Behind the “Starbucks Atmosphere Group” is the feather of Starbucks 2020. Natural disasters, no way.
Editor’s note: This article is from the public micro-channel number, “Lu Jiu Finance” (ID: liujiucaijing69), Author: Wang Xueqin.
The double attack of online consumption and the new tea drink market, coupled with the compression of the “third space” due to the epidemic, will Starbucks have a chance to “support” in 2021?
Picture comes from Lu Jiu Finance
Grabbing the tail of 2020, #原星巴克有环境组# quickly posted hot searches on Weibo and gained 250 million views.
Starbucks not only did not deny the atmosphere group, which is a sensitive word with a certain negative nature, but instead released the registration conditions for the “Starbucks atmosphere group” on the official blog, which gave a wave of enthusiasm.
In fact, in the catering industry, atmosphere marketing has always been a tacit secret. Internet celebrity shops such as Master Bao and Cha Yanyue Se have been exposed to hiring people to line up to create a hot business atmosphere. As a coffee company adhering to high-end, petty-bourgeois brand tonality, does Starbucks also need atmosphere marketing?
Yes, because of the Starbucks atmosphere, it won’t work in 2020.
From the perspective of Starbucks’ financial report, its full-year net profit for fiscal year 2020 fell by 74.2% year-on-year, almost “cut in half.” In early 2020, Starbucks temporarily closed more than 2,000 stores in China, and sales fell for the first time since the 2008 financial crisis.
Repeated epidemics and domestic beverage brands are chasing and blocking the market, and it is difficult to sink the market. In 2021, Starbucks may still be unable to support its life.
Reality: a cup of bitter coffee named Black Swan
On October 30, 2020, Starbucks released its fiscal fourth quarter earnings report for fiscal year 2020. The financial report shows that Starbucks’ fourth-quarter revenue was US$6.203 billion, down 8.1% year-on-year; net profit was US$393 million, down 51.1% year-on-year. The 2020 annual revenue was US$23.518 billion, a year-on-year decrease of 11.3%. The annual net profit was US$923 million, a year-on-year decrease of 74.2%, which was almost “cut in half.” Judging from these data, Starbucks does need more traffic to boost performance.
The official said in the financial report that the new crown epidemic may have a significant adverse impact on the company’s business, operating results, cash flow and financial conditions. Before the outbreak, Starbucks maintained an average rate of opening a new store every 15 hours in China. At the beginning of 2020, affected by the epidemic, Starbucks temporarily closed more than 2,000 stores in China, and its sales fell for the first time since the 2008 financial crisis.
At present, Starbucks’ offline stores are the main source of company’s revenue, accounting for more than 80% of the company’s revenue. However, the operating conditions of the stores in 2020 are not optimistic, so Starbucks China can use the “Starbucks Atmosphere Group” to complete A wave of borrowed marketing is also a benign return to the company’s performance.
Limit 1: the malfunctioning “third space”< /p>
Starbucks sells not only coffee and desserts, but also leisure time in the “third space”. According to the founder Schultz: Starbucks is not a simple coffee shop, but through the social bonding dose of coffee, it provides people with a third space for gatherings.
The epidemic has brought severe damage to Starbucks’ performance, and it has also made Starbucks’ “third space” fail for a long time.
Starbucks, this chain coffee brand that can be seen everywhere on the ground floor of central office buildings in the city, once millions of working people would buy a cup thereEarly morning coffee, but under the epidemic, these stores were almost empty, and even the airport branch basically stopped operating.
Starbucks CEO Kevin Johnson believes that the epidemic has had a significant impact on its store expansion strategy, and it is a good time to change the store layout. Starbucks plans to take this opportunity to open more “mini stores” in the city center-no Seats, buy and go.
The layout of Starbucks is to transform it from an experience model to a dining car model. Starbucks has no third space, just like Jingdong gave up its logistics business. The coffee is still the same, but the taste of the “third space” is missing.
Many people will order a cup of coffee, then sit in Starbucks for an afternoon, and talk freely with friends or business partners. Because of this, Starbucks has become a mecca for many Internet celebrities, and makes buyers willing to bear higher prices. In this consumption, money is not only spent on coffee, but more on the venue.
If Starbucks loses its advantage in the “third space” and only has order and takeaway functions, whether its brand premium can make consumers pay for it will probably be a big question mark.
Limit 2: Entering a field that I am not good at< /p>
The epidemic has given birth to the housing economy, and major coffee brands have also spread the war to the line. In the past year, Starbucks China Mobile’s order sales accounted for more than doubled, reaching 26% in the fourth quarter, of which 13% came from delivery and 13% came from mobile phone orders and payments.
According to a senior person in the coffee industry who did not want to be named, online coffee consumption will definitely be the future development trend. Consumers will also change from the consumption of “third space” to the consumption of coffee itself consumption.
On July 21, 2020, Starbucks cooperated with Alibaba to launch the “Coffee Express” service of “Order online, pick it up in store”.
Starbucks Group stated that of its 259 Chinese stores opened in the fourth quarter, 10% were “coffee fast” concept stores. This kind of store is very small, only about 70 square meters, with a small amountFor seats, most of the business is geared towards “pick-up at the store”, similar to the sales model of Luckin Coffee.
Starbucks has made the concept of “the third space” deeply rooted in the hearts of the people, and the digital space that jumps out of geographical restrictions is defined by Starbucks as the “fourth space”. People often lament the convenience and speed of online consumption, but for Starbucks, is it a blessing or a curse to create a “fourth space” for online consumption?
A few years ago, when we mentioned “fresh ground coffee”, most people thought of Starbucks. But today, when talking about “freshly ground coffee”, the first thing everyone thinks of may be other competing products and Su Daqiang.
On the online freshly ground coffee market, Starbucks is being “encircled and suppressed” by young domestic coffee brands represented by Luckin and Lian Coffee. In terms of price, take a cup of American coffee as an example. Luckin is priced at 13 yuan and Starbucks is priced at 28 yuan. When consumers are used to coffee at 13 yuan, how much market will there be for a cup of Starbucks at 28 yuan? In terms of cost, Lian Coffee closed all offline stores, deducting rental costs, and fully exerted its efforts online. In terms of the taste of coffee itself, some insiders said that the current major coffee brands are not very different, so the future of coffee brands will shift from experience to taste.
Starbucks, which carries the label of “handcrafted” and “ultra-personalized”, and has been emphasizing the concept of “third space”, currently its online products are just a homogeneous product with no advantages.
Limit 3: Crazy Attack of Milk Tea
“Line up for two hours, drink tea for five minutes.” On the opening day of Wuhan’s first tea Yanyuese, there was a long queue at 6 o’clock in the morning, and the waiting time was as high as 8 hours. The takeaway boy’s errand fee also reached 100 yuan for a cup. Although it was a bit of marketing hype, it did. Netizens shared the grand occasion of encountering a boy next door with 10 cups of tea on the high-speed rail.
Data from the “2020 White Paper on New Tea Drinks” shows that by the end of 2020, the market for new tea drinks is expected to exceed 100 billion yuan.
The challenge that Starbucks faces in China is not only the epidemic, but also the entire market environment. When people line up in the mall for two hoursAfter buying a cup of hi tea, there is a high probability that you will not go to the “third space” to buy a cup of Starbucks.
The market competition between coffee and tea has always been a hot topic in the beverage industry. Last year, “Autumn’s first cup of milk tea” appeared on Weibo’s hot searches, but “Autumn’s first cup of Starbucks” did not arrive. Most people drink Starbucks because of caffeine, which is also found in new-style tea, and it is still sweet. The sweetness of human beings is also the internal reason for the rise of new tea drinks.
According to the “Development Trends of the Global Coffee Industry” issued by the US Department of Agriculture at the end of June 2020, the size of China’s coffee consumption market is about 100 billion yuan, of which instant coffee accounts for 72%, freshly ground coffee accounts for 18%, and ready-to-drink coffee accounts for 10%. Compared with developed countries such as the United States and Japan, coffee consumption in China is still in its infancy.
Behind the consumption of drinks, it is the strong taste habits and taste memories that dominate the consumption of Chinese people. As an exotic product, Starbucks is not as smooth as the new tea in terms of matching. This natural resistance prevents Chinese people from truly relying on Starbucks coffee.
Starbucks is the same as Western food. In many cases, people consume only novel scenes and cultures. If you eat it every day, I am afraid that few people can stand it. This kind of inborn deficiency cannot be cultivated.
Ending: Is it reliable to bet on the Chinese market?
In the fourth quarter of the previous fiscal year, Starbucks opened an unprecedented 259 new stores in the Chinese mainland market. In addition, according to its plan, in fiscal 2021, Starbucks will open a net 50 new stores in the Americas and approximately 1,300 stores in other regions, of which 600 will be opened in China. The importance of the Chinese market to Starbucks is beyond doubt.
But in a non-coffee country, can this layout make Starbucks comeback against the wind?
At present, more than half of Starbucks stores in the Chinese market are concentrated in a few first- and second-tier cities. In the Midwest and underdeveloped areas, Starbucks has not become a trend.
In the financial report, Starbucks stated that it will enter 230 cities in China by the end of the 2022 fiscal year, enter andIt is not difficult, but how to attract and retain customers, and because of the higher prices of single products, it is more difficult to sink.
“Short Board Theory” tells us: How much water a bucket can hold depends on the shortest board. If you want to increase the amount of water in this wooden barrel, you can only change or lengthen the short board. Starbucks’ strategic layout in China is subject to the “shortcomings” of the sinking market.
The other biggest uncertainty factor is the epidemic. Not to mention how long the epidemic will take to end. Even if it can be controlled within a short period of time, the impact of the epidemic will not be temporary. After an avalanche blow to the entire Chinese economy, how many people will still maintain their previous attitude of buying and buying when they face a cup of Starbucks worth 30 or 40 yuan?
There is a question on Zhihu, “Will you consume retaliatory consumption after the epidemic?” Most people answered rather pessimistically. Because the epidemic is accompanied by the tide of unemployment and wage cuts, the monthly deductions for mortgages and car loans, the general rise in prices and the substantial increase in the cost of living, a cup of Starbucks cannot fill your stomach, but a fast meal can. .
If it is not necessary, the Starbucks option may have to be deducted from the consumer candidate list of many people.
Nowadays, the epidemic is on the rise again, and vaccines cannot stop the spread of the virus in a short period of time. Starbucks’ transformation pains may continue for a long time.
In 2021, Starbucks may still not work.