market news

Starbucks opens 3,000 stores in China despite sales dip, COVID lockdowns

Starbucks opens 3,000 stores in China despite sales dip, COVID lockdowns
Starbucks opens 3,000 stores in China despite sales dip, COVID lockdowns

Starbucks Corp. aims to raise the number of stores in China by 50% over the next three years, demonstrating confidence in its largest market outside of the United States, despite Covid-19 lockdowns and decreased consumer spending that has hurt its sales.

To everyone’s surprise, Starbucks executives presented a comprehensive overhaul at an investor presentation where they established a goal of 9,000 China stores by 2025. By the end of this year, the corporation had previously stated that it would run 6,000 outlets in China.

The business added that it anticipates same-store sales in China to roughly treble over the following three years, recovering from this year's decline by seeing outsized growth beginning in 2023.

Although it has been a difficult year for businesses that cater to consumers, the company is optimistic about the Chinese market. In contrast to a 3% increase in same-store sales globally, the Seattle-based retailer said last month that same-store sales in China decreased 44% during the quarter ended July 3 from a year earlier. The decrease was a sharper decline than the company's prior quarter's 23% decline in same-store China sales.

Interim CEO Howard Schultz stated that coffee is developing as the beverage of choice for younger customers in China, and the company is positioned to gain a share. They're making investments today for the country's long-term growth prospects.

Additionally, Starbucks stated that there is still room for expansion in China's coffee market, as it is still at the inception stage. According to Mr. Schultz, the average Chinese consumer now consumes 10 to 12 cups of coffee a year, up from less than three cups in 2014.

However, the danger of ongoing and recurring Covid lockdowns continues to hurt China's economy, and foreign corporations have taken a disproportionately large financial hit.

Some Chinese customers claim they have reduced their spending on some unnecessary things as a result of the lockdowns, which have harmed expenditure on anything from coffee to sneakers.

Source Credit: https://www.wsj.com/articles/starbucks-plans-3-000-new-china-stores-despite-sinking-sales-from-covid-policies-11663148638?mod=business_lead_pos6

About the author

Aakriti Rao

Aakriti Rao

Aakriti Rao has always had a flair to pen down crisp and quirky content. A qualified English Literature graduate, Aakriti’s forte lies in creating content for varied genres in an utmost interactive way. Presently, she works as a content developer and writes articles spanning the latest business trends, market research, and industry news for Cue Report.