In Hema’s small-scale supermarkets, Starbucks plans to build up to 600 of what the company calls “Starbucks Delivery Kitchens” — stations that will service delivery orders for surrounding areas — over the next several years.
While the partnership was previously reported by the Wall Street Journal, Johnson’s comments marked the first official confirmation by the coffeemaker about its specific plan with Alibaba.
Calling the initiative “a transformative strategic partnership around modern retail,” Johnson said the combination of Alibaba’s top-tier technology capabilities and Starbucks’ retail prowess “will be an accelerator for our business, no doubt.”
In Starbucks’ fiscal third quarter, its China business — which has historically been a growth driver for the company — weakened slightly. While Starbucks’ revenues in the Chinese market grew 17 percent, its same-store sales, a key metric for retailers, fell 2 percent.
“Most of the growth of transactions in China is coming from our new store growth,” Johnson told Cramer on Wednesday. “Now, yes, we did have a negative 2 percent same-store sales comp last quarter, but, you know, if … I look at what we’re doing here with Alibaba and the digital flywheel and enabling delivery, this is like rocket fuel for the digital flywheel in China.”
Coffee consumption in China has nearly tripled in the past four years, according to the International Coffee Organization and the U.S. Department of Agriculture.
On Starbucks’ third-quarter conference call, Starbucks China CEO Belinda Wong told investors that “our new delivery service will adhere to the high standards our customers in China have come to expect … as we expand our business [there].”
Shares of Starbucks closed down 0.88 percent on Wednesday at $51.93. The stock ticked up slightly in after-hours trading to $52 a share.
Correction: This story has been revised to correct that Starbucks’ Ele.me delivery partnership will be implemented in 150 Starbucks stores that are already open.
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