Starbucks to Add 1,500 Stores in U.S.

Published in CSP Daily News

Leveraging Evolution Fresh, La Boulange, Teavana acquisitions, more

NEW YORK -- After scaling back a couple years ago, Starbucks has announced a growth agenda across its global retail, emerging brands and CPG channels that includes a plan to open 1,500 new U.S. locations.

"Starbucks business and brand have never been healthier, and as a company we have never been better positioned to execute against our global, multi-channel growth agenda," Starbucks chairman, president and CEO Howard Schultz said at the company's 2012 Investor Conference on Wednesday in New York City.

"Starbucks will have more than 20,000 retail stores on six continents by 2014 and more than 200,000 points of global CPG distribution by 2015. I am personally committed to seeing Starbucks deliver the innovation, execution and elevated customer experience necessary to achieve both these goals and remain one of the world's most trusted and admired consumer brands," he said.

Cliff Burrows, president, Starbucks Americas and U.S., announced that his region planned to add more than 3,000 net new stores, and renovate thousands more stores, over the next five years. At least half of the new stores are expected to be in the strong, rapidly growing U.S. market, where revenue grew by 9% in fiscal 2012.

In 2008, Starbucks said it would close approximately 600 underperforming U.S. stores and would open fewer than 200 new U.S. company-operated stores in fiscal 2009. In 2009, the company said it planned to close 200 more underperforming U.S. stores, by the end of the fiscal year.

(See Related Content below for previous CSP Daily News coverage of Starbucks' plan to sacle back U.S. store counts.)

Burrows also announced plans to leverage the recently completed Evolution Fresh and La Boulange acquisitions--and to increase sales and drive customer frequency throughout the day--by making La Boulange products available in more than 2,500 U.S. company-operated Starbucks stores and making Evolution Fresh juices available in more than 5,000 U.S. company-operated stores by the end of 2013.

Starbucks channel development has become the company's second largest operating segment, growing 50% to $1.3 billion in revenue in fiscal 2012. Jeff Hansberry, president, Starbucks channel development and emerging brands, announced that he expected his business to double its international channel development footprint by 2015, building on its more than 100,000 points of distribution in 20 countries, and to eventually rival Starbucks retail store portfolio in terms of size and profitability.

Hansberry also announced plans to expand the company's My Starbucks Rewards customer loyalty program in 2013 to enable customers to earn Starbucks stars--redeemable for free beverages and food at Starbucks retail stores--when they purchase Starbucks-branded products in consumer packaged goods (CPG) channels.

Seattle-based Starbucks reiterated plans to vault itself into a leadership position of the $40 billion global tea market with its intended acquisition of Teavana, announced in mid-November. The company shared for the first time that it plans over time to offer handcrafted Teavana tea beverages at Teavana mall and neighborhood stores and eventually at Starbucks stores.

Once the acquisition is complete, Starbucks and Teavana will together jumpstart the next wave of growth in the tea category, leveraging Starbucks core competencies in handcrafted beverage, real estate and design and integrating these with Teavana's tea authority, merchandising and retail store unit economics. Powered by Starbucks existing infrastructure, Starbucks plans to continue to grow and extend Teavana's 300 mall-based stores as well as add a neighborhood store concept that will accelerate Teavana's domestic and global footprint.

Beyond retail store and CPG channel developments, Starbucks described how its digital and loyalty platforms and initiatives are transforming the way it connects with customers, strengthening brand relevance, delivering greater value and convenience to consumers.

Chief digital officer Adam Brotman described how the company's social, web, mobile, loyalty and card assets differentiate Starbucks from any other retailer and combine to directly drive growth across the company's business and around the world. Brotman announced that Starbucks cards are now used in approximately 25% of the company's U.S. transactions and that the amount of dollars loaded on Starbucks cards increased by more than 20% last year. He also expects the company's mobile payment platform to account for 10% of payments in Starbucks U.S. stores by the end of fiscal 2013.