What exactly does Starbucks sell? Is it just coffee?
If we only talk about selling coffee, Starbucks' business logic seems somewhat illogical. In the mature coffee consumption market in China, there are rising stars such as Luckin Coffee on one hand, and a large number of household coffee machines and online coffee beans on the other. Starbucks, sandwiched in the middle, is almost facing a dead end of "ambush in the front and pursuit in the back".
But the fact is, Starbucks not only did not get sandwiched, but also achieved impressive performance.
Starbucks' latest financial report shows that in the fiscal year 2023 (October 1, 2022 to October 1, 2023), the company's revenue in the Chinese market was $3 billion, a year-on-year increase of 11%; The number of stores increased by 13% to reach 6806.
In other words, Starbucks has never been solely focused on coffee as a source of profit.
Starbucks is the first brand in the catering industry to introduce the concept of "third space" into business operations. As early as the 1970s, American sociologist Ray Oldenburg proposed that people urgently needed to find an "informal public space" between home and work, also known as the "third space". He defines the main characteristics of the "third space" as "relaxed but not lazy" and "free to release oneself", and particularly emphasizes that the place must have a certain social function. Using this definition to filter various places, coffee shops, tea houses, community centers, etc. clearly have advantages.
Looking back at Starbucks from the perspective of the "third space", one can understand its selling points. Unlike fast-moving coffee shops and convenience consumption scenarios, Starbucks has clearly put a lot of effort into creating a "third space". Buy a delicious drink, sit in a cozy and warm space, flip through a paper book, or read a PPT. When you meet someone who is close to you, smile and say hello. Leisure and interaction are completed unconsciously.
Following the concept of "third space", it is not difficult to understand the "street pickup" service. Last March, Starbucks China and Amap jointly launched a new retail channel called "Along the Street Picking", which was the first to launch in 150 Starbucks stores in Beijing and Shanghai. It is expected to expand to 1000 stores nationwide within a year.
This service is mainly aimed at car owners or passengers who have a need for coffee during peak commuting hours and busy road sections. Consumers only need to set their destination and pick-up points along the way on the Gaode Map App in advance, and store staff will deliver meals to the passing points based on the estimated arrival time of the consumers.
From the perspective of selling coffee, the "street pickup" service is really mediocre. On the one hand, it needs to rely on a high-density store network, which most chain stores cannot achieve; On the other hand, it also requires precise route planning to the minute level, which non professional navigation cannot do; Even worse, before the formation of economies of scale, "taking along the street" does not have sufficient profit margins, and is basically "losing money and making a fuss".
However, from the perspective of the "third space", "taking along the street" can be considered a pioneering move. It is equivalent to extending services from stores to street side retail using cars as a carrier, transforming "people waiting for goods to arrive" into "goods waiting for people to arrive". Its birth marks the expansion of Starbucks' "third space" once again, creating a new consumer scene of "on the go" beyond "to the store" and "to the home".
In fact, the market space for "on the road" is extremely huge, but it still needs to be cultivated and explored. According to data, as of 2022, the global car ownership was 1.446 billion vehicles, with China's car ownership exceeding 312 million vehicles, accounting for 22% of the world's total and ranking first in the world.
Many countries have launched "Drive Thru" services to cater to this large consumer group. The entire restaurant is designed in a lane shape, and drivers only need to drive into the store, press the car window, and can directly order and pick up food like passing through a toll station on a highway. The entire process only requires braking and does not require getting off the car.
In China, due to the high rent in the core areas of most cities, it is difficult for ordinary restaurants to afford the car restaurant model with their own lanes. On the contrary, the "street pickup" service can not only meet this demand but also avoid high upfront cost investment, which is undoubtedly a highly imaginative lightweight and digital innovation.
From Starbucks' exploration, it can be seen that good products are only a necessary condition for a good brand, not a sufficient condition. The breadth of service extension and the ability to reach customers will largely determine how far a brand can go. Only brands that can keenly identify, lead, and even cultivate demand have a long-term competitive advantage.