Starbucks to nearly double store count, triple revenue in China
Starbucks Corp. is accelerating the pace of expansion in one of its most important — and fastest-growing — markets.
The coffee giant announced plans to build 3,000 stores — 600 net new stores annually — during the next five years in Mainland China, which will double the market’s store count from its current 3,300 locations. Starbucks said it expects to more than triple revenue and more than double operating income in China by the end of fiscal year 2022 from fiscal year 2017.
“The power of our brand in China, the strength and momentum in our business, and the world-class Chinese leadership team give me great confidence in our ability to capture the enormous growth opportunities ahead in this dynamic market,” said Kevin Johnson, Starbucks president and CEO. “No Western company or brand is better positioned to evolve with the rapidly expanding Chinese middle class – and we continue to mindfully evolve a coffee culture in China where the reward will be healthy, long-term, profitable growth for decades to come. We are committed to long-term investment in China.”
Starbucks’ said its newest class of stores in China are delivering the highest average unit volumes, return on investment and profitability of any of the market’s prior store classes in its history. The company operates approximately 3,300 stores in 141 cities in China, with a new store opening every 15 hours.
In June, the company will open its newest multi-level flagship format, in the Beijing Fun shopping area. It will be Starbucks’ largest store globally (aside from its Roasteries concept).
Ikea’s newest solar accomplishment
Ikea continues to expand its U.S. footprint — and solar capabilities.
The home furnishings giant has opened a 290,000-sq.-ft. store in Oak Creek, Wisconsin. It is the company’s first store in the state and also boasts one of the largest rooftop solar arrays in the state.
The new solar array consists of a 1.63 MW system and is built with 4,716 panels. It will produce approximately 2,046,000 kWh of electricity annually for the store, which is equivalent to reducing 1,678 tons of carbon dioxide (CO2), the emissions of 326 cars or providing electricity for 228 homes yearly. The installation is the retailer’s 52nd solar project in the United States, giving it a solar presence atop 90% of its U.S. locations, with a total generation of more than 42 MW.
Ikea operates 416 stores in 49 countries, including 48 in the United States.
This category accounted for the most global retail activity in 2017…
It’s not just your imagination. Coffee shops are popping up everywhere.
The coffee and restaurant category accounted for 25% of overall global retail expansion in 2017, up from 16% in 2016, according to a new report from CBRE. The growth of the category has been driven by the evolution of consumer shopping habits that are increasingly blurring the lines between retail and leisure, the report noted. Food and beverage retailers are taking advantage of the shift, positioning themselves as destination-worthy venues in the overall retail landscape.
The “How Global is the Business of Retail” report analyzed 47 countries and 123 cities globally to gauge the pulse of the overall global retail landscape and identify the sectors and markets that that came out on top 2017. It found that while retail continues to grow, it is doing so at a slower pace.
“Through our analysis of 334 global retailers, we found that expansion activity increased only marginally by 0.4% year-over-year,” CBRE stated. “This can, in large part, be attributed to economic shifts and new technologies, resulting in caution amongst retailer to not over-expand. These changes are forcing retailers to rethink their portfolios, prioritizing omnichannel strategies that connect front-end brick-and-mortar with back-end distribution with technology at the core. However, research found that retailers see the physical store footprint as fundamental to their overall growth strategies.”
In other report highlights:
• Dubai tops the ranks for international retailer penetration with 62% of retailers surveyed having a presence in the city. Dubai is set to see retail space increase by 50% during the next three years.
• Hong Kong, the United Arab Emirates and the United Kingdom took the top three spots in 2017 with the most new retail entrants.
• New York was the top U.S. destination for global brands in 2017, followed by Miami, Philadelphia, San Francisco and San Diego. London is retailers’ favorite city in Europe for international expansion.
• New entrant activity has been largely focused on Europe and Asia, primarily driven by home-grown brands who are capitalizing on opportunities within their own region. Overall expansion into Asia increased by 8% last year, largely due to increased focus on Asia by retailers from the Americas.
For the full CBRE report, click here.