Why Starbucks Succeeds Internationally
July 5th, 2024
If you have had the opportunity to travel internationally and visit a Starbucks, you may have noticed the stark contrasts between those locations and their US counterparts. I initially encountered these differences during a brief stopover at Singapore Changi Airport. While stopping in for a quick snack, I was greeted by unique menu items such as matcha cheesecake and specialty cookies, which sparked my excitement due to their novelty compared to the standard offerings at Starbucks in the US.
While the experience of a completely different Starbucks was novel to me, that's been their goal from the beginning (Kaur, 2023).
By now, almost everyone knows of the Starbucks brand, but it didn't start this way. Founded in 1971 as a seller of high-quality beans, the company's trajectory changed completely after Howard Schultz took over and visited Italian coffeehouses (Our Company). He realized that selling coffee drinks in a cafe style would be more appealing to their consumers (Our Company).
This one change led to the company's exponential growth, making it the $106 billion company it is today (Starbucks NASDAQ). Interestingly, by 1987, the company had earned enough to open its first international store in Vancouver, Canada (Our First International Store).
Localization is a key reason for Starbucks's success during its expansions (Kaur, 2023). The concept of localization involves tailoring a product or service to align with the local culture (Sheldon, 2023). Recognizing the significance of adapting its offerings to cater to local preferences, Starbucks aimed to enhance its international success (Kaur, 2023). This strategic approach has not only boosted Starbucks' global standing but also positioned numerous Starbucks outlets as integral coffee destinations within their respective communities.
Through a commitment to localization, Starbucks places a strong emphasis on extensive market research before entering a new market (Day Translations, 2023). To further integrate into local communities, the company actively seeks partnerships with indigenous coffee companies to source local food and coffee, as well as collaborate with local construction firms for the authentic design of coffee shops in each specific region (Day Translations, 2023).
A prime example of this approach is evident in Japan, where Starbucks engaged local designers to create stores that pay homage to the surrounding culture. The Fukuoka store, for instance, utilized 2,000 wooden blocks to evoke a forest ambiance, drawing inspiration from Shintoism, the prevalent religion in the area (Day Translations, 2023). Moreover, the Starbucks menu in Japan strategically emphasizes matcha over other drinks, aligning with the cultural palate (Day Translations, 2023).
In China, Starbucks tailored its stores to accommodate the local preference for large-group gatherings, with a focus on spacious layouts featuring sizable tables (Day Translations, 2023). These examples underscore Starbucks' deliberate efforts to assimilate into the broader community, thereby enhancing the perceived value of their stores among local consumers. Similarly, in India, the company introduced a range of vegetarian-only options and implemented a competitive pricing strategy to contend with local brands, showcasing their adaptability to the unique demands of the Indian market (Siddhartha, 2023).
Starbucks's global success is not just a result of serving coffee but a testament to its localization approach.
Always busy,
Sam
Works Cited:
Day Translations. (2019, January 17). How Starbucks Adapts to Other Cultures. Day Translations blog. https://www.daytranslations.com/blog/how-starbucks-expands-abroad/#:~:text=Its%20localization%20strategy%20is%20a,to%20reflect%20the%20local%20market.
Eshghi, A. (1985, January 1). Assessing consumer behavior differences in a cross-cultural context: A historical perspective: ACR. ACR Special Volumes. https://www.acrwebsite.org/volumes/12127/volumes/sv05/SV-05#:~:text=Illinois%20State%20University-,Four%20cross%2Dcultural%20consumer%20behavior%20constructs%2C%20namely%20individual%20modernity%2C,for%20future%20research%20are%20cited.
Kaur, M. M. (2023, October 9). How Starbucks conquered the world through expansion, localization, & Brand Building Success?. Medium. https://medium.com/@mausammkaur/how-starbucks-conquered-the-world-through-expansion-localization-brand-building-success-46acca1b074b
Sheldon, R. (2023, December). Localization. TechTarget. https://www.techtarget.com/searchcio/definition/localization
Siddhartha, S. (2023b, May 29). From Seattle to Global Success: How Starbucks Mastered International Expansion. LinkedIn. https://www.linkedin.com/pulse/from-seattle-global-success-how-starbucks-mastered-sashya-siddhartha/
Starbucks (n.d). Our Company. Starbucks. https://www.starbucks.com/about-us/
Starbucks (n.d., b). Our First International Store. Starbucks. https://archive.starbucks.com/record/our-first-international-store
Yahoo! (2024, January 30). Starbucks Corporation (SBUX) stock price, news, Quote & History. Yahoo! Finance. https://finance.yahoo.com/quote/SBUX?p=SBUX
