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Strategy beyond the storefront: Starbucks’ major investment plan

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Coffee giant’s focus on customer experience, beverage innovation and digital customer relationships boosts profits and growth in Q3, reports Heather Cant

Earlier this year, at Starbucks’ largest ever shareholder meeting, the company revealed a major $100m investment plan. Last week’s release of the catering giant’s third quarter fiscal report shows it to have been a huge success. The company enjoyed 7% global net store growth and 16% net store growth in China since the previous year.

In March, FCSI’s coverage of Starbucks’ ambitious new investment plan predicted that the company’s insistence on placing the customer experience as a top priority was core to its continued success.

Listening to customers

Starbucks’ CEO Kevin Johnson outlined the firm’s three key strategic priorities: “accelerating growth in the US and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestlé, and increasing shareholder returns.”

Keeping a close eye on customer feedback has been crucial in Starbucks’ investment strategy, and it has paid off. Earlier this year, Rosalind Brewer, Starbucks’ chief operating officer, highlighted the importance of listening to customers, “so we can better position our business now and for the future”.

This commitment was mirrored by Johnson’s own reflections on June’s success, which he attributed to “our focus on enhancing the customer experience, driving new beverage innovation and accelerating the expansion of our digital customer relationships.” The rosy fiscal report has given Starbucks such a boost that Johnson confirmed his decision to raise the full-year financial outlook.

Growth at scale

Given its success in China as well as the US, it is no surprise that Starbucks has ambitions to push growth in both markets. The firm recognises that building and maintaining a connection with the customer is essential, and their new strategy steps beyond the storefront.

Starbucks coffee pods are sold in supermarkets, they have developed an order-and-collect mobile app and the logo’s twin-tailed mermaid appears on mugs in many homes, a go-to for a breakfast brew or a post work pick-me-up.

The proof is in the pudding: the Active Starbucks® rewards membership in the US increased by 14% year-over-year to 17.2 million active users.

It seems Starbucks has struck the perfect blend. The investments into elevating the brand by employing a customer-centric focus have boosted profits enough to return $581m to shareholders. Johnson affirmed, “we are repositioning the company to deliver predictable and sustainable operating results while building an enduring company that creates meaningful and long-term value for Starbucks shareholders.”

With 442 net new stores opened in the last quarter, of which nearly a third were in China, Starbucks proves itself to be committed to fulfilling its “growth at scale” agenda.

Heather Cant

Pictures: Starbucks