A consumer insights analysis at GlobalData, a leading data and analytics company, has offered her view of the recently announced partnership.

Starbucks has partnered with Sequoia Capital to drive innovation and make strategic co-investments in next-generation food and retail technology across Mainland China.

“The partnership between Starbucks and Sequoia Capital China comes at a time when the global economic slowdown due to the COVID-19 pandemic is forcing the companies to realign their business models and retool product portfolios as per evolving consumer behaviour,” commented Shagun Sachdeva.

GlobalData’s COVID-19 Week 5 consumer survey has suggested that more than 40 percent of Chinese are always/often influenced by how digitally advanced a service is.

“Against this backdrop, the strategic move by Starbucks seems to be an effort to move away from a shop-centric model to one that is consumer-centric and virtually borderless by adopting a stronger virtual presence. This move will help Starbucks grow the coffee and retail industry in China,” Sachdeva explained.

The deal seems to be a win-win situation for both companies as it offers an excellent opportunity to leverage on each other’s synergies. The deal will be instrumental in laying the digital roadmap for Starbucks and boosting sales through optimisation of existing retail touch points.

Leveraging Sequoia’s hold across multiple markets in the region, Starbucks can enhance its presence in the Chinese market and tap into China's most competitive tech space with integration of food and retail activities including supply chain efficacy and improved inventory control.

“Sequoia already has a diverse and impressive portfolio comprising about 300 dynamic companies that bring in high returns on investment using differentiated technologies and innovative business models,” concluded Sachdeva.

“The deal will complement its existing platform and allow Sequoia to gain  a competitive edge by harnessing Starbucks longstanding market presence, its deep-rooted innovation culture as well as insights on consumer landscape.”