Brief:

• Starbucks, the coffee chain with more than 24,000 stores worldwide, partnered with Chinese e-commerce giant Alibaba on a high-tech brick-and-mortar store in Shanghai that features a mobile augmented reality (AR) experience. The Starbucks Reserve Roastery lets smartphone users walk around the store and point at different features with their smartphone to learn more information, according to a press release from the company.
• Starbucks describes the 30,000-square-foot roastery as the "first fully immersive coffee wonderland in China" and its "most ambitious project ever." The Shanghai location is the coffee chain’s largest retail space worldwide, featuring three coffee bars, a 3-D-printed tea bar, a bakery and a ceiling built with 10,000 handmade wooden tiles.
• Alibaba will sell special merchandise, coffee and tasting experiences on its Tmall marketplace. Smartphone users need to download the custom app to see the AR features and unlock virtual badges as they tour the store.

Insight:

Starbucks’ massive roastery in Shanghai shows how retailers can enhance the in-store experience with smartphone AR features that help to engage customers in their surroundings and educate them on products and services. Retailers that seek to differentiate themselves from e-commerce rivals have an opportunity to transform their stores with mobile features that can turn every location into a high-tech shopping experience.

For Starbucks, the roastery is another indication of China’s importance for the company’s growth. The company’s first roastery was opened in hometown Seattle three years ago, with Chairman Howard Schultz describing it as the “Willy Wonka of coffee.” The China CEO Belinda Wong said the company opens a new store in China every 15 hours, making it by far the fastest-growing market for the chain. The company has 3,000 stores in 136 cities in China, including 600 in Shanghai. Starbucks previously partnered with Chinese tech giant Tencent for social gifting integration on the WeChat app. China also has 700 million smartphone users, making mobile technology an essential way for marketers to reach this large consumer base.

Starbucks isn’t a stranger to new technologies like AR and virtual reality (VR). The company has experimented with AR features on its cups, and its designers use VR to help design stores. Starbucks also is experimenting with VR content that lets people virtually visit a coffee farm in Costa Rica to learn more about harvesting beans, Geekwire reported. Other retailers that are enlisting AR and VR features into the mix include Ikea, the Swedish design chain that lets people use their smartphones to see what furniture will look like inside a home, as well as Lowe's' apps to help people navigate stores, take measurements of their homes and shop for decorations.