Starbucks Store Closures Follow US Unemployment Trends

April 14, 2009

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Analytics, Automated & MarTech | CPG & FMCG | Europe & Middle East | Retail & E-Commerce | Trade Shows & Events

A look at the recently released list of 200 US stores that coffee chain Starbucks said it would close this year reveals that many of the planned closures concentrated in states with some of the highest unemployment figures, according to an analysis by Retailer Daily.

Almost half the planned closures, 76, are scheduled to take place in California. According to numbers from the US Bureau of Labor Statistics, California lost the most jobs of any state, 116,000, in February 2009, a month it tied Rhode Island for the fifth-highest unemployment rate, 10.5%. Between February 2008 and February 2009, California lost almost 606,000 jobs. During Q109, Starbucks operated 1,773 stores in California, the most of any US state.

The state with the next-highest number of planned store closures (15) is Florida, Retailer Daily reported. Florida lost the second-highest number of jobs in February both on a monthly basis, 49,500, and on a yearly basis, approximately 339,00, and reported an unemployment rate of 9.4% in February. Starbucks operated 447 stores in Florida during Q1 2009.

The state with the third-highest planned store closure count of 12, Georgia, lost almost 36,000 jobs during February 2009 and almost 182,000 jobs between February 2008 and February 2009. Georgia’s February 2009 unemployment rate, 9.3%, is its highest on record. Starbucks operated 166 stores in Georgia during Q109.

Other states with a large share of planned store closures, Nevada, Texas and New York, also all reported significant monthly and annual job losses and high unemployment rates.

Interestingly, Starbucks is only planning two store closures in Michigan, which led the nation with a 12% unemployment rate in February 2009. Michigan lost 277,000 jobs between February 2008 and February 2009, but only about 21,000 jobs for the month of February 2009. Starbucks may be assuming the worst has already happened in Michigan, although a failure of one or more of the three major US auto manufacturers headquartered in that state could drastically increase already-high unemployment figures, according to the analysis.

It should be noted that Starbucks already had heavy store penetration in the states it is planning the most store closures. Some states where Starbucks is planning few or no closures, such as South Dakota and Wyoming, have low unemployment rates but also minimal Starbucks market penetration. Starbucks only plans to shut one store down in Rhode Island, but only operated 11 stores there during Q109.

At the same time Starbucks is closing stores in the US, it continues expansion plans in other countries. The chain recently announced it will be opening its first coffee house in Poland.

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