Starbucks has more than 28,000 stores around the world, and increasingly each one looks and operates different than the last.
In Seattle and Shanghai are its high-end Reserve Roasteries — with more locations to come in New York, Chicago, Milan and Tokyo — where Starbucks aims to create an immersive, sit-down experience with premium coffee and food. On the other end of the spectrum are a couple of speed-oriented concepts introduced in New York City in recent years: an Express store on Wall Street focused on moving people in and out as fast as possible and a location in the Empire State Building that only uses Mobile Order and Pay.
“Here, I am trying to slow it down into slow motion, and here we are trying to speed it up into time lapse,” Natarajan “Venkat” Venkatakrishnan, vice president of global equipment at Starbucks, said during a session of the Future Stores retail conference focused on the coffee giant. “We exist in both worlds, time lapse and slow motion.
This is the balance Starbucks has to strike in today’s retail environment. Customer priorities are all over the map and changing every day. For some, speed is a top priority, for others it’s all about service and experience and some value the quality of food and beverage most. Starbucks aspires to meet all these priorities through an increasing number of store formats and technological innovations.
As Starbucks continues to experiment with new formats, it is also closing stores where things aren’t going as well. The company is closing 150 stores in the 2019 fiscal year, up from a historical average of 50. Comparable sales growth at existing stores, a key metric for the company, is expected to grow only 1 percent this quarter, a figure CEO Kevin Johnson called unacceptable.
Technology underpins much of Starbucks’ evolution in recent years. Starbucks executives speaking at the conference said Mobile Order and Pay, which accounted for 12 percent of all U.S. transactions in the most recent quarter, has been more popular than the company ever imagined. Starbucks has in recent years added even more digital features, including new ways to order drinks through digital assistants like Amazon’s Alexa and the Google Assistant and the ability to give digital gifts.
Min Cho, vice president of Concept Studio, global store design and development for Starbucks, said the company has a vocal fan base, and many of its innovations come from watching how customers use its offerings. Cho called out a trend of more people using mobile ordering directly from their table to get a second cup of coffee. So Starbucks is working on smoothing out that experience for the customer.
Starbucks is experimenting with augmented reality in its Shanghai Roastery. Users can open up an app and point their phones at a specific product or section of the store and get a backstory. This is a piece of Starbucks’ larger plan to give customers a “bean-to-cup experience.”
“That is part of our attempt at getting people to understand what the brand is all about as opposed to just consuming it,” said Todd Shaver, vice president of retail infrastructure for Starbucks.
The Starbucks executives played it cool when asked about new things they’re working on. But each identified an important theme. Shaver pointed out how connected everything has become. Between customer smartphones and in-store tech, opportunities abound for Starbucks to connect with customers digitally, and the company is just getting started.
Cho’s big takeaway was how quickly some of the company’s initiatives are developing. Starbucks likes to test a new concept in just a couple stores, and then expand it rapidly on a huge scale. One recent example came in 2016, when Starbucks added nitro cold-brew coffee at just a few locations before embarking on expansion.
For Venkatakrishnan, customization is king. The same way the company tailors stores to fit the surrounding areas and customer bases, Venkatakrishnan wants to see Starbucks offer more options for customers to get detailed personalized orders, such as deciding exactly how much sugar should be in a drink, without sacrificing speed.
“How can I custom make something for you based on your preferences and do it with speed, so that you’re not sitting in the drive thru for 10 minutes; you get your order in a minute and a half,” he said.