience in an interactive coffee and retail destination like no other.”
The Shanghai Reserve is the worldwide coffee giant’s second Roastery, with the first location residing within its hometown of Seattle, Washington. The opening of the Shanghai location occurred just a month after Starbucks’ Q4 2017 earnings call, which announced escalating growth in Asia, particularly China.
With Starbucks stores opening every 15 hours across China, the Starbucks Foundation and Starbucks China have accompanied the Reserve opening with a commitment to the Chinese market, announcing a social impact commitment of $20mil USD over the next five years.
Digital innovation and coffee experimentation
Shanghai’s new Reserve Roastery joins the 600 stores already open in the province – revealing the success of the Starbucks brand in this region.
The Roastery is an experience far beyond that of a typical Starbucks outlet, however, with the company announcing that “The Shanghai Roastery will become the first Starbucks location, and the first-of-its-kind in China, to seamlessly integrate a real-time, in-store and online customer experience.”
According to Starbucks’ Q4 earning call, introducing augmented reality (AR) to Starbucks’ customers is all part of the company’s commitment to digital innovation. Japan was one of the first markets to experience Starbucks’ Digital Flywheel Program, which involves using artificial intelligence technology in Starbucks Rewards members’ accounts. This optimises the use of data such as order history and current weather conditions to tailor consumer experience.
The AR technology in the new Shanghai location allows customers to use the custom Roastery digital web app, or Alibaba’s Taobao app, to find out information about the company and its products by pointing their mobile devices at key features within the outlet.
China and coffee: watch this space
Shanghai’s Roastery is just one step further in Starbucks’ wider plan for the Chinese market. The Q4 earnings call reported that China was up by 7% compared to last fiscal year.
“China was stand out in fiscal 2017, posting 7% comparative growth, strong revenue growth and another year of AUVs and strong profitability,” says Kevin Johnson, CEO and president of Starbucks. “We added over 550 net new stores in China in fiscal 2017 and now have nearly 3,000 stores in 135 cities.”
The Roastery marks a promising 2018 for the company, as the outlet delivers double-digit comparative growth and an average ticket nearly four times that of a typical Starbucks shop front. Johnson believes that the opening will “further elevate the Starbucks brand in China, while at the same time adding to our momentum across the business and market, underscoring, once again, the significant growth opportunity that China represents for Starbucks.”