Starbucks in Australia: Challenges and Strategies
Global Presence
- Starbucks has over 28,000 locations in 76 markets worldwide.
- Rapid expansion noted, especially in China with a new location every 15 hours.
Struggles in Australia
- Australia remains a tough market for Starbucks.
- In 2008, Starbucks closed over two-thirds of its stores in Australia.
Initial Expansion in Australia
- First Australian store opened in Sydney in July 2000.
- By 2008, 87 stores were established.
- The rapid expansion strategy led to consumer disinterest.
Reasons for Failure
- Rapid Expansion: Failed to integrate slowly into the Australian market.
- Market Saturation: Too many stores, reducing uniqueness.
- Cultural Misalignment: Starbucks' American coffee culture didn’t fit with Australian cafe culture.
- Financial Losses: Accumulated $105 million in losses by 2007.
- High Pricing: Higher prices compared to local cafes.
- Menu Mismatch: Lack of adaptation to local tastes and preferences.
Comparison with Gloria Jean’s
- Gloria Jean's, another American coffee company, succeeded in Australia.
- Success attributed to localized franchising and menu adaptation.
- Over 400 locations in Australia serving 35 million consumers annually.
Future Strategies
- Italian Expansion: Entering Italy with a respectful approach to local culture.
- Australian Comeback: Re-entry strategy involves appealing to tourists rather than locals.
- Tourism Focus: Targeting American and Chinese tourists in major cities like Brisbane, Melbourne, Gold Coast, and Sydney.
- Partnership with Withers Group: Acquired Australian operations, aiming for a more strategic growth.
Market Potential
- Australia is a significant tourist destination.
- Benefits from a high influx of international students and tourists.
- Potential to capture tourist market could prevent another failure.
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