Recently, wechat moments have been dominated by the news that Starbucks has cancer, mainly from foreign media reports. In a ruling on March 28th, an American court ordered Starbucks to put a “cancer” warning label on its products because of high levels of acrylamide. After the news came out, Starbucks was put in the spotlight.
Starbucks crisis looms, but is it clear who knows what?
The “coffee cancer” issue will not have a material impact on Starbucks. As it turns out, Starbucks did not suffer any loss in this incident. On the contrary, many media and netizens began to take sides for it after the incident.
After the incident, Starbucks immediately launched crisis public relations. First, it reported the relevant wechat account that created the rumor. Second, make a statement to the media. As a matter of fact, starbucks’ crisis public relations approach is similar to that of other brands, or even less than that of other brands, at least its official wechat and Weibo did not issue this statement. However, this simple PUBLIC relations has been paid by the public, what is the underlying principle behind this?
1. It has to be said that the brand’s own reputation is very important. Starbucks has long been a brand reputation is an important condition to win public trust. Just think about the consequences of a brand that has repeatedly suffered from food safety problems, even though it can prove its innocence every time, but it consumes too much public trust.
2. The smart thing of Starbucks is that it did not take the initiative to announce its attitude, but accurately conveyed its message through the statement of the association.
The key points starbucks wanted to express in the whole incident actually lie in two points. It is based on these two points that the safety crisis of Starbucks can be resolved in a short time. On the one hand, the coffee selling company of this ruling is not only Starbucks, which only attracts the attention of most media and the public due to its own topic. On the other hand, the public knows whether coffee is healthy or not. Of course, the popularization and correction of coffee health in the media has also given the public a shot in the arm.
At the very least, even if Starbucks were to put a “cancer” label on its coffee, it wouldn’t cause much of a drop in sales, except that it would make people feel bad about their coffee. The result is similar to that of cigarettes, which consumers will pay for despite the “smoking is bad for their health” label.
The real crisis comes from within
In fact, this “carcinogenic event” is not a crisis of Starbucks. The real threat to the development of Starbucks comes from the defects of Starbucks’ own strategy and management mode.
With the development of the commodity economy, the emergence of boutique cafes and McDonald’s and other low-cost coffee has squeezed the living space of Starbucks. China has a vast incremental coffee market. Relevant data show that in 2017, the growth rate of China’s coffee market reached 15%, and the consumption market scale exceeded 100 billion yuan. Relevant institutions predict that since China’s coffee market has entered the social demand-oriented consumption, the scale of China’s coffee market is expected to reach 300 billion yuan in 2020, or more than 1 trillion yuan in 2025.
Face so attractive “fat meat” everybody wants to bite. Foreign brands began to enter the Chinese coffee market one after another. Foreign coffee brands, mainly Costa, swept the whole China, and even McDonald’s and other fast food brands joined in. However, the former mainly serves the middle and high-end, while the latter serves the low-end market. In addition, domestic coffee brands are also slowly rising, such as Seesaw, which has attracted many fans due to its high level of coffee taste and appearance, and Lian Coffee, a new retail brand relying on e-commerce operation thinking.
China’s coffee market is being occupied by a variety of coffee brands, and Starbucks’ market space is being severely squeezed. With the increasingly fierce competition, the future development space of Starbucks may continue to reduce, after all, the increase of new entrants will more or less divide the user base of Starbucks.
Starbucks also has several problems.
First, the lack of standardized management, industry chain cost is too high. On the industrial chain, Starbucks spends as much as $100 million a year to maintain its daily supply chain operation, which is obviously a figure out of control.
Second, the cup shape is criticized. Inspired by Italian coffee, Starbucks introduced the concept of grande and venti. With the development of Starbucks, medium, grande and venti gradually replaced the traditional large and medium cups. But in reality, Starbucks is just “stealing the concept” by calling a medium instead of a small.
Third, the expansion rate is too fast. Starbucks was born with the gene of crazy expansion. Between 1998 and 2008, the number of Starbucks coffee shops grew from 1,886 to 16,680. Over the course of a few years in China, Starbucks has opened more than 3,000 stores, and officials say one opens every 15 hours. Such a crazy expansion speed will result in the decline of coffee quality. In order to improve operating efficiency, Starbucks will inevitably adopt fast ways to produce coffee, such as high-end espresso machines, which will undoubtedly make Starbucks coffee tainted with the taste of “fast food”.
Fourth, the impact of e-commerce, the global physical retail is declining. Overseas wal-mart, Macy’s, Marks & Spencer and other large supermarkets, department stores sales decline rapidly, store closure boom, domestic retail market scale also continued to decline. Influenced by the overall environment, starbucks customer flow is also gradually decreasing.
Under the crisis, Starbucks transformation of new retail can rest easy?
The fierce competition in the stock coffee market and its own problems make Starbucks more likely to fall into a crisis. In this situation, Starbucks is becoming more cautious in its strategic layout, and the transformation of new retail is an important measure for starbucks. But can Starbucks really rest easy with its new retail? That’s not the case.
First, it is difficult for Starbucks to fully implement the transformation of new retail. According to the current development status of Starbucks, its so-called new retail is mainly concentrated in offline stores, and only relying on payment means to realize online connection can not be regarded as the real meaning of online and offline integration. The difficulty for Starbucks is the level of consumer demand.
Most people buy coffee to a large extent to enjoy the romantic, artistic and relaxed atmosphere of coffee shops. If Starbucks adopts new retail models such as convenience stores and take-out to sell coffee, consumers will lose the experience of enjoying coffee shop atmosphere to a certain extent. Moreover, consumers are willing to pay high prices for Starbucks because of its store atmosphere. It is really hard to say whether consumers will accept the high prices of Starbucks if starbucks starts to implement take-out and quick delivery modes. In addition, the cost of coffee take-out and quick delivery is high. In order to ensure the taste, the radiation radius of the stores is limited, and a large number of stores mean that the quality and standard will not be guaranteed.
Second, excessive reliance on third parties in the process of transformation. “Star” small programs or wisdom stores, starbucks’ new retail is through co-operation with third parties, itself for a new retail and no deep understanding, this also means that starbucks will transform new retail rights to the third party’s hands, once the starbucks opened its own star member system, if the system running in degrees with a third party is not enough, Starbucks will be in trouble.
Third, consumption degradation appears, commodity prices and commodity value deviate from the era is about to pass. With the increase of people’s income, consumption concept is also changing, and consumption downgrade is coming in a threatening way. The so-called consumption downgrade is not a reflection of people’s life quality regression. On the contrary, people are paying more and more attention to the simple beauty of life, such as the rapid rise of Xiaomi, Netease Yanxuan and Pindoduo. Under the trend of consumption degradation, people’s consumption will return to rational, and consumers will re-examine the products whose value differs too much from their price. Starbucks, which touts the “luxury” label in the coffee world, will have a limited market presence.
What is the future of Starbucks in the face of the crisis it will encounter after the transformation? In fact, compared with the crisis before and after the transformation, it is the best way for Starbucks to continue the transformation of new retail, but the method needs to be adjusted.
Through the application of big data, Starbucks can accumulate consumers’ personal information and consumption data, screen out core users through cloud computing, and gradually precipitation the next batch of heavy coffee consumers loyal to the brand. In addition, other consumers with low loyalty to Starbucks should carry out corresponding promotion and social fission activities to increase the stickiness of starbucks brand among consumers. The accumulation of data and information can not only be used to screen users, but also be applied to store location, replenishment and other aspects. Make use of the high-tech of new retail to create more consumption scenes and improve consumption experience.
People who know about the new retail know that alibaba and Tencent are inseparable when it comes to the new retail in the domestic market, so is the new retail of Starbucks. Starbucks can choose mobile payment tools with strong social attributes according to the characteristics of its products, strengthen the connection with users through payment means, and direct users to starbucks physical stores in the process of interaction with users. It is better to use the channels of the two giants to expand their sales range and enhance the brand’s user engagement through some means of activities.
In addition to mobile payment tools, Starbucks can leverage the latest technology developed by the two giants in new retail areas to create smart stores with more consumption scenarios and better experiences. For example, Alibaba’s digital system into its stores. In addition, Starbucks still needs to grasp the real core of the new retail by constantly understanding and deepening the new retail, and during the cooperation with the two giants, it should not hand over what it owns without reservation without guarantee.
In general, whether it is the cancer scare or the transformation of new retail, As the industry benchmark of the coffee industry, Starbucks is destined to live a life of not too quiet. In an era of rapid change, there will be greater challenges waiting for Starbucks. In order to go further and more stable, Starbucks must adapt to the development trend of The Times, constantly update itself, and meet the challenges with the best state.
Article/Liu Kuang public account, ID: Liukuang110