A focus on China and on increasing store openings in the country has been part of the Starbucks strategy since the company felt the negative impact of recession. Prior to 2008, Starbucks had been growing rapidly in terms of store openings, revenues, and operating profit. However, this all changed as the recession hit and the company struggled to cope. As many countries around the globe fell into recession, the impact on Starbucks was strongly felt. This led to a shift in resources to growth in international markets. It was felt that greater profits would come from outside of North America, and in less mature markets. The particular area of interest for the company was China.
At the end of 2012, there were over 17,000 Starbucks stores in operation in 64 countries around the world. However, research carried out by the company indicated that Starbucks was accountable for only a small share of overall global consumer coffee occasions. The company concluded that Starbucks was significantly under-stored in numerous markets, including the company’s fastest growing international market, China. As such, further aggressive growth was planned in this market.
Looking at the returns Starbucks is reaping from its stores in China, it is unsurprising that this is market is being targeted for aggressive growth. In Q3 of FY2016, the company saw a 7% rise in like-for-like sales, compared to 4% in the US and 4% overall globally. On the back of these results, the decision was made to grow the number of stores in the country by around 2,200 stores over the next five years. The company’s success in the country is no more evident than in statements by Starbucks CEO in January 2016, in which plans for China to become the company’s largest retail market by 2019 were outlined.