Retailers Starbucks and Loblaw Discuss On-Campus Strategy in Response to Surging Enrollments and New International Students

How do retailers view campus opportunities? This question was central in a session by David Ian Gray of DIG 360 at SHURE-Vancouver. Neena Arora, Sr. National Account Executive at Starbucks, and Kieran Janes, Manager of Real Estate at Loblaw Companies, participated in the session. Both retailers agreed that university settings are increasingly important environments for expansion, especially with growing student populations and online ordering. However, the off-season can be more challenging for big box retailers like Loblaw.

Starbucks is bullish on its campus expansion plans, operating 74 stores in Canadian university environments, an increase of approximately 50 in the last ten years. According to Neena Arora, Sr. National Account Executive, there is an opportunity to double the university store footprint. “There are some campuses that need more locations and some that we need to get on, so it’s a big focus for us.”

For Starbucks, it’s not just about getting a cup of coffee in somebody’s hands, but it’s about improving community study spaces, creating better experiences for faculty through mobile and pick-up, and how to cater to the various customer needs on campus uniquely.

For universities and retailers, the rise of international students has been front and center, presenting a unique opportunity and challenge. Currently, approximately 800,000 non-Canadian students are studying in the country. According to Arora, there’s a comforting factor for those students when they can get the same Starbucks beverage in their home country and while in school in Canada.

“When I’m in New Delhi, I want my Grande Americano Misto with almond milk. And I can get the same drink at UBC in Vancouver. And there’s something comforting about that,” according to Arora.

Gray and Arora discussed the Starbucks campus licensing program, its inauguration, and future growth.

Arora noted that Starbucks is more bullish about post-secondary institutions than ten years ago. Initially, she said post-secondary institutions for Starbucks were more of an exploratory or reactive business plan, and now it’s more strategic. “We have had an opportunity to grow at a significant pace, and so my team’s role is going and hunting out those new locations.”

For Loblaw, a Canadian retailer encompassing corporate and franchise supermarkets, most stores are off campus, but the company vision may change.

“We have several food stores that are located just off of campus that do an excellent job trading on to these campuses; however, we do lack that presence right now for food stores on physical campuses,” according to Kieran Janes, Manager – Real Estate, Loblaw Companies Limited. “That’s something that we’re actively trying to change and are very interested in changing because it’s just another opportunity for us to grow our network and expand our brands.”

For Loblaw, the university campus is challenging due to its big-box status and building a large footprint on campus. According to Janes, each campus is unique. “Case by case basis is where the demographic what is the offering that’s best tailored towards each university. “It’s going to be unique for each campus that you’re looking at, and so that’s something that we’re eager to start exploring,” said Janes.

For the future, Arora of Starbucks said that her firm likes to be on campus and infuse a positive influence. Arora said that in Starbucks’s first store on a university campus in Canada, the vision was to create study lounges and study rooms, with store artwork procured by the students. “How do we make it feel and operate like their community store?” asked Arora.

The retailers touched on the mobile aspect of food delivery. Starbucks will launch mobile ordering and pick-up at the University of British Columbia and Simon Fraser University in the coming week. “We’re excited to bring that to our college university segment,” said Arora.

For Loblaw, the campus environment presents a challenge during the off-campus seasonality from May to August and decreased sales. According to Janes, the annualizing of sales, or increase in volume over the 8-9 months when the university is in session, doesn’t make up for the summer off-period. “When you look at it from a grocery perspective, you certainly see the volatility in sales,” said Janes.

Labour is also a challenge for university retailers due to the peaks and valleys of demand when school is in session. Indeed, universities are unique because summers will see less volume of faculty, staff, and students, while in-session periods tend to see demand fluctuate dramatically with a high peak at lunch and dinner. The retailers noted the need to prepare meals in advance to hit peak demand on campus.

The session concluded with moderator David Ian Gray noting that developers and retailers need to see eye to eye, and there has to be alignment between the landlord and retailer at the end of the day.