American coffee group Starbucks Corp. has opened on Wednesday its new facility in Shanghai, marking as its largest café in the world, the company believes that China will become its biggest market within a decade.
Starbucks’ founder and Chairman Howard Schultz stated that it was clear to them that the holding power of China is going to be much more significant than the US’, adding that with the growing middle class and opportunities in the country, the market will be much larger there.
The Seattle-based roaster is taking the lead in China and is growing fast in the market. China’s market is also becoming vital for Starbucks.
In its most recent quarter, Starbucks’ same-store sales climbed 8 percent in China, compared with a 2 percent gain worldwide.
Revenue from the Asia-Pacific region represented 15 percent of its revenue for the fiscal year ended October, way far ahead the 5.5 percent in the past five years.
Moreover, the coffee giant had a 54.8 percent share of the country’s CN¥25.2 billion ($3.81 billion) in the previous year which was more than its rivals, including Mcdonald’s Corp., McCafe and Whitbread Plc, as well as Costa Coffee.
Starbucks’ Expansion Goals in China
Starbucks, who announced that it is opening one outlet every 15 hours in China, is aiming to establish 10,000 outlets in the country within a decade, in an effort to catch up with the US in terms of stores.
The company already has more than 3,000 coffeehouse chains in the country and is looking to add 2,000 more stores in mainland China by 2021.
Additionally, Starbucks has announced in July its plans to acquire the remaining 50 percent of the business of its joint venture partner in East China for $1.3 billion, giving it ownership of about 1,300 cafés in Shanghai as well as the Jiangsu and Zhejiang provinces.
Shanghai alone has about 6,500 cafés, with small stores, independent chains, and bakeries vying for a piece of its market that is expected to grow from this year’s CN¥60 billion ($9.1 billlion) to CN¥79 billion ($12 billon) by 2022.
Starbucks Plans Mobile-Ordering and Delivery Service in China
Starbucks’ chief executive Kevin Johnson said that the company is also aiming to offer mobile ordering and delivery of beverages as well as store goods in China, as it explores a variety of options for delivery.
Johnson stated the mobile-ordering service is the next frontier for them, noting that the innovation in the country is accelerating and will be broader than anything they have ever seen in other parts of worlds. Johnson did not specify when the service might begin.
This plan would also make the coffee group the latest business to offer delivery service in a country where nearly everything can be bought online and delivered the same day.
Schultz stated that the roaster could collaborate with China’s online retailer Alibaba Group Holding Ltd. on projects beyond mobile payment services.
Customers in the country can pay for Starbucks purchases using a mobile payment platform provided by Alibaba’s affiliate Alipay, which the coffee group started accepting in September.
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