 "Starbucks steps up its India game")
On Valentine's Day, Starbucks, the world's largest coffee chain, will invite 50 couples in Delhi, Mumbai and Bengaluru for a date. The event, organised in association with dating app TrulyMadly, is being hyped as an evening of fun and entertainment.
Starbucks, predictably, along with its partner, is doing everything it can to ensure the event is a success. It is pushing the initiative on digital media, canvassing about it in stores and raising noise levels across platforms.
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On the face it, the exercise may seem like any other marketing effort, but, there is a backstory to it. This is Starbucks's first marketing tie-up in the country, and has come a good three-and-a-half years after it first stepped into the market with the Tata group.
Tata Starbucks Chief Marketing Officer Manmeet Vohra says the company was looking at ways to extend the promise of "creating special moments", a programme it has been running for the last year -and-a-half, to drive footfalls. "The first leg was a campaign called 'Meet me at Starbucks'. An extension of this is 'Meet me for Love', which we are now unveiling with this association (with TrulyMadly)," Vohra says.
The delay in stitching together such marketing associations, which is common in food and beverage retail, is not lost on the company and industry observers. That the coffee chain has finally come around to doing it points to one thing: the changing market dynamics and the need to respond to it quickly.
Traditionally, Starbucks has positioned itself as the third place, after home and work, where one can relax, have fun and coffee. This has served it well. The chain claims it processes 85 million transactions every week the world over and that this number is growing.
In fact, for the crucial 2015 holiday season (which is the last quarter of the year) Starbucks was the only global retailer to report double-digit revenue growth in an otherwise bleak market. It grew 12 per cent, resulting in a record $5.4 billion in topline for the coffee chain.
The fourth place
To this third-place strategy, Starbucks is now adding one more dimension: digital.
By digital, the implication here is not only about reaching out to a "digitally-savvy audience", but also about creating a place that is "digitally-equipped" with a robust mobile and online delivery system. Starbucks calls it the fourth place.
Experts say it is this fourth-place strategy that is expected to help get the coffee chain's cash registers ringing in the future.
Howard Schultz, Starbucks's global chairman & chief executive, said on his recent trip to India, "We will bring our learning in digital and mobile this summer into India, which will be a game changer in the business."
The plan, say industry sources, is to introduce online and mobile ordering, making it convenient for consumers to order from anywhere. Customers can then pick up the stuff at store counters without a hitch.
Globally, the mobile order and pay option was introduced recently by Starbucks with its app, implying that India getting to see these developments fairly quickly highlights the importance of the market in the retailer's scheme of things.
While global fast-food giants such as Domino's and McDonald's have already put online food ordering in place a few years ago in India, for Starbucks the delay was partly linked to its smaller footprint here: it has close to 80 stores in six Indian cities. The plan is to touch 100 stores in 2016, according to market sources, making online and mobile ordering a more viable option.
But the convenience apart, the move, say experts, is also linked to Starbucks's need to tap a younger audience more aggressively.
With a 65 per cent under-35 population, Schultz, who is driving this strategy from the top, is aware how crucial India is to achieve what he is setting out to do globally - a sharper segmentation of his audience.
Counting on millennials
Digital, say experts, is nothing but a means towards this end, owing to its early adoption by youngsters. Some of them are born into the medium, transacting as well as interacting only there, implying that they have to be reached out to.
The ultimate objective, according to sector analysts, is to help drive up Starbucks's sales in emerging markets, where the proportion of younger people is greater than in the developed world.
For some time now, Schultz, say experts, has been attempting to de-risk Starbucks's core business model by foraying into areas beyond retail (such as consumer products) and into territories beyond the US.
It already has 16,000 stores outside the US, representing 70 per cent of its 23,000-store worldwide footprint. Of these, China-Asia-Pacific holds the most promise for Starbucks, emerging the fastest-growing for the retailer in recent years. India is included in this group.
Schultz underscored the importance of India and China on his recent visit here. "I look at India with great optimism. There are lots of people around the world who for the last few years have compared the race between India and China, I don't see it that way. Both the markets are critical for us," he said.
China is already Starbucks's second-largest market after the US with 2,000 stores. And like India, the coffee chain proposes to increase store count rapidly in China, taking it to 3,400 by 2019. Digital and e-commerce are next frontiers where Starbucks will make significant investments in China, Schultz said just before hopping over to India last month, implying it knows where it wants to go in two of the world's key consumer markets.
