The Secrets of Starbucks’ Success : 3- Going Global

When you say the word “Starbucks” to someone, whether they are in Texas, London, or Tokyo, there is a very good chance that their eyes will light up in recognition; in fact, there is a strong chance that they’ve been to a Starbucks before, perhaps even in the past week or so. Starbucks may have begun as a global brand, and established a strong business model that works in the American market, but there is no doubt that this caffeine titan is now a global powerhouse. It’s first international location (aside from Canada) was opened in Tokyo in 1996, and the company hasn’t looked back, now boasting more than 9,000 locations in 63 foreign countries, in addition to the 13,000 locations in the United States.

The success of Starbucks in America has largely been due to their ability to remain a “local” favorite, managing not to lose their unique, community atmosphere in every location, despite the common trend of larger food and beverage companies to become standardized and essentially identical. By maintaining the feeling of a corner coffee shop, Starbucks was able to solidify its dominance in America’s coffee niche, but there was some concern that they wouldn’t be able to achieve the same goals (at least with the same tactics) in the global market. Critics argued that Starbucks would have to become more uniform in its approach and appearance, as trying to customize store designs, product offerings, and marketing strategies for every country would be too challenging, and would stretch resources unnecessarily. Never one to let their ears be bent by critics or naysayers, Starbucks implemented the same strategy in their foreign locations as they had throughout their empire in America. They didn’t move into a cookie-cutter style of franchising, nor did they “sell out” or quietly allow a drop in quality or customer service. Their brand consistency has been the stuff of legend in for the retail industry, while paradoxically offering unique experiences, ambience, products, and services in their different locations. The same held true abroad, and they quickly moved into a powerful position in dozens of international markets.

Imagine walking through the streets of Paris, strolling by dozens or hundreds of cafes in a single day. With coffee culture being such a key element of Parisian life, it might seem impossible for a huge coffee chain like Starbucks to get their foot in the door, let along flourish, among a seemingly infinite number of quaint, intimate, independent cafes in the City of Light. However, what if the only thing that defined a café as a Starbucks was the logo and the name? What if the quality of the coffee was superior to most other offerings on the Champs- Élysées? What if the tables inside were weathered and beaten antiques from flea markets outside of Paris? And if the espresso machine looked as though it had survived World War II, yet still cranked out exceptional brews? Starbucks’ global development team knew that moving into major coffee markets would be a challenge, so they tried to blend in as much as possible. Inserting a Starbucks retail location that would be appropriate for the Upper West Side of New York City into the Latin Quarter of Paris wouldn’t make sense, nor would it attract new customers, but toning down the design, changing up the menu, and trying to blend into the market was key.

Sourcing local materials for decoration and furnishing, tailoring the interior and exterior to fit the neighborhood, and even using local artists and musicians to create an attractive atmosphere was more costly than simply dropping an identical McDonalds into the middle of London, Tokyo, or Berlin, but it has allowed Starbucks to quickly and quietly establish itself as a globally accepted and competitive player in the market. There have been countless stories of popular American brands trying to cross over into international markets and failing quite spectacularly. Starbucks did its homework, found the weak spots in the implementation policies of other brands, and avoided making those same errors.

Their initial approach to global success helped them establish themselves and gain a foothold in dozens of markets, but Starbucks is not nearly as dominant in the rest of the world as it is in America. Therefore, a new strategy has developed in recent years. Selling coffee is Starbucks’ proverbial bread and butter in most markets, but for certain massive international markets, coffee simply isn’t king. China, with its population of over 1.3 billion people, largely prefer tea to coffee, and Starbucks isn’t about to give up on a potential customer base 4x larger than the United States simply because of their reputation as a coffee company. The company now has approximately 4,000 stores in the Asian- Pacific region, including more than 1,000 locations in mainland China, and it is likely to become the second-largestmarket in the company by the end of 2014.

Starbucks purchase Teavana, an American specialty tea company, in the final hours of 2012 for a cool $620 million dollars, which was the first major step towards cutting into the $90 billion global tea market. Starbucks wants to mimic its coffee shop style in tea-drinking countries by becoming the international teahouse of choice. Although tea is sold in every Starbucks location, there will be a much stronger emphasis on Starbucks as ahigh-quality, artisanal tea distributor in primarily tea- drinking countries. Also, by offering certain locations in China as coffee shops and others as teahouses, Starbucks will begin winning over that massive market from two key angles.

By maintaining a local, customized feel in every store, in addition to considering cultural and societal preferences in their international locations, Starbucks has become one of the most popular, adaptive, and respected retail brands on the planet.

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