Taking a leaf out of the marketing and distribution manual of archrival Cafe Coffee Day, Tata Starbucks, the joint venture between Starbucks Coffee Company and Tata Global Beverages, is considering opening outlets in hospitals, educational institutions and corporate campuses to expand its retail footprint. People in the know say the joint venture may also set up outlets near gyms or health stores.
Since debuting in India in October 2012, the company has opened 15 Starbucks stores across Mumbai and Delhi. These outlets are a combination of standalone ones, including the 4,000-sq ft flagship cafe at Horniman Circle here, those located at malls, airports and metro stations (at Nehru Place in Delhi), and one at a commercial complex (India Bulls Financial Centre at Elphinstone in Mumbai).
Responding to a mail from Business Standard, a Tata Starbucks spokesperson said the company would focus on how to offer convenient locations to consumers. “We will look at what makes sense, where our customers work and where they live,” the spokesperson said, without sharing the details of the brand’s retail strategy.
The chain, which has about 17,000 stores globally, is not expected to compromise on its brand promise, even as it targets new retail formats, say people in the know. “Initially, they will avoid hypermarkets, as this would impact the positioning of the brand,” aid an executive with direct knowledge of the company’s plans said. Presence inside Tata retail stores and properties would depend on the brand’s premium positioning.
Experts say the move to broad-base the company’s retail presence is partly linked to Starbucks’ endeavour to quickly scale up operations in a market pegged at about Rs 1,000 crore and growing at about 30 per cent a year. Saloni Nangia, president at Gurgaon-based retail consultancy Technopak Advisors, says currently, the top 40 cities in India have about 1,700 cafes. “These cities can accommodate another 2,000 cafes in the next few years,” she says.
“India has been adding around 200 cafes a year for the last five years…If this pace of growth is maintained, 2,000 more cafes would see the light of day,” she says, adding given all players have plans to expand operations, there is no reason why this target cannot be achieved.
Bangalore-headquartered Cafe Coffee Day, the largest coffee chain in India (about 1,200 outlets), proposes to add 1,000 stores by 2014, raising its store count to about 2,000. Lavazza, owners of Barista, which has 154 outlets in India, proposes to turn aggressive with its flagship format Expression. Dunkin’ Donuts, Starbucks’ archrival in the US, has already set up 10 stores in the Delhi National Capital Region. Recently, it marked its foray into Chandigarh.
Those in the know say given the competitive landscape, Starbucks is expected to not only target new retail formats, but also quickly roll-out operations in cities such as Bangalore and Chennai. The Tata Starbucks spokesperson confirmed Bangalore was part of the company’s growth plans. “We are focused on disciplined growth and are confident in our ability to build and grow the Starbucks brand here. We will continue to work thoughtfully to open stores quickly to ensure we exceed the expectations of our customers and build strong presence in the market,” the spokesperson said.