Starbucks Exploits GIS and Analytics to Grow Worldwide

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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?

Answer Guide

1. Demographics and GIS Information for Store Location Decision

When deciding on a store location, Starbucks would consider various demographics and GIS (Geographic Information System) information, including:

  • Population Demographics: Understanding the age, income levels, and lifestyle preferences of the local population is crucial. This data helps assess the potential customer base and their purchasing power. For instance, locating a store in an area with a higher concentration of young professionals might be ideal for Starbucks.
  • Traffic and Footfall Data: Analyzing foot traffic patterns, both pedestrian and vehicular, near potential locations is essential. This data aids in estimating the number of potential customers passing by the store.
  • Competitor Locations: Identifying the locations of competitors, especially other coffee shops, allows Starbucks to assess the level of competition in the area. It’s important to choose areas with a competitive advantage.
  • Retail Clusters and Generators: Understanding the presence of other retail stores and businesses in the vicinity can provide insights into the area’s commercial activity. Being near retail clusters or generators can attract more customers.
  • Traffic Flow and Accessibility: GIS can help analyze traffic flow and accessibility in terms of road networks, public transportation hubs, and parking availability. Stores in easily accessible locations tend to perform better.
  • Demographic Trends: Data on demographic trends, such as population growth or decline, can indicate whether the area is likely to see an increase in potential customers over time. Starbucks may prioritize areas with growing populations.

2. Information from Starbucks Mobile App

Starbucks encourages customers to use its mobile app, from which it can gather valuable information to enhance its operations:

  • Customer Preferences: The app can track customers’ order history and preferences, helping Starbucks tailor its menu, promotions, and product recommendations. For example, if a customer frequently orders a specific type of coffee, the app can suggest related products.
  • Location Data: Location services within the app can provide data on where and when customers visit Starbucks stores. Starbucks can use this data to optimize staffing, inventory management, and marketing efforts based on real-time customer movements.
  • Payment Data: Starbucks can analyze payment methods used through the app to understand customer behavior, preferred payment modes, and the impact on transaction times.
  • Feedback and Ratings: The app can collect feedback and ratings, allowing Starbucks to gauge customer satisfaction and make improvements in areas where customers express dissatisfaction.

3. Free Wi-Fi and Analytics

The availability of free Wi-Fi at Starbucks’ stores can provide valuable information for better analytics:

  • Customer Engagement: Starbucks can monitor customer engagement with the Wi-Fi service, such as the duration of usage and websites visited. This data can offer insights into customer behavior and interests, which can be used for personalized marketing efforts.
  • Peak Usage Times: By analyzing when Wi-Fi usage is highest, Starbucks can optimize staffing and promotions during peak hours to accommodate customers who use the store as a workspace or meeting place.

4. Starbucks App Usage

Personal usage of the Starbucks app varies, but whether individuals use it or not can depend on various factors:

  • Usage Reasons: Users may choose to use the Starbucks app for reasons such as convenience (mobile ordering and payment), loyalty rewards (earning stars for free drinks), customized recommendations, or easy access to promotions and discounts.
  • Non-Usage Reasons: Some individuals may opt not to use the app due to privacy concerns, a preference for in-store ordering, or simply because they do not frequent Starbucks often enough to benefit from the app’s features.

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.


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