Starbucks Innovates At Home And Abroad With Princi And Alibaba

It’s been a busy week for Starbucks. After acquiring Milan-based Princi last year, Starbucks finally opened the first of what is planned to be a 1,000 store standalone bakery concept in their hometown of Seattle. Customers have been able to sample Princi goods inside their Roastery concept in Seattle since last Fall and in the newly opened Reserve concept located in the building headquarters.

The freestanding Princi is located in the hip Denny Triangle neighborhood. The menu features sandwiches, salads, soups, and pastries. And of course, Starbucks coffee including the Princi blend. Locations in New York and Chicago are set to open this Fall. I had a chance to visit the newly opened store in Seattle and I was impressed. Great artisinal bread is a lost art in the U.S. and Princi certainly delivers. I would be more excited about the concept if I also hadn’t visited freestanding Teavana tea café’s and La Boulange bakeries. These are two businesses that Starbucks also acquired, later to shut down. While Princi offers great promise, both as a freestanding concept and as a way to upgrade the in-store offer, there is also reason to be skeptical given their past track record.

At the same time, the company has also announced an ambitious partnership with Alibaba in China. The broad ranging partnership is centered on three activities:

• Utilizing the Alibaba platform, starting in September, Starbucks will leverage Ele.me’s 3 million registered delivery riders to deliver its coffees, teas and food to Chinese consumers. The initiative will start at 150 of its stores in Shanghai and Beijing before expanding to 2,000 store in 30 cities by the end of the year.
• Inside the innovative Hema stores, Starbucks Delivery Kitchens will complement the delivery of coffee and tea offered through existing Starbucks stores. The first of these fulfillment hubs will launch in Shanghai and Hangzhou next month, with other Delivery Kitchens opened in other cities over time. Hema is the fresh supermarket that also doubles as a mini-fulfillment center to deliver groceries in as quickly as 30 minutes to the surrounding neighborhood.
• Finally, Starbucks will be partnering on a virtual store (on their own and Alibaba’s multiple platforms) to allow customers to order product, buy merchandise or send a gift card.

What is fascinating about these two stories is the example of multi-pronged innovation. Starbucks is simultaneously upping the experience through Princi while going all in on convenience and immediacy of delivery with Alibaba. Both strategies likely have a place in retail’s future.

Finally, and perhaps it goes without saying, Starbucks shares a hometown with a little company called Amazon, which is a chief rival on a global level with Alibaba. Perhaps another partnership will be in the marking?

By Neil Stern

Neil Stern for Forbes