Starbucks announces expansion plans in Europe, Middle East and Africa

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Starbucks is drawing up an expansion strategy in the Europe, Middle East and Africa region as it intends to increase the number of operating stores from 700 to 1,000 over the next three to five years.

Michelle Gass, the president of Starbucks Europe, Middle East and Africa (EMEA), will be gathering 350 senior managers in Amsterdam this week as part of the plans to announce the Starbucks Renaissance plan. Gass was brought to London from the US last autumn to oversee the growth. She said her aim is to popularise Starbucks in Europe as it is in Manhattan.

Gass has been instrumental in Starbucks’ European expansion and under her stewardship the coffee chain opened its first outlets in Norway and Sweden and rapidly expanding in France and Germany as well as in the Middle East and North Africa.

The Seattle-based company said it is considering to open new outlets in service stations, drive-throughs and concessions in airports, railway and bus stations and hotel lobbies. Starbucks has already opened an outlet in the lobby of the Novotel in Paris and will look at expanding its food operation.

The expansion drive is expected to create 5,000 jobs across the UK alone. The company has hired British designers and fabrics for re-designing the cafes in order to get the local feel.

Thom Breslin, Starbucks director of design in the UK, said that although the new cafes would still retain the identity of Starbucks, they would also use local touches to give an additional flavour of the region.

Starbucks had its first store in the Europe, Middle East and Asia region in the UK in 1998. Since then, the retail chain has grown in the region over the years and at present offers the unique ‘Starbucks Experience’ to customers in 29 countries throughout continental Europe, the UK, Ireland and the Middle East.

TATA STARBUCKS

Recently, Starbucks joined hands with the Tata Group to set up shops across India. The joint venture will set up around 50 stores this year with the first one likely to open in the second half of the year. Tata Starbucks Ltd., an equal joint venture, will own and operate Starbucks cafes which will be branded as Starbucks Coffee ‘A Tata Alliance.’

However, investors are skeptical about the outcome of the expansion plans of the company. Earlier, the company had resorted to aggressive expansion which resulted in 12,000 layoffs and closure of 600 Starbucks shops in the US in 2008, followed by 300 more store closures and 7,000 layoffs a year later.

The coffee chain had been underperforming in Europe compared with United States as sales from cafes open at least 13 months were up just 2% in EMEA compared with 9% in North America.

The recent expansion plans may be an effort to strengthen its position in Europe. The coffee chain has reported to extend its global partnership with Autogrill Group to develop new business in Europe. Autogrill and Starbucks started their co-operation in the United States in 1991. As per the new agreement, Autogrill will introduce Starbucks at its points of sale in French railway stations, Marseille Airport and on Dutch motorways. In the coming days, the partnership also intends to operate in other cities of Europe.

Sources: Telegraph.co.uk, The Hindu, Zacks.com

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