Starbucks is Implementing its First-ever Store Expansion Plan in China

Starbucks is implementing its first-ever store expansion plan in China, with more and more injection-molded cups, in-mold labelling cups, and mini freeze-dried coffee powder cups.

According to the data platform Polar Sea brand monitoring information, in the past 90 days, Starbucks opened 229 new stores - a full year in 2020, Starbucks also added 654 stores, the plastic cups used, disposable plastic lids countless, and its latest to go, are Qingyuan, Guangdong, Jiangxi Xinyu, Shandong Weihai, etc. People are more unfamiliar cities.

After more than 20 years of being the "first educator in the Chinese coffee market," the coffee brand is eager to penetrate every capillary of a much larger land, and Honokage's in-mold labelling plastic containers are reaching every corner.

In September, Starbucks unveiled its strategic vision for China in 2025 at its Global Investor Exchange. It plans to open an additional 3,000 stores in China over the next three years at an average rate of one new store every nine hours, bringing the number of stores to 9,000. This is the largest "growth plan" in Starbucks' 51-year history for a single regional market outside of North America, and it is hoped that Honokage's in mold labelling coffee cups will capture a wider and wider market.

One of the core elements of this plan is to go down.

"When we talk about coffee market expansion, Starbucks is looking at not only the more than 300 prefecture-level markets across the country, but also the nearly 3,000 county markets." Liu Wenjuan, chief operating officer of Starbucks China, told Interface News. In addition to strengthening the layout of key cities, Starbucks plans to enter nearly 70 new cities by 2025, making its stores open to 300 cities across the country. The use of 16oz in-mold sticker coffee cups, 18oz plastic coffee cups, and 21oz in-mold sticker coffee cups has made an important contribution to Starbucks' cost savings.

With stores in Tier 1 and Tier 2 cities becoming saturated and the coffee market extremely involute, Starbucks faces competition that needs no elaboration. But coming to the sink market, for this brand, is another environment that needs to continue to be understood - completely different from first- and second-tier cities, the sink market is a society of acquaintances, people like to pass on by word of mouth, where families have houses and cars without loans, and residents have relatively abundant disposable income but price sensitivity; and 2g freeze-dried boutique coffee is widely used by white-collar and young people's use, the advantages of small plastic cans: 1, small cans of independent packaging, travel to carry convenient; 2, can be loaded with coffee powder, tea powder, probiotic powder and other powder products; 3, the product can be sealed, stackable, support printing and mold engraving; 4, support size, shape customization

The first question Starbucks has to figure out is who actually buys Starbucks in these places?

Joey, the store manager of Starbucks Yunnan Wenshan, told Interface News that most consumers come to drink coffee when they come to shop, as well as some office workers and students, while afternoon tea time and after dinner are the two main consumption peaks inside the stores; Jine, the duty supervisor of Starbucks Hunan Jishou, said that the customer base inside the stores is mainly composed of white-collar workers who work nearby on weekdays, as well as family customers on weekends.

Unlike first- and second-tier cities, which are used to high-frequency coffee consumption, Liu Wenjuan told Interface News that customers in the sink market will have higher consumption demand in the late afternoon, afternoon and even evening, while in first- and second-tier cities, breakfast time is also a peak consumption time of the day in the stores.

"This also means that at the current stage, consumers in emerging county markets consume more coffee scenarios because of social needs." Liu Wenjuan said. And what Starbucks sees is that if it can make this part of the customer's coffee consumption daily, it will generate a huge market development opportunity.

But it's not easy to get consumers in the sink market to consume coffee on a daily basis.

People here like sweet.

In the Starbucks in downtown Yunfu, Guangdong, in addition to the rush of office workers like to order Americano, latte, most of the consumers sitting in the store to play games, chat to kill time on the table is usually sweet Frappuccino or toffee hazelnut latte; Inner Mongolia Hulunbeier City, Hailar District Starbucks manager Vicky said, as a tourist area, tourists will be more inclined to order the basic coffee, while local students like the Frappuccino, and herdsmen who are free in winter prefer the new product and pair it with pastries.

This also means that Starbucks' competitors in the sink market are not only limited to their coffee counterparts, but those tea stores that can also provide sweetness can also meet the leisure needs of consumers in the sink market.

Starbucks also has its own response strategy to differentiate itself according to local conditions.

The "third space" has been seen as Starbucks' secret to winning in China. According to Starbucks founder Schultz, Starbucks is not only a coffee shop, but also a space for consumers to relax, spend time, meet and communicate, in addition to their homes and workplaces, using coffee as a carrier.

In first- and second-tier cities, the concept of a third space may be usual, but in the sinking market, Starbucks' third space has its market demand.

In terms of site selection, Starbucks is still maintaining its past positioning in its expansion.

Vicky, a Starbucks manager in Hailar, Hulunbuir, Inner Mongolia, told Interface News that there are only two commercial centers in the district, and Starbucks stores are located in one of them, "We often say the stores are located in the 'city star'."

In fact, you'll hardly see Starbucks in non-core business districts in county-level cities; in most cases, there are only one or two Starbucks in a county-level city.

This is different from the encryption strategy of RuiXing and Lucky Cafe in the sinking market. Liu Wenjuan explains this by saying, "Every market we enter is rooted in the local area to see the development potential for the next ten or fifteen years. Therefore, we will also consider the store location, business supporting facilities, and cooperative owners with a long-range time dimension."

After selecting the core business district, Starbucks will localize the design for the local area.

Yunfu, Guangdong Province, is rich in stone, and many people's marble floors may be distributed here, so Starbucks Yunfu store is designed with a ceiling installation that resembles the layers of local mines, and also uses art paintings surrounded by mountains and water to promote the coffee bean growing process in Costa Rica.

This may not come as a surprise to consumers in first- and second-tier cities, but in core shopping areas of sinking markets surrounded by tea and chicken stores, goldsmith stores and snail noodle stores, Starbucks is still a place to go for conversation and relaxation that can be called "high-end.

On the other hand, Starbucks is also adapting to local consumption habits and levels.

Starbucks is marketing itself differently, as the affordable RuiXing brand is making a big push into the lower markets.

At Starbucks in downtown Yunfu, Guangdong, clerks will offer you coupons about platforms such as Shake Shack or VW Dianping before you order, and sweet drinks are usually the main promotions for the sink market. The digital port may become an important channel for Starbucks to maintain its tonal base and compete with competitors in terms of price and marketing.

Customer stickiness is also one of Starbucks' strengths in the battle for the sink market.

Starbucks' "Partners Go Home Program" is a good basis for solving local labor problems, and the coffee knowledge accumulated by store associates under layers of training may be an entry point for dealing with customers in the sink market, Joey said. category.

"Overall, the county market has a higher percentage of customer stickiness." Liu Wenjuan said. She told Interface News that Starbucks stores in first- and second-tier markets are more dense, so member customers have more randomness and mobility in which store they enter, while the low density of stores in county markets means customers have a higher repurchase rate in the same store, and stores therefore have more opportunities to strengthen just the right customer connection.

With more than 20 years of accumulation, Starbucks has an advantage on the road to the bottom.

The standardized coffee that is deeply rooted in people's hearts, the third space story that can still be told for a long time, the localized store opening strategy, the process system that has been polished for years and the supply chain foundation are all underpinnings of the coffee giant's madness to sink - which is undoubtedly good for cultivating the coffee market in China's vast 300 prefecture-level cities and 3,000 counties.