The success of Starbucks here -- sales volume per store in Japan is twice as high as in the United States -- is all the more remarkable because this nation of tea drinkers has been mired in recession for most of the past decade.
TOKYO— HOWARD SCHULTZ said he knew Starbucks would be a hit in Japan the day he opened his first store here in 1996.
When Mr. Schultz, the company's chairman, arrived in the fashionable Ginza district at 6:15 on that humid August morning, 100 people were lined up for the ribbon-cutting, scheduled for 6:30. At the front of the line was a man in his 20's who looked as if he had slept outside the shop the night before. When the doors opened, he rushed in to become customer No. 1 in Japan. Although he otherwise spoke no English, he blurted: ''Double short latte!''
The goal was to find a balance between the fragile issues of making a profit and being a socially conscious member of the community.
“Starbucks brought people together,” he said. “There was a sense of gathering ... this human interaction built the brand.”
But Starbucks exists as more than a chain – it’s a communal meeting place, it’s a home away from home.
Starbucks’ first non-North American store was opened in 1996 in Tokyo. In reflecting on this early step in internationalizing the chain, Schultz notes:
Two years prior to opening up in Japan, we hired this blue-chip consulting firm to guide us to succeed here. Basically, they said we would not succeed in Japan. There were a number of things they told us to change. [They said] we had to have smoking, but that was a non-starter for us. They also said no Japanese would ever lose face by drinking from a cup in the street. And third, they said that given the [high] rent, stores couldn't be larger than 500 square feet…Well, our no-smoking policy made us an oasis in Japan. As for our to-go business, you can't walk down a street in Tokyo today and not see someone holding a cup of Starbucks coffee. And our store size in Japan is identical to our store size in the U.S., about 1,200 to 1,500 square feet. It just shows the power of believing in what you do. And also that Starbucks is as relevant in Tokyo, Madrid, or Berlin as it is in Seattle. Throughout the talk he stressed the importance of maintaining the core values of the company, and what the brand has meant to everyone involved. “There was an emotional attachment that we were building, both with our customers and our people,” he said. However, he noted the difficulties inherent in trying to preserve company values against rapid growth. “How do you get this big, and stay small?” he asked. He went on to emphasize the need for companies to have a social conscience, when it comes to both treatment of its own people as well as the community in general. “Corporate social responsibility has to be an integrative part of the company,” he said. As example, he pointed out that shareholders were initially very concerned when Starbucks began offering comprehensive health care coverage to its employees, but the company went ahead anyway. He also discussed the state of the economy today, and what it means for Starbucks. He noted various negative markers, such as the decrease in mall traffic and the rise in home foreclosures. “This is a humbling time, and a real character test,” he said. “The real challenge today for us is believing and having faith in the guiding principles of the company.” Schultz underscored the importance of not letting success lead to passivity. Pointing to his own company as an illustration, he explained why he returned to Starbucks in January after having resigned in 2000. “I feel that we were drifting a little bit toward mediocrity,” he said. “Success is not an entitlement -- you have to earn it.