Starbucks

Suite of Claritas market segmentation data brews success for site sales forecasting

The Company

Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world, with more than 9,500 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The company is committed to offering the highest quality coffee and the Starbucks “Experience” while conducting its business in ways that produce social, environmental and economic benefits for communities in which it does business.

The Challenge

Historically, the Starbucks network planning process had produced sub-optimal results, brought on, in part, by the following:

• The retail store pro forma process did not sufficiently predict actual new store volumes.
• The company could not analytically predict often enough the impact of a new store on surrounding Starbucks locations.
• Planners did not have sufficient models for estimating the impact of renovations, retrofit decisions, and marketing environmental analysis on store profit.

Moreover, all of these limitations flew in the face of Starbucks site selection procedures that required accurate estimates of the outcome of various development decisions in order to optimize market development planning and execution.

The Case

Using a suite of Claritas market research products, such as the PRIZM lifestyle segmentation system, iMARK Online, a web-based site analysis software, and demographic data, as its main ingredients for developing a predictive modeling tool, Starbucks has enhanced its process workflow and improved sales forecasting, while markedly providing a greater capability for predicting under-performing sites.

With the predictive modeling tool in place, Starbucks implemented a series of deliverables to improve store placement and site planning, which resulted in:

• Higher pro-forma accuracy rates
• Site development consistency
• Improved "right-sizing" estimates in location planning

The Results

In time, Starbucks also expects the predictive modeling tool to be integral in creating a fully integrated market planning function, as well as establishing a process to analyze under-performing sites.

“The foundation for store growth and opportunity is Claritas data,” said Patrick O'Hagan, Starbucks market planning specialist.