Diaries of a Starbucks traveller

This year has been a nice start for Starbucks with quite a bit of news for both the United States and Asia (hey, is there any thing in store for us, Europeans?). The first piece of news we got was that Starbucks will be selling wine, as well as beer in parts of the United States, then the opening of shops in India that are meant to happen around August (aiming to open 50 outlets by the end of the year). These steps are quite risky I think, but you’ve got to be daring to succeed. They clearly did their market research, but you always have to be cautious with your strategy. I’d like to add some insight from my point of view…

I can’t recall the first time I had Starbucks, but I must admit I really like it. I like it, but I don’t love it. I’m not one of those Starbucks junkies who need their skinny latte on a daily basis (I do have other coffee resources; I often get jars of coffee whacked onto my desk at work). Anyway, let’s take a mini Starbucks tour in four countries:

INDIA Starbucks clearly want to stay competitive globally and follow what Costa has been doing, however it may have been a smarter move to delay their expansion a little longer and see what comes out of that before they make a move. I remember being in New Delhi and paying the same amount for ‘good’ coffee as I would pay for say a scarf. Obviously that would not be normal around here, but it is there. The ‘no name’ coffee shops charged prices that were sky high, Café Coffee Day and Barista being the current largest coffee chains. I’m really interested in what Starbucks’ pricing strategy will be in India. Reuters says that Starbucks has not said anything yet about what they will charge in India, so I guess we will have to wait and see. They will have to keep their prices high enough for there to be a return on their $81 million dollar investment, so I doubt this would be the first case when they try to adapt to the country better. They know they will have fewer sales so the need for high(er) prices are necessary in this scenario. They’re trying to lure in the young professionals, but what they will also do is drive out the businesses with the same Western coffee drinking spirit as the middle class who will be able to afford these drinks will be encouraged to promote their wealth and status with a global brand. What will happen to Café Coffee Day and Barista? Surely the young professionals are also aware of their emerging economy and would want to promote their own brands. Will Starbucks succeed to call them to the dark side?

HUNGARY Once again: the price. Starbucks is considered extremely expensive in Hungary, you can get around 2 cups of coffee for the price of what you are paying for one in Starbucks. This is another reason why I am a bit worried about India. I’m also surprised they have opened more outlets in Hungary lately. Whenever I go to one back home, it is usually packed with foreigners or people who share a cookie amongst two people. It’s not a place where you go to grab coffee; you stay there to show off that you can afford it. I feel really uncomfortable purchasing something there, because they are TOO nice. The whole thing reminds me of the 90s back in Budapest: we used to have Dunkin’ Donuts. You may be thinking: “What the hell?” You are right; their relationship with Hungary did not last long at all. It’s not because we don’t like donuts, it’s because it cost a friggin’ fortune. I see a similar future for Starbucks unfortunately. The facilities are super clean though, so they definitely get brownie points for that, but it’s not a reason for them to be successful.

FRANCE I think Starbucks completely achieved what they wanted in France, the yuppie audience totally bought the whole Americanized coffee ways: “On se prend un Starbuck?” is a phrase you will hear often, suggesting to go grab coffee. Completely different from Hungary, I find the stores to be dirty, but who cares? You just go and get your coffee. The service is also average; you’re not going there for the experience, but for the coffee. It’s all about the brand here and the logo. You are oh so cool if you are walking around with your takeaway coffee. Hell, don’t ever drink coffee in their shops! That’s why if you do decide to stay and have your coffee there, you will see that there is always a free spot where to sit. People go back for coffee here, unlike in Hungary where it’s more of a special occasion.

UNITED KINGDOM Perfect, but there should be more! People can obviously afford it. I want to see a Starbucks around every corner like in the US. Why didn’t they focus on this first?

I just feel Starbucks is trying to amplify too quickly. I know it’s not a solution to wait too long for something to happen, but sometimes you need to be more careful with your strategy. In my point of view, Starbucks is not delivering the same quality in each country as they should be, regarding the service that is. The service provided has been affected by their similar pricing globally, which has created huge gaps in the customer experience and the way it’s perceived. Of course, this will vary on cultural factors as well, but there are elements that they can control.

Take McDonald’s as an example. Their market-oriented pricing is what has led them to succeed globally, being truly ‘global’. Starbucks is trying to expand quickly, yet they need to reconsider their pricing strategies to stay competitive. Their efforts and statistics may pay off in the short run, but it’s not a long term strategy.

There seems to be no coherence in their service across the world, which has created distorted images of the experience they are actually selling. What is the experience again?