retail news in context, analysis with attitude

CNBC reports this morning that Starbucks plans to open 12,000 new stores over the next five years, with half of them in the US and China, which would bring it to a total of 37,000 stores globally.

The company also said that it is possible that China eventually could be a bigger market for the company than the US, and outgoing CEO Howard Schultz reiterated a point he has made before: ""These are the early days of the growth and development of the company. If Starbucks was a 20-chapter book, I still think we're in chapter 4 or 5."

The comments came at an investors conference, where executives "highlighted how the company is focusing on both its flagship Starbucks stores and the higher-end Reserve Roastery and Tasting Room outlets for future growth. The company also has targeted the Reserve Roastery stores, which will sell premium coffee at around $10 a cup, to represent about one-fifth of total outlets by 2021.

"Also, Starbucks plans to open new stand-alone outlets under Princi, a high-end Italian bakery the company invested in over the summer. The bakery will serve pizza and have locations in major markets such as New York, Seattle and Chicago by 2018. Moreover, Princi food is expected to be offered at all of the company's new Roastery locations."
KC's View:
Y'know how some times you get an uneasy feeling about a company?

It happened last night at an Apple Store, when Mrs. Content Guy and I wandered in to look at the next MacBook Pro. The store was pretty much empty, with a lot more employees there than customers. And yet, during the 10 minutes or so we were there, not one person came over to ask if they could help us. Not one. Now, I'm a big Mac guy, and this experience didn't change anything. But it gave me a vague feeling that things were not quite right.

I feel the same way right now about Starbucks.

I am just not persuaded that the move into more expensive coffee and coffee shops is the way that the company can best sustain itself. It is an interesting experiment, and I'm a huge fan of the Roastery experience in Seattle. But this move depends, I think, on continued economic growth that may or may not happen. Last time we had a recession, Starbucks had trouble selling $4 lattes; what happens to the Reserve Roastery stores if there is a recession, and they find themselves trying to sell premium coffee at around $10 a cup in a fleet that represents one-fifth of total outlets by 2021.

If that happens, the company could find itself in big trouble. Schultz's reputation could take a hit ... unless, of course, he is once again able to blame somebody else for the problems. Which he'll try to do.

I have a vague feeling that things are not quite right.