When people ask what I miss most about America I always answer, “Apple Stores and Starbucks.” Well, we sort of have an Apple Store here in Krasnodar but we are all still waiting for a Starbucks. Fortunately, there may now be a light at the end of the tunnel.
Two articles appeared today on JRL discussing Starbucks plans to open its first independent location (I believe I heard there was/is one in the American Embassy in Moscow) at the Mega Mall next to one of the Ikeas in Moscow. Since we will have an Ikea with a Mega Mall here in Krasnodar opening in April 2008, we hope that the Starbucks will also open there at some point next year.
See this link for the article in the Seattle newspaper.
See below for the article in the Wall Street Journal:
Wall Street Journal
August 31, 2007
From Seattle, With Lattes: And Russian Rivals Await
By JANET ADAMY
MOSCOW — When Starbucks Corp. founder Howard
Schultz’s book, “Pour Your Heart Into It,” was
translated into Russian three years ago, Vlad
Lozitsky bought a pile of copies for his
employees at Shokoladnitsa, one of Russia’s largest coffeehouse chains.
“We ordered them to read it in one week,” says
Mr. Lozitsky, the chain’s general manager. Mr.
Lozitsky also watched and rewound scenes from the
film “I Am Sam,” in which Sean Penn’s character
works as a Starbucks barista, to study how he makes cappuccinos.
It’s all helping Mr. Lozitsky get ready for the
arrival next month of the first full-service
Starbucks in Russia — an important market in the
Seattle chain’s strategy to drive growth by one
day having 20,000 cafes outside the U.S., five times as many as it does now.
But local chains say Starbucks already has made a big mistake.
“If I were Starbucks, I would have done it five
years ago,” says Vladislav Dudakov, president of
Coffee House, Russia’s largest cafe chain. In
parts of Moscow, his 160-store chain has
locations every few blocks. Adds Mr. Lozitsky: “They missed their time.”
As Starbucks waited — spending several years
trying to win back the rights to its name from a
Russian trademark squatter — local coffeehouses
built heavily in large cities, real estate became
more expensive, and the labor market tightened,
making it difficult for restaurants to find good
workers. And Starbucks won’t be competing only
against homegrown rivals, but against other giant
Western chains: McDonald’s Corp. is putting more
McCafe sections in its restaurants to serve cappuccino and dessert.
“We do not spend a great deal of time focusing on
our competition,” says Martin Coles, president of
Starbucks Coffee International, who will start as
the company’s chief operating officer next month.
He adds that the growth of other coffee chains
can actually help Starbucks by increasing the
overall coffee market. “We’re at our best when we have some competition.”
Starbucks has been touting its international
growth prospects to shore up waning investor
confidence; its shares have fallen about 30%
since their peak in November. But a handful of
recent setbacks overseas show how tricky it is to
operate in other cultures. In July, Starbucks
closed its store in Beijing’s ancient Forbidden
City amid complaints that its presence was
disrespectful. Also that month, the company
postponed its entry into India without giving an explanation.
Starbucks’s executives stress that the chain has
been welcomed in the overwhelming majority of
places it has opened. Although Russians
historically have drunk tea or, more recently,
instant coffee, Starbucks predicts its beverages
will appeal to Muscovites’ affinity for Western
brands. They say the experience of sitting at a
Starbucks will attract customers regardless of
whether they like the taste of coffee.
“What we’ve found everywhere we’ve opened is we
become a landmark overnight,” Mr. Coles says.
In Russia, Starbucks plans to offer more
croissants, sandwiches and other food than in the
U.S., since food is typically a bigger draw in
its overseas cafes, Mr. Coles says. The chain may
adapt its offerings using cinnamon and other flavors popular with Russians.
However, the drink menu will offer most of the
same lattes and other beverages as in other parts
of the world and will be priced similarly to the
U.S. Starbucks even has an employee trying to
match the taste of its blueberry muffins for
Russia to those sold everywhere else in the world, Mr. Coles says.
While Starbucks’s trademark paper cups are a
common sight in the hands of U.S. commuters, the
company expects that the vast majority of its
business in Russia — as it is in other
international locations — will come from sit-down customers.
The chain plans to start by building in Moscow,
with a goal of having no more than 10 Russian
locations by year’s end. The first will be in a
Mega shopping center on the outskirts of Moscow.
Starbucks plans to use the same color scheme and
other design aspects as its locations in every
other part of the world. A Starbucks spokeswoman
declined to comment on other details of the opening.
To enter Russia, Starbucks has joined in a
partnership with M.H. Alshaya, a Kuwait retail
firm that operates Starbucks locations in the
Middle East. Some analysts have questioned why
Starbucks picked that company to open in Russia
since they’re not Russian and specialize more in
mall locations than the main-street sites
Starbucks typically prefers. Mr. Coles says the
company picked Alshaya because it has
successfully operated other retail brands in
Russia, such as the Body Shop, and because
Starbucks has a good relationship with the firm.
To get out in front of Starbucks, Russian coffee
chains are adopting some of its techniques. An
old Russian cafe that was revived in 2001,
Shokoladnitsa’s stately locations cater to
sit-down customers with waiters, dark wood
chairs, gold-framed paintings and a 14-page menu
featuring pancakes with caviar, piña coladas and Marlboro cigarettes.
Mr. Lozitsky made a detailed plan to ready
Shokoladnitsa for Starbucks’s arrival. It
includes prominently displaying paper to-go cups
and cutting the price of take-away coffee by 20%.
He’s adding stations for cream and sugar, trying
to speed service, and whittling the menu to make
it easier for customers to choose.
Since Russians typically don’t walk down the
street while drinking, he has walked around
Moscow with a cup in his hand to study the
reactions of passersby. Shokoladnitsa plans to
add about 25 locations by the end of the year for
a total of as many as 175 in Russia and Ukraine,
outpacing Starbucks’s projected growth this year.
Still, Mr. Lozitsky is worried that Starbucks may
make it more difficult for his company to get new
sites. The cachet of the Western brand is a lure
to some landlords: At one big shopping center in
Moscow, Mr. Lozitsky says the owner “just denied
us completely. They want Starbucks, and they are waiting.”
Coffee House is redesigning some of its
espresso-hued locations to make them more
appealing and adding a line of cups, thermoses,
packaged coffee beans and chocolates embossed
with the chain’s emblem to “get prepared for the
Starbucks invasion,” says Mr. Dudakov, the
chain’s president. He’s also trying to teach customers how to use to-go cups.
The preparations haven’t made much of an
impression on Irina Nikanorova, a 31-year-old
Moscow resident. She used to visit Starbucks
almost every day when she lived near one in
London. Starbucks “is much better than this one
or the other ones around,” the tourist-agency
worker said while she sat at a Coffee House one
afternoon drinking a cappuccino and smoking a
thin cigarette. “It’s nice, especially in the
morning, when there are croissants.”
Other restaurant operators say that Starbucks’s
Western allure may not hold as much sway in
Russia as elsewhere. “The American influence in
Russia has diminished,” says Rostislav Ordovsky,
a Russian restaurant magnate who operates T.G.I.
Friday’s outlets here. The U.S. “used to be an
aspirational place,” but because of what he sees
as an unfriendly U.S. government, he says
Russians are now looking more to countries like Italy for cultural trends
