Starbucks 'future depends on China to keep opening a store every 15 hours?

In the second quarter of fiscal 2017, the Chinese market became the main driver of Starbucks' growth. The Seattle-based coffee chain invited Starbucks China CEO to make an independent report in the middle of the night on a conference call after the results were released.

Starbucks reported that same-store sales in the global and US markets rose 3 per cent in the second quarter of fiscal 2017, below Wall Street analysts' expectations, but same-store sales in China rose 7 per cent.

"our business in China has never been so strong since we first entered the market 18 years ago." Said Kevin Johnson (Kevin Johnson), president and CEO of Starbucks. Wang Jingying, CEO of Starbucks in China, attributed the growth to beverage, food and digital innovation. "targeted brand investment is attracting new customers to the stores and bringing more existing customers to the store."

You may find some recent changes at Starbucks-the launch cycle of time-limited new products is shorter and more seasonal, such as the recent series of coconut-flavored drinks and cold-extracted coffee. In the first quarter of 2017, Starbucks also launched a new flavor of bottled Frappuccino "tailor-made for Chinese consumers" in China. Starbucks' second coffee roaster and Zhenxuan restaurant will also open in Shanghai and sell food exclusively supplied by the Italian high-end roaster Princi.

Meanwhile, Starbucks plugged into WeChat Pay's system at the end of 2016 and promoted its "using Star" service on Wechat platform in February this year. The latter is a program that gives Starbucks virtual e-coupons to friends and is also seen as a way to attract new customers to stores.

A program that can give Starbucks virtual e-coupons to friends-"say with stars".

These beautiful financial figures strengthen Starbucks' previously proposed expansion plan. It proposed last year to open 5000 stores in China by 2021, and by the end of 2016, Starbucks China had done half of its job and overtook Japan to become the overseas market with the largest number of Starbucks stores. According to Wang Jingying, Starbucks had 2628 stores in China in the second quarter of fiscal year 2017.

"We will continue to open a new store in China on average every 15 hours, and this rate of opening is likely to be maintained in the coming decades." Kevin Johnson has made no secret of Starbucks' ambitions to expand aggressively in China.

Starbucks' expansion plans are not without reason. According to Euromonitor International, a market research firm, the size of China's coffee market is 20 billion yuan, up from 1.1 billion yuan a decade ago. But there are plenty of competitors in this market, including coffee chains such as costa and independent boutique coffee, which are even more popular with young people.

Although Starbucks still maintains the position of the largest coffee chain in China by virtue of its first-mover advantage and scale advantage, preemptive layout and opening stores to more Chinese cities may be a prerequisite for it to maintain its market advantage. Starbucks opened stores in five new cities in the second quarter, and it is clear that it needs to enter more cities.

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