Big Shot

What a difference five years makes. In 2008, Starbucks Coffee Co. (Seattle) braced for a perfect storm of challenges: a crashing U.S. economy, sluggish revenues and a backlash from its core base of young, urban consumers disillusioned by its cookie cutter stores and steamroller development. It was in retreat mode, shutting down stores and laying off scores of workers.

Fast forward to 2013: The java giant is back on track with a strong balance sheet, aggressive international and domestic expansion, a commitment to localization and community engagement, and bold acquisition of complementary brands.

Market leadership, ongoing innovation and a commitment to customer-focused practices are why we’ve named Starbucks the VMSD/Peter Glen Retailer of the Year. Today, with more than 18,000 stores in 62 countries, Starbucks is the world’s largest coffee chain. In 2012, global revenues reached a record $13.3 billion, a 14 percent increase over the previous year, reports the company, with revenue growth driven by a 7 percent rise in global comparable store sales.

Over the next five years, the innovator that created a new retail/foodservice category plans to open 3000 new stores in the Americas, with more than half of those locations in the U.S. Globally, it has its sights set on Asia, with more than 4000 stores slated to open by year-end. Last fall, it opened its first store in India, in a 50/50 joint venture with Tata Global Beverages (Kolkata, India). Espresso sourced from India will be a hallmark feature of all Starbucks stores in the market.

The company will also leverage recent acquisitions of La Boulange bakery chain and the Evolution Fresh juice line, driving customer traffic throughout the day by making these products available in many U.S. company-operated stores. And it doesn’t stop there: Starbucks has growing interest in the $40 billion global tea market, starting with its recent purchase of the Teavana tea chain with its 300 mall-based stores.

BUILDING COMMUNITY

Starbucks’ president and ceo Howard Schultz has bolstered the brand and reenergized its legion of employees (or “partners” in Starbucks speak). Building on the tagline of  “inspiring and nurturing the human spirit one person, one cup and one neighborhood a time,” the company has charged its leadership team with redefining Starbucks as a lifestyle brand and creating a sense of community at the store level.

Key to this localization is designing stores to reflect their surroundings while preserving brand identity. The mantra going forward is “local relevance and a commitment to sustainability,” says Bill Sleeth, vp, design, regional North America, Starbucks. Five years ago, the company’s designs all originated from a single Seattle office; today, 300 designers work out of 18 studios worldwide. “We don’t want the same store feeling in Seattle as in Shanghai or São Paolo or Miami,” Sleeth says.

“We believe that innovation is going to come from the field, and by creating these global studios, we’re enabling that,” Sleeth adds.

Already, the company is preparing to renovate thousands of existing stores with the continued goal of building to LEED standards. (In 2012, it reported 116 LEED-certified stores in 12 countries.) In the next two years, Starbucks plans to install energy management systems and hybrid water heaters to heat its water and cool its stores. In addition to reducing energy and water consumption, the company incorporates reused and recycled materials wherever possible.

“Our customers have high expectations for our sustainable practices,” Sleeth says. “It’s a big, giant, audacious goal and it’s not something we can deliver overnight, but it’s the path we’re on and it drives everything we do.”