Starbucks Exploits GIS and Analytics to Grow Worldwide
One of the key challenges for any organization that is trying to grow its presence is deciding the location of its next store. Starbucks faces the same question. To identify new store locations, more than 700 Starbucks’ employees (referred to as partners) in 15 countries use an ArcGIS-based market planning and BI solution called Atlas. Atlas provides partners with workflows, analysis, and store performance information so that local partners in the field can make decisions when identifying new business opportunities.
As reported in multiple sources, Atlas is employed by local decision makers to understand the population trends and demand. For example, in China, there are over 1,200 Starbucks’ stores, and the company is opening a new store almost every day. Information such as trade areas, retail clusters and generators, traffic, and demographics is important in deciding the next store’s location. After analyzing a new market and neighborhood, a manager can look at specific locations by zooming into an area in the city and identifying where three new office towers may be completed over the next 2 months, for example. After viewing this area on the map, a workflow window can be created that will help the manager move the new site through approval, permitting, construction, and eventually opening.
By integrating weather and other local data, one can also better manage demand and supply-chain operations. Starbucks is integrating its enterprise business systems with its GIS solutions in Web services to see the world and its business in new ways. For example, Starbucks integrates AccuWeather’s forecasted real-feel temperature data. This forecasted temperature data can help localize marketing efforts. If a really hot week in Memphis is forthcoming, Starbucks’ analysts can select a group of coffee houses and get detailed information on past and future weather patterns, as well as store characteristics. This knowledge can be used to design a localized promotion for Frappuccinos, for example, helping Starbucks anticipate what its customers will be wanting a week in advance.
Major events also have an impact on coffee houses. When 150,000 people descended on San Diego for the Pride Parade, local baristas served a lot of customers. To ensure the best possible customer experience, Starbucks used this local event knowledge to plan staffing and inventory at locations near the parade.
1. What type of demographics and GIS information would be relevant for deciding on a store location?
2. It has been mentioned that Starbucks encourages its customers to use its mobile app. What type of information might the company gather from the app to help it better plan operations?
3. Will the availability of free Wi-Fi at Starbucks’ stores provide any information to Starbucks for better analytics?
4. Do you use the Starbucks app, if so why? If not, why?
When deciding on a store location, Starbucks would consider various demographics and GIS (Geographic Information System) information, including:
Starbucks encourages customers to use its mobile app, from which it can gather valuable information to enhance its operations:
The availability of free Wi-Fi at Starbucks’ stores can provide valuable information for better analytics:
Personal usage of the Starbucks app varies, but whether individuals use it or not can depend on various factors:
The decision to use or not use the app can be influenced by personal preferences and how individuals perceive the value it adds to their Starbucks experience.