Retail Strategy: How Starbucks Impact Real Estate Value

We all know how important location is in a retail strategy, either online (where you need to get the best keywords on search engines) or brick & mortar.

Hence, to be able to get the best locations to open new stores is key to secure high traffic and high revenues. It is an art Starbucks has thriven on. Furthermore, real estate equity where Starbucks settled tends to grow faster than in the neighbourhoods where they are not located. 

To explore exactly how closely the two correlate, we compared a database of Starbucks locations with Zillow data. And since Starbucks’ corporate headquarters in Seattle is located just a few miles down the road from Zillow, we also took the opportunity to pay our neighbors a visit, and to pick the brains of Starbucks’ own real estate analytics team—the whizzes who determine where to put that next Starbucks location.

Here’s what we can tell you: Starbucks equates with venti-sized home-value appreciation. Moreover, Starbucks seems to be fueling—not following—these higher home values.

How Starbucks select its locations

The Starbucks team explained that while they have 20 or so analytics experts around the world poring over maps and geographic information systems data—assessing factors like an area’s traffic patterns and businesses—the company also empowers dozens of regional teams to come to their own conclusions about location, store design, and a host of other issues.

Yet, even with their reams of data and locally-driven decision making, our Starbucks friends noted that there was no single silver bullet. “The beauty of Starbucks is our understanding of real-estate site locationing,” Arthur told us. “It’s an art and a science.”

We couldn’t have put it better ourselves.

There have been times and places—like before the financial crisis, when Starbucks bet on an up-and-coming Seattle commercial area that never materialized—where the art of site location is displayed in all of its messiness. In other instances, the science has delivered big-time returns.

Ultimately, one Starbucks pro told us, “We try to provide consistency in the science… so that local decision makers have everything they need at their fingertips to make easy decisions.”

Indeed, at the end of the day, where you buy a home is based on countless subjective factors. As in Moby-Dick—whose pages gave us the first mate Starbuck and inspired the Starbucks name—finding that perfect, ahead-of-the- curve home can sometimes seem like chasing your very own white whale. But some factors can make that search a little bit easier. So grab a venti skim latte—hey, get the extra shot—and go find the right home for you.

This is the clear message of the article: Big data and scientific facts can not be taken solely while selecting a location to open a new store. And the know how of Starbucks in is expansion program is placed in the local people that make the final decision.