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What has happened to Starbucks in China?

via:环球科技     time:2018/7/30 14:21:55     readed:180

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And the latest news shows that Starbucks will be hungry to cooperate with the joint launch of take-out services, specific information will be announced in early August. As for the news, the industry generally believes that Starbucks's move is to cater to Chinese consumers' consumer demand, on the other hand to resist new Chinese competitors like Rui's coffee to boost Chinese market performance.

What has happened to Starbucks, which once created the "China miracle" in the Chinese market?

Bad market performance

According to the financial performance of the third quarter of the thirteenth fiscal year up to July 1, 2018, the Consolidated net revenues in the quarter rose by 11% to $6 billion 300 million over the same period, and 511 new stores were down 11% from the same period last year.

The Chinese market, which has been seen as a life-saving straw, has seen a negative growth in this quarter. The earnings report showed that Starbucks'same-store sales in China fell by 2%, a significant drop from 4% in the second quarter. The financial statements show that although revenue in China and the Asia-Pacific region has increased by 46%, it mainly comes from the incremental revenue brought about by the change of ownership of stores in East China.

Although Starbucks announced the third quarter sales forecast in the 2018 fiscal year before the release of the official financial statement, the forecast showed that the Starbucks global same store sales rose 1% in the quarter, significantly lower than the analyst's 2.9% growth expectation, the worst performance of Starbucks in 9 years. However, the poor performance of the Chinese market, or even negative growth, made investors "unprepared".

Starbucks's importance to the Chinese market is obvious to all.

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In 2017, Starbucks spent $1.3 billion to acquire 100% ownership of about 1300 stores in East China, including Jiangsu, Zhejiang and Shanghai. After the completion of the deal, Starbucks controlled the overall management of China's mainland market, including all 2800 stores in the mainland of China, including East China, Southern China and North China's Starbucks.

In fact, since the opening of the first Chinese mainland store in China World Trade Center, Beijing in January 1999, the Chinese market has rapidly developed into the second largest Starbucks market next to the United States.

In 2005, after China allowed foreign invested enterprises to open the sole proprietorship, Starbucks repurchased Meida, three yuan and beautiful shares in 2006, 2007 and 2011, took over the stores in Central China, North China and Southern China, and took over the East China market in 2017 through the acquisition of the shares held by the United States.

"We are confident of China's future development, and the mainland market has become the fastest growing and largest overseas market for Starbucks." After announcing the resumption of the comprehensive right to operate the mainland market, Starbuck Corp said.

The right to resume the Chinese market is only part of Starbucks's Chinese market. In 2016, the Starbuck Corp announced an annual plan in which Starbucks will continue to expand at 500 new stores in the next 5 years, and the number of Starbucks stores in the Chinese market will expand to 5000 in five years.

Kevin Johnson, CEO of Starbucks Coffee, has stressed that the goal of expanding the number of stores from 2,800 to 5,000 by 2021 should be achieved.

But now, icy earnings have hit Starbucks's ambition.

The fast developing Chinese market and changing Chinese consumers

When Starbucks entered Taiwan, it lost three consecutive years, but in Shanghai only 1 years, 9 months, it began to make profits. For Starbucks, the biggest bargaining chip is the rise of China's middle class and the wave of consumption upgrading. "In the next four years, 300 million people are expected to be among the middle class, and the total number of middle classes in China will double to more than 600 million, and the emerging middle class will be one of the main drivers of the boutique coffee market." Starbucks explained the reasons for increasing the long-term investment in the Chinese market.

But it is clear that Starbucks has ignored the impact of the Internet on the Chinese market and the changing consumer habits of the Chinese millennials.

Starbucks's entry into the Chinese market has nurtured the perception of coffee among Chinese consumers. The rise of Chinese Internet companies is changing the consumption habits of Chinese consumers.

According to the "2017 China Internet consumption ecological data report" published by CBNData last year, the domestic consumption demand has changed more and more with the change of the main body of the Internet consumer and the further promotion of the per capita disposable income of our country. New consumer demands such as culture, entertainment, sports, health and so on have erupted. Consumers of different ages have also shown more and more diversified and subdivided consumer demands.

With the upgrading of the consumption concept, consumers are increasingly showing a multiple subdivision of consumer demand; artificial intelligence, cloud computing and other high-tech industries have accelerated industrial applications and entered the consumption level. "Credit service" has become an important support for consumer ecology and a new model of shared economy, and the boundary of online consumer channels is becoming more and more integrated. Forming a new retail ecosystem centered on "consumer data".

Under the trend of escalation of consumption, consumers want more than products, but also a better consumption experience. This includes fast mobile payment, convenient take out service, and more personalized consumption experience.

As an old coffee retailer, Starbucks still belongs to the traditional retail store mode. Even though the Chinese market has a good brand image and awareness, but in terms of operation and service is lagging behind the pace of consumers.

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But apparently, some new brands, such as Ruixin Coffee, as Starbucks'competitors, have begun to lay out the market to win more consumers.

Goldman, the world's top investment institution, has published a special study and believes that the success of Rui's success in young white collar workers reflects three key trends in Chinese consumers: offline experience, the convenience of consumption, and the millennial preference for takeaway.

This is related to the operating mode of Rui, and Rui coffee, founded by COO Qian, the former Shenzhou superior car group, is very familiar with the Internet. It uses the operation mode of the Internet to quickly cut into the market through the large area layout of the stores and high subsidies, and obtain a large number of customers. More importantly, on the premise of guaranteeing the quality of coffee, Ruixing coffee provides convenient take-out service to better meet consumer demand.

A strong competitor

Outside the changing market, Starbucks must also face strong competitors.

Reuters has reported that the fast-rising Ruixing coffee may become a nightmare for Starbucks in the Chinese market. In an interview, Qian Zhiya made it clear that preempting consumers is its primary goal: "For us, we are now focusing on the number of users, whether they know us or not, whether we can occupy market share, as long as They can come back to us."

The new retail + coffee model makes Ruixun Coffee quickly become the second largest chain coffee brand in China. The capital market also fully recognizes the operation mode of Ruixun Coffee. In July this year, Ruixing Coffee just announced the completion of the A round of 200 million US dollars financing, after the investment valuation of 1 billion US dollars.

Unlike Starbucks, Ruixun Coffee advocates the brand strategy of “Any Moment”, through the differentiated store layout of flagship store, Youxiang store, cache store and takeaway kitchen store, as well as online and offline, dine, and The new retail model, which combines the delivery and delivery, is dedicated to achieving full coverage of the user's various consumer scenarios.

Whether it is in store layout, consumption patterns, scene modes, etc., Ruixing coffee is obviously more flexible.

According to the London International Coffee Organization report, China's coffee consumption in 2015 was about 70 billion yuan. Before 2025, China's coffee market is expected to reach a trillion yuan scale.

Such a large market is attracting more competitors to join. These opponents include the California family, the coffee from South Korea, the coffee from Los Angeles, and the Shangdao coffee from Taiwan. In addition, there are also Pacific coffee from Hong Kong, which is now mostly acquired by China Resources Group.

It also includes the rise of Chinese local coffee brands represented by Ruixun Coffee. Compared with overseas brands, Chinese local coffee brands know how to use China's Internet technology to open up the market, and at the same time understand consumers' individualized demand for products. According to statistics, Ruixun Coffee has opened more than 660 stores in 13 cities in China. The number of offline stores it has developed in just half a year is equivalent to the total of Starbucks' nearly 12 years.

Although not everyone agrees that the Internet model is easy to turn into the coffee industry because of the need for expensive stores and quality control. But in the current Chinese market, Starbucks clearly has a stronger competitor than before, and is constantly being seized market share.

Launched take-away business and set foot in new retail Starbucks can boost China's market performance

Although Starbucks has not responded to the take-away business mentioned in the news. However, it is understood that Starbucks will hold a media communication meeting on August 2 to announce some strategic layouts on the Chinese market.

At the same time, hungry, said to Global Network Technology: Starbucks and Alibaba have been long-term strategic partners, including Shanghai Baking Workshop, both sides have been achieving results in the creation of new retail new technologies, the future based on new retail Exploration will have more room for imagination.

It is worth noting that, from the response of Hunger, Starbucks and Alibaba are long-term strategic partners. In cooperation with Hungry, the launch of the take-away business is likely to be part of the cooperation with Alibaba. And “the future will be more imaginative based on the exploration of new retail”, indicating that Starbucks and Alibaba will have more business cooperation in new retail.

The cooperation between Starbucks and Alibaba has also been around for a long time. On September 25, 2017, Starbucks announced that more than 2,800 mainland Chinese stores will be connected to Alipay, and consumers can choose to use Alipay to pay when they pay. In June of this year, Alipay officially announced that Starbucks settled in AlipayApplets.

Starbucks seems to be more interested in Alibaba's "new retail." In December 2017, Shanghai launched a selection of baking stores, and the Starbucks offline store connected to Alibaba's digital system, which is closely integrated with the offline and offline.

Meanwhile, Starbucks founder Howard Schultz (Howard Schultz) made a surprise visit to the King88 Square store in Shanghai in August 2017, the company's founder, Hou Yi, accompanied him, according to sources.

At present, Box Ma Xiansheng has tried to open “24-hour service” in the distribution: 25 boxes of horse shop in Beijing and Shanghai can still use the box horse app when the store is closed from 22:00 to 7:00 in the evening. Place an order and enjoy the delivery service to the home as soon as possible within 30 minutes.

If Starbucks cooperates with Hungry to launch a take-away business, taking the box horse fresh life as a reference, there is no “24-hour service”, and at least 30 minutes of delivery within 3 kilometers of the store should be delivered to the home. However, this service standard is already a take-away service provided by Ruixing Coffee to consumers.

Starbucks and Alibaba collaborate to test new retail sales is expected: Alibaba has a lot of experience in new retail, and has helped retailers such as Intime and RT-Mart to start a new retail transformation, and more importantly, Alibaba has a huge Consumption data, it understands Chinese consumers.

Starbucks chose an excellent partner, but the key to the problem is time.

Under the pressure of competitors such as Ruixing Coffee, how much time does Starbucks have to regain consumers and continue to maintain the "Chinese miracle"?

Or, when Starbucks finally catches up with the pace of Chinese consumers, has it lost the Chinese market, after all, the cold figures in the financial report show that the situation is not optimistic, and its competitors are fighting for the market at all costs.

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