ASSIGNMENT: PRINCIPLES

OF RETAILING

SUBMITTED BY:
MOSHABA DEBANA
(MBA 2)

SUBMITTED TO:
PROF. TEJAS JOSHI
 Starbucks Corporation is an American coffee company and
coffeehouse chain. Starbucks was founded in Seattle,
Washington, in 1971. As of early 2019, the company operates
over 30,000 locations worldwide.
Starbucks has been described as the main representative of "second wave coffee," a
retrospectively termed movement that popularized artisanal coffee, particularly darkly
roasted coffee. Since the 2000s, third wave coffee makers have targeted quality-minded
coffee drinkers with hand-made coffee based on lighter roasts, while Starbucks nowadays
uses automated espresso machines for efficiency and safety reasons.
Starbucks locations serve hot and cold drinks, whole-bean coffee, microground instant
coffee known as VIA, espresso, caffe latte, full- and
loose-leaf teas including Teavana tea products, Evolution Fresh
juices, Frappuccino beverages, La Boulange pastries, and snacks including items such as chips
and crackers; some offerings (including their annual fall launch of the Pumpkin Spice Latte) are
seasonal or specific to the locality of the store. Many stores sell
pre-packaged food items, hot and cold sandwiches, and drinkware including mugs and
tumblers; select "Starbucks Evenings" locations offer beer, wine, and
appetizers. Starbucks-brand coffee, ice cream, and bottled cold coffee drinks are also sold at
grocery stores.
On December 1, 2016, Howard Schultz announced he would resign as CEO effective April 2017
and would be replaced by Kevin Johnson. Johnson assumed the role of CEO on April 3, 2017,
and Howard Schultz retired to become Chairman Emeritus effective June 26, 2018.
Process and Capacity Design. Process and capacity efficiency is one of the contributors to
Starbucks success. The companys processes are highly efficient, as observable in its cafés.
Also, Starbucks optimizes capacity and capacity utilization by designing processes to meet
fluctuations in demand. For example, processes at the firms cafés are flexible to adjust
personnel to a sudden increase in demand during peak hours. In this decision area of
operations management, Starbucks aims to maximize
cost-effectiveness though efficiency of workflows and processes.

Location Strategy.

Demographics:

Starbucks location strategy focuses on urban centers, especially those with large
middle and upper-class populations.

Geographics:

Most of its cafés are in densely populated areas. Also, Starbucks occasionally uses strategic
clustering of cafés in the same geographic area to gain market share and drive competitors
away. This decision area of operations management shows that Starbucks emphasizes areas
with affluent consumers who could afford its premium priced products.

Layout Design and Strategy. The layout design of Starbucks cafés maximizes workflow
efficiency. It also supports a warm and friendly ambiance to match the companys
organizational culture. This layout strategy does not maximize space utilization for tables
and seats because Starbucks focus is on premium customer experience, which involves
higher prices for more leg space in the cafés. In this decision area of operations
management, Starbucks prioritizes customer experience over space utilization.

DETERMINING OPTIMAL RETAIL LOCATION:

Starbucks global market planning manager Patrick OHagan told that Starbucks uses an in-
house mapping and business intelligence platform called Atlas to determine where to open
new locations. Atlas is used worldwide; for opening new branches in China for instance,
OHagans team uses the platform to have local partners evaluate nearby retail clusters, public
transportation stops, and neighborhood demographics.
In an example he showed in Nanjing, Starbucks local representative used the platform to
find a store location which had high potential foot traffic from several office buildings
under construction—and then created a workflow which handled the permit and legal
process for the new Starbuckss opening.

This location data can also be used for unorthodox purposes. As Starbuckss data-
centric approach is good for more than just real estate purposes. They use
demographic information regarding the number of local smartphone owners to
determine which parts of southern states to target app-based discounts into.

In Memphis, Starbucks used added weather overlays to predict when a heat wave would strike,
and then timed a local Frappucino promotion to coincide with it. And for Starbucks ongoing
effort to add beer and wine to store menus, they use Atlas to find locations with two criteria:
high local spending patterns and a large number of wine away from home drinkers.

For chains, using GIS and other data-centric services follows simple logic: It helps the
company save money, and prevents them from losing money by opening branches that will
just underperform later.

John Crouse, the director of Wendys real estate services, told Co. Labs that because the fast
food industry traditionally hasnt used loyalty programs or branded credit cards, its been
harder for fast food restaurants to obtain demographic information than other hospitality or
retail sectors. But at Wendys, for example, Crouse and his coworkers use GIS platforms to
help break down which blocks in an urban downtown will have high foot traffic and similar
factors.