Taiwan’s Starbucks buck global downturn

While Starbucks stores in the United States are closing in the face of shrinking domestic consumption, Taiwan’s Starbucks outlets are seeing a rise in business by co-marketing with subsidiaries. Taiwan’s Starbucks, operated by the Taipei-based President Chain Store Corporation (PCSC), has increased sales by promoting “buy one, get one free” for customers of the PCSC four-dozen subsidiaries.

PCSC, a part of Uni-President Enterprises Corporation in Taiwan, has subsidiary retail stores, sales channels, manufacturing and investments. Among them are Carrefour, 7-Eleven, COSMED, Starbucks, Semeur De Pain Bakery, Dream Mall, Cold Stone Creamery and Unimall. Whereas USA Starbucks has adjusted its business operations strategy by closing some stores, selling instant coffee, and introducing other measures to trim expenditure during the financial slowdown, Taiwan’s chain is doing the opposite.

Taiwan Starbucks general manager Hsu Kuang-yu said all PCSC subsidiaries follow the Japanese business model, which invests more during a recession. Along with promoting “buy one, get one free” weekends, his company is also focused on investing more time and money in retraining personnel and redesigning the standard operating procedures for brewing coffee. As a result, Taiwan Starbucks has seen a jump of 30-40 percent in new customers during the promotion.

Recently, to celebrate the opening of the first 7-Eleven store in Shanghai, China, by the PCSC subsidiary group, all 4,800 7-Eleven stores in Taiwan started a points-accumulation promotion. Customers who spend NT$40 (US$1.20) receive one point, with 20 accumulated points qualifying for a “buy one, get one free” product or service at any of the PCSC subsidiary stores like Starbucks, Mister Donut, COSMED, Cold Stone Creamery, Dream Mall, Unimall, and Semeur De Pain Bakery.

According to the Central News Agency, business sales increased over 10 percent during the promotional run. Unfortunately, this is one strategy not available to USA Starbucks in riding out the recession. With Taiwan’s PCSC subsidiary groups sharing customer resources, Taiwan Starbucks has not only consolidated its existing customers base, but has expanded its new customer pool to take full advantage of Uni-President’s combined conglomerate sales and marketing channels.