Nilu Coffee surpasses Starbucks

Although Starbucks is sweeping the world, a small company, which competes with it in the UK, has not been defeated, but has stood out. The return on assets has surpassed Starbucks for four years in a row, the store has expanded at an average annual rate of 38%, and its share price has risen 15 times in three years. The reason is that it implements the industry essence excavated by Starbucks: "experiential consumption".

It turns out that small companies, if they have a thorough grasp of the nature of the industry, can also compete with giants. The company, CaffeNero, like Starbucks, has learned that in an era of affluence, consumers are no longer inclined to "rational consumption" and that the traditional pursuit of coffee quality and value for money has been translated into the demand for "experience" and "third space" provided by cafes. Starbucks is the world's largest coffee chain, with 10241 stores, a 20% increase in sales and a 30% increase in profits for more than a decade, with a total market capitalization of $26.4 billion. In 1998, Seattle Coffee was acquired to expand the British market. Traditional British people have a long tradition of afternoon tea, but Starbucks has changed everything!

From 1997 to 2000, the British coffee shop market grew by 55%, surpassing tea in 2000, accounting for 51% of the market value of hot drinks. There are three strong coffee chains in the UK, namely, Costa Coffee, which opened in 1971, CoffeeRepublic, which opened in 1995, and Nilu Coffee, which was founded in 1997.

In these three local coffee shops, Nilu Coffee is outstanding. For two consecutive years in 2004 and 2005, it was selected as the 20 fastest growing companies in Europe by BusinessWeek. From 2001 to 2006, the number of Nilu coffee shops increased from 61 to 285, expanding at an average annual rate of 38%.

Comparing the market share of British coffee chains, Starbucks accounts for 27%, Kashijia 18%, Nilu Coffee 13%, and the remaining 42% are other coffee shops. Although Nilumu has a coffee shop. Although Nilu's current share has not surpassed that of industry giants and established competitors, it has almost achieved the results of Kashijia for more than 30 years in less than 10 years.

The share price of Nilu Coffee rose 15-fold from 17 pounds a share to 260 pounds in the three years from 2003 to 2005.

Starbucks and Nilu Coffee are both successful in the UK market. What's the secret? They have all mastered the "industry essence" of the brand chain coffee industry, that is, "Experience".

What is experience? Is the experience so magical?

Britain is a well-known developed country in the world, according to data, the "non-essential expenditure" in national life has greatly increased, indicating that British people are increasingly seeking enjoyment. In other words, the British people began to want to "experience" something they had not experienced before, and they wanted to "experience consumption".

Let's take a look at the whole process of the appreciation of coffee: when coffee was sold as a commodity, his price was about 15 pounds per pound; by the time the factory was packaged as a commodity, his price was about 1 pounds per cup; if sold in a coffee shop, the price will increase 2-3 times to 2-3 pounds per cup.

The price of coffee has multiplied several times from simple goods to coffee shops, but if it allows customers to experience a new way of life, it can cost as much as 5 pounds or even dozens of pounds per cup.

When coffee is a commodity, its value is reflected in the basic value, that is, the value of the goods.

When the coffee is packaged into a commodity, the packaging and brand of the commodity have added additional value to the coffee, and its value is not only the value of the goods, but also the value of the goods.

When the coffee arrives in the cafe, the service adds more added value to the coffee, and the value of the coffee is more reflected in the service.

By the time coffee allows people to experience a new way of life, then all the added value mentioned above is no longer important, and the word "experience" is enough to give a new interpretation of coffee and magnify its value as never before.

Brand chain coffee shop, it is found that the "experience" contains a huge added value, thus through the "experience" to add value to the coffee and obtain huge profits. "experience" has now replaced price, quality and service as the core competitiveness of coffee retailing!

Three kinds of experience

What are the elements of the experience in a chain of coffee shops? It is mainly divided into the following three categories: sensory experience, emotional experience and action experience.

Sensory experience

Sensory experience focuses on "sensory enjoyment". We might as well take Nilu Coffee as an example to analyze the process of this sensory experience from the perspective of a customer from the moment it bursts in:

Nilu Coffee's unique storefront decoration style is extremely eye-catching, which makes passers-by have an impulse to stop and enjoy the amorous feelings of the store. And these passers-by are potential consumers of brand chain coffee shops. Nilu Coffee provides potential customers with a visual experience and enhances its attractiveness through unique external decoration.

When customers enter Nilu coffee, elegant decoration, comfortable environment, full of artistic posters, meticulous display of goods, all of which make customers stop and linger. Nilu coffee conveys a warm, happy, warm and comfortable visual experience through the decoration of black, white and blue.

Nilu Coffee plays different styles of music from morning till night, and singers perform live from time to time. When customers are waiting for coffee in their seats, the melodious music has made you relaxed and happy and enjoy the auditory experience.

When the coffee is delivered, it will first smell mellow and fascinate the customers, then put the Shou coffee into the mouth and savor it carefully. The mellow and mellow coffee is intertwined, bringing customers a dual experience of smell and taste.

The whole process may take only a few minutes from entering Nilu Coffee to sitting down and tasting it, but Nilu Coffee provides customers with a comprehensive sensory experience in terms of sight, hearing, taste and smell.

According to a recent survey in the UK, customers think that the best conditions for a good coffee shop are coffee quality (32%), service attitude (20%) and interior decoration (18%).

Among the three most important conditions, coffee quality is related to smell and taste experience, and store decoration is related to visual experience. So we found that 50% of the conditions that we should have are directly related to the sensory experience. This shows how sensitive the customer is to the sensory experience.

Emotional experience

Emotional experience is of course related to the emotion of the customer. Before we talk about "emotion", let's take a look at who are the customers of the brand chain coffee shop.

Nearly half of the consumers of the brand coffee shop chain are students and nearly four percent are white-collar workers, according to a British survey. These two main consumer groups already cover 90% of all consumers.

Do these two groups have anything in common?

Students and white-collar workers are well-educated, stress the taste of life, and are rich in cultural flavor. These characteristics lead to their consumption activities, the emotional component is often greater than the rational component, that is to say, when they consume, they are often easily affected by emotion.

Hermit, a famous marketing psychologist, pointed out that the emotion that occurs during consumption is the strongest.

The famous consumer symbol scientist Kemei Hoshino also pointed out in his work that consumers are not only limited to the economic behavior of "consumption of things", but also transformed into the perceptual and imagery consumption behavior of products.

We might as well imagine what it would be like to sit in a romantic coffee shop with a favorite book, listening to wonderful music and tasting mellow coffee. What kind of mood do you have in all this?

There is no doubt that your mood is relaxed and comfortable, you can ignore the worldly world outside the coffee shop, just let the mood fly in the coffee shop and enjoy it quietly.

According to a survey, 37% of consumers said that the purpose of breaking into the chain coffee shop for the first time was to relax.

In fact, the coffee shop has been a place full of humanistic flavor and emotional enjoyment since ancient times. Many well-known painters and writers in Europe like to create art in cafes. Van Gogh has two famous paintings related to cafes, and Dickens also wrote many immortal literary masterpieces in the cafe.

Why do cafes become a paradise for artists? Because the cafe can provide a leisurely atmosphere and atmosphere that can not be provided elsewhere, allowing artists to maximize their imagination and creativity in this atmosphere.

It can be seen that the emotional experience of the coffee shop has been produced as early as a few centuries ago, but the brand coffee shop chain inherits this valuable experience and shows it through the enhanced sensory experience.

The reason why the emotional experience can be produced is closely related to the comprehensive sensory experience of the chain coffee shop. "the aroma of coffee", "relaxed atmosphere" and "elegant decoration" are precisely the interweaving of the elements emphasized in these sensory experiences, which trigger consumers' perceptual thinking and stimulate their emotional experience. Therefore, sensory experience and emotional experience are inseparable.

So whether the emotional experience can be recognized by consumers? According to a consumer report, consumers have the following experience of the brand coffee shop chain: "they feel different from the polluted air outside the store and have a sense of isolation from the rest of the world." "the smell of coffee makes me want to sit a little longer." "when you are in a bad mood, you will want to drink coffee. When you run out of coffee, you will forget all your troubles." "here I can have my own space to think."

These are the wishes of consumers themselves, and it seems that consumers have unwittingly integrated into the emotional experience provided by the chain coffee shop, and therefore feel very enjoyable.

Action experience

The so-called "action experience" refers to a kind of "life form" experience and a kind of interactive experience.

Brand chain coffee shop, to play is the "third space". "first space" and "second space" refer to workplaces and living places. The third space, for customers, is a comfortable social gathering place, just like another "living room", where you can either meet guests or relax alone. The main customers of chain coffee shops-- students and white-collar workers-- pursue fashion and fashion, while facing strong pressure of further study and work every day, they are in great need of spiritual comfort and a place where they can relax and get rid of their troubles. Chain coffee shops just cater to their psychological needs, so some people call it a "healing oasis" in the city.

According to local sociological research in the UK, the top two consumption activities that customers most often engage in in coffee shops are rest, relaxation (33.5%) and killing time (23.5%). We found that more than 50% of people came to the coffee shop aimlessly, indicating how strong the customer's need for action experience is.

The emergence of action experience is largely rooted in customers' demand for emotional experience in coffee chains, so we can find that in the whole process of experience, sensory experience, emotional experience and action experience are inseparable and intertwined. It is the interweaving of these three experiences that create the best experience process for customers.

So how amazing is the experience? The results of a survey show that 33.5% of consumers in chain coffee shops have no habit of drinking coffee! This shows that consumers come to the chain coffee shop to get some kind of experience they expect, not the coffee itself, and the chain coffee shop chain has expanded its customer base by nearly 50% just by "experience".

Most consumers are irrational.

Finally, we might as well compare "traditional consumption" and "experience consumption".

In "traditional consumption", consumers are "rational decision makers". In different markets, they consider functions according to importance, evaluate product performance, and choose goods with the maximum overall benefit.

Different from traditional consumption, the focus of "experience consumption" is "consumer experience", which replaces the value of function with the value of perception, cognition, emotion and behavior. In the process of consumption, consumers are not only "rational decision makers, but also emotionally driven. What consumers want is entertainment, stimulation, emotional shock, and creative challenges."

It is worth noting that consumers are often irrational. Some studies have pointed out that the human brain is always biased towards emotion rather than reason. A recent study by Professor GeraldZaltman of Harvard Business School shows that 95 per cent of consumers' perception of a product or brand exists subconsciously. What does that mean? It shows that consumers will be subconsciously affected by emotion when they buy.

Other research results show that more than 70% of consumer behavior is impulsive consumption. A typical example is that when you go to the supermarket, you usually buy more things than you expect when you check out. When consumers consume, they often do not have a deep understanding of the irrational elements and think that they are rational consumers. In fact, the phenomenon of irrational consumption is far more serious than we thought, but we just don't realize it. It is precisely because consumers are irrational that brand chain coffee shops can ignore the most important factors in traditional competition, such as price, weight and quality, and use "experience" to capture consumers directly!

Ignore the decline of "perceptual consumption" and "Lodorum"

Are consumers rational animals or perceptual animals? Whether the true meaning of business management lies in the rational model with quality and price as the core, or the perceptual model with experience and feeling as the main body? The ups and downs of the Japanese coffee giant Rodorun give a good explanation to this issue. Rodolun was founded in 1962 by Birdwood Bodo and was originally engaged in the coffee processing business. In 1980, Japan's first self-service coffee shop chain was founded in Tokyo. Before that, coffee was still a luxury in Japan, while patronizing coffee shops was a high-end consumption of identity and status. Luo Doren broke this situation, praised the business philosophy of "for people's relaxation and vitality", and created a relaxed and leisure atmosphere in the store. At the same time, Rodoren grabbed a huge market share with an attractive low-price strategy. It only costs about 200 yen to drink a cup of coffee in Rodorun, and with snacks, the per capita consumption is no more than 300 yen. At that time, in other cafes, a cup of coffee was at least 300 to 500 yen, with a per capita consumption of 1000 to 2000 yen. This price difference of several times has become the most important competitive advantage of Rodolon. Rodorun has rapidly grown into the number one brand chain coffee shop in Japan. By 2005, Rodorun had 1424 stores across the country, including 268 directly operated stores and 1156 franchise stores, almost occupying the center and transportation hub of every city. the eye-catching shop logo of Rodorun's yellow stripes with black background can be seen in every big subway or station. As a result of the low-price strategy, even in the recession that began in Japan in the 1990s, Rhodoren maintained an average annual sales growth of 13%, rising from 35 million yen in 1999 to 55 million yen in 2003. However, since 1996, Rodoran's hegemonic position in Japan has been strongly challenged. This challenge comes from the Starbucks craze that is sweeping the world. Japan's Starbucks, founded in 1996, is 50% each funded by Japan's Sazaby Group and Starbucks of the United States. The operation of the company is presided over by Yuji Kata, the boss of Sazaby. When Starbucks first started to develop in the Japanese market, it was faced with an overwhelming number of Rodolon and a market spoiled by its low prices. Even so, Starbucks did not give up its position and fight a price war with Rodolon. Starbucks' coffee pricing is high compared with the self-service coffee chain represented by Rodoran. The average cup of coffee is set at about 300 yen, which is 50% higher than that of Rodolon, and the per capita consumption is more than 500 yen, which is also 60% higher than that of Rodolon. However, this relatively high price did not stop Starbucks from growing rapidly in Japan, with sales growing at a rate of about 100%, from 4424 million yen in 1996 to 54,599 million yen in 2000. The number of Starbucks stores is also expanding rapidly, opening 100 in 2003 alone and reaching 551 in 2005. Apart from the price, Starbucks and Rodoran's strategies are also significantly different in many other ways. Through an online survey of cafes across the country in 2006, we can get a general idea of the strategies of the two brands. The survey interviewed about 7000 people of different ages in different regions of Japan and surveyed all coffee shops in Japan, focusing on the four most popular coffee shops (Starbucks and Lodorum). A more detailed study was conducted on the old-fashioned coffee shop and Tory, another local self-service coffee shop chain. The survey points out that more than half of the people who like Rodolon most are because of its price. Luo Duolun surpasses his peers and has the taste of snacks. The most people said that they liked Starbucks because of its coffee taste, with a satisfaction rate of 63%, while Starbucks had the highest score for atmosphere in the store, with a satisfaction rate of 44%. On the other hand, the scores of both items are the lowest in the industry.

Thus it can be seen that Starbucks wins with atmosphere and coffee, while Rodollen wins by price and snacks. In order to better understand the strategic differences between the two, let's compare the atmosphere and snacks of Starbucks and Rodoran.

The first is the atmosphere in the store. It is also a self-service coffee shop, but the two shops give people a completely different feeling. Rodrigo and Starbucks have an average store area of 30-50 square meters, but Rodrigo usually has 40-60 seats, while Starbucks usually has only 20-30 seats, a difference of twice as much. Luo Doren's tables and chairs are crowded and there are only some gaps between the seats, which indirectly leads to the noisy environment in the store. As a result, customers can enjoy coffee to spend their leisure time in the spacious and quiet environment of Starbucks, while they can only be treated like a fast food restaurant in Rodorn.

At the same time, every Starbucks attaches great importance to interior decoration, style and atmosphere. Because Luo Duolun is a franchise restaurant, there is no unique and unified style, most stores use the simple decoration of fast food restaurants, and will not pay special attention to the overall environment.

In addition, smoking and no-smoking areas will be set up in every Starbucks store to ensure a fresh and tidy environment. And the vast majority of Luo Doren do not have this kind of setting, sometimes the store is shrouded in smoke, can not help but drive away some female customers.

Outside of the environment, let's take a look at Rodoran's snack strategy. Luo Doren's snacks are based on staples such as hamburgers and hot dogs, which are well received and cheap.

However, if you compare Rodolon with McDonald's and Starbucks. It can be seen that in terms of types of food, Rodorn is far from Starbucks, but closer to McDonald's. As for price, if weight is taken into account, Lodorum is much cheaper than Starbucks and at the same price as McDonald's.

At the same time, as a coffee shop, the most eye-catching and space-occupying part of Rodoren's menu is snacks. From this, it can be inferred that Rodoren is not actually targeting customers who really want coffee, but is similar to McDonald's, focusing more on "hungry customers" who need food to fill their stomachs. In this sense, Rodorn is essentially a fast-food coffee shop.

To sum up, on the one hand, Luo Duolun adopts the strategy of low price, on the other hand, he provides high-quality and inexpensive fast food snacks to defend his hegemonic position in a "rational way". On the one hand, Starbucks maintains a high-end attitude, on the other hand, it strives to create an atmosphere in the store, selling leisure and romance, and opening up the market in a more "perceptual way".

So, rational or emotional, which wins or loses?

First, let's take a look at the consumer anti-collapse online survey report in 2006, the proportion of respondents who have visited Starbucks and Rodoran are 82.8% and 80.5%, respectively.

Among the respondents, 38% said their favorite coffee shop was Starbucks, while Lodorum had only 21%, 17% less than Starbucks.

It turns out that Rodolon's low price does not help it win more customers. If you consider that there are twice as many stores as Starbucks, in fact, the average number of customers per store is less than Starbucks. And among these visitors, the number of people who really like Rodolon is even less than Starbucks. It can be seen that customers are lack of recognition to this rational strategy of Rodolun.

Let's compare the sales of the two companies. For the whole of 2005, Starbucks' average sales revenue per store in Japan reached 112.85 million yen. Rodrigo costs only 46.56 million yen, which is about the same as that of Starbucks. Instead of helping it achieve small profits and quick turnover, Rodorn's low-price strategy has reduced its profit margin, leaving its overall revenue far behind Starbucks.

With the gradual improvement of the Japanese economy, Rodorn's rational consumption pattern is facing more severe challenges. When people's income increases, they tend to move from rational to perceptual, demanding higher emotional and spiritual enjoyment.

The increase in sales revenue of Rodoran reflects this trend. With the economic recovery that began in 2002, Rodorn's income growth has slowed significantly since 2003, and profit margins have also declined. Income grew by an average of 13 per cent between 1998 and 2002, compared with just 3 per cent in the three years from 2003 to 2006.

On the other hand, Rodoran's stock market performance is also disappointing. In 2002, the stock price of Rodolun plummeted. Since the beginning of 2003, the Nikkei index began to rise steadily, but Rodolun remained stagnant, and the stock price did not rise with the improvement of the market.

The decline of Rodorn proves the essence of the coffee chain-"experience first". Customers are irrational and they are willing to spend more than the value of coffee to buy emotional and spiritual satisfaction. Driven by this demand, a simple low-price strategy will not work.

Contrary to the nature of the industry, "experience value-added", United Coffee failed.

So what are the consequences of violating the nature of the industry "experience"? Let's look at the example of Union Coffee.

Union Coffee is one of the three local coffee chains in the UK with a glorious past. It had 8% of the British market in 1999 and less than 2% in 2005.

What makes Union Coffee in crisis? There are two reasons: first, blind expansion; second, wrong transformation.

Let's first take a look at the consequences of blind expansion. Union Coffee bought 30 branches of the top coffee chain for 8.6 million pounds at the end of 2001. However, haste makes waste. SaharHashemi, founder of United Coffee, said, "people expect us to expand faster than we value profits." The debt cost of acquiring a new company is much higher than management imagined. " Union Coffee's debt-to-asset ratio reached 242% in 2005, far ahead of Nilu Coffee, Kashijia and Starbucks, which have a debt ratio of less than 100%.

Let's take a look at the second reason for failure, wrong transformation. The original purpose of United Coffee is to provide customers with enjoyment and experience. But as competitors become stronger and eager to get out of debt, the idea of transformation is put into action.

In 2003, Union Coffee changed from an experiential coffee shop to a coffee shop mainly selling fast food and cooked food. Imagine drinking coffee while eating bread and cooked food. the target customer base has naturally changed from a "receptive customer" to a "hungry customer", and the atmosphere and experiential function of the coffee shop have been completely changed.

This transformation goes against the nature of the industry and leads to a series of losses. It lost about £1.7 million in 2004, £1.4 million in 2005 and £1.45 million in 2006. It is precisely because it expands too fast and violates the nature of the industry that it falls into the abyss of losses year after year. Don't forget that Union Coffee was one of the top three coffee chains in the UK.

The share price of United Coffee is also a strong proof of these two losses. Share prices fell between 2002 and 2003, from a peak of £9 to less than £2. Between 2003 and 2006, share prices were mediocre, hovering between £1 and £2 a share despite big asset sales, proving that the transformation was against the nature of the industry. Summing up these two major mistakes, United Coffee failed justifiably.

Nilu Coffee perfectly interprets the essence of the industry

With the nature of the industry discovered by the giant Starbucks, can the fledgling Nilu Coffee take market share from Big Brother?

The answer is no for the time being, and this should never be Nilu's short-term goal. After all, there is a huge gap between a fledgling rookie and the founder of the industry. So, does standing on the shoulders of giants mean being a little brother to giants and following suit? Nilu Coffee's vision is by no means limited to that.

A customer satisfaction survey conducted by the famous British consulting firm Allegra on the British coffee chain revealed its ambition and potential (the survey targets are Nilu Coffee, Starbucks and Kashijia): Nilu Coffee won the first place in six rankings, including coffee quality, bad atmosphere, service quality, food quality, cleaning and price ratio, beating industry giant Starbucks and local established stores Cafe.

In many other financial performance, Nilu Coffee is also very eye-catching. Since Nilu Coffee went public in 2001, its share price has risen much higher than that of its rival Starbucks, and its operating return has also reached 7.8%, surpassing Starbucks, reflecting that Nilu Coffee's profitability continues to improve with the scale effect of expansion.

It is based on such excellent financial performance that Mr. Ford, the founder of Nilu Coffee, said: "Nilu Coffee can make any new branch profitable within three months."

Experience differentiation: a unique Cultural experience of Italian Coffee

In addition to the industry nature of "experience consumption", Nilu coffee will experience differentiation is the second important factor in its success. According to Pine and Gilmore, the creators of the concept of experience economy, "setting a theme is the key to creating experience." If the experience has no theme, consumers will not be able to grasp the main axis, and it will be difficult to integrate the experience and leave a long-term memory. " Nilu Coffee, with the theme of providing pure Italian coffee culture, provides customers with a unique experience and has been a great success.

Italian coffee is the highest-grade coffee in the world, and coffee culture is the most thick and deep-rooted in Italy. It is said that when Starbucks President Schultz started his business, he also went to Italy to learn lessons. At that time, he was deeply impressed by the richness of Italian coffee culture, and Starbucks' experiential marketing was also inspired by it.

Caffe Nero means "black coffee" in Italian, and "black coffee" is the purest coffee without any added coffee. The name "black coffee" is undoubtedly a sign of purity and nobility. The trademark design is also all in Italian, and the English part of it is also to show their identity, emphasizing "Italian coffee culture". Such a logo can arouse consumer curiosity and boast that unlike the popular American consumer culture, it offers pure Italian coffee and a unique experience. The Italian style of Nilu Coffee is realized through its elegant storefront design and elaborate food service. Nilu Coffee has a variety of storefront styles, no two stores have exactly the same design, and each store has a sense of freshness. But on the whole, it is mainly European-style architecture, showing Mediterranean style. In contrast, its competitors United Coffee and Kashijia's storefront design are lack of ingenuity, adopt the same fast-food storefront design, appear to be more rigid. Industry giant Starbucks has its own global style, but it will adjust accordingly according to the surrounding buildings or environment. In terms of interior decoration, Nilu Coffee, which attaches importance to experience, is also quite different from the Cajun Family which gives priority to coffee quality. Ka Shijia adopts a fast food style similar to that of McDonald's, while Nilu Coffee uses a large number of vaulted carvings as decoration elements, which is more elegant. As the most intuitive and priority experience for customers, the storefront is undoubtedly an aspect that the chain coffee chain should pay attention to. Nilu Coffee's high-end decoration style and diversified storefront design highlight the successful differentiation of its own Italian style.

Rich Italian food experience

Food service accounts for 35% of Nilu coffee sales, which makes the per capita consumption of Nilu coffee higher, and the store turnover is also higher than Starbucks, Kashijia and so on.

Nilu Coffee offers more than 70 kinds of food, including sandwiches, soups, desserts, spaghetti, cakes, salads and so on. Customers can enjoy non-repetitive cuisine at Nilu Coffee all day, many of which are very distinctive Italian food.

In order to ensure the high quality of food, Nilu Coffee has established a long-term partnership with DBC Food Service, a leading British food supplier, in charge of food production and delivery, while RPC Blackburn, a well-known European plastic container manufacturer, has tailored containers for Nilu Coffee to facilitate microwave heating of take-out soup and retain the original flavor.

On the face of it, food is just an auxiliary tool for coffee chains to increase their turnover. Why is Nilu Coffee so committed?

It turns out that food plays a very important role in Italian culture. It is not only for people to satisfy their hunger, but also regarded as "spiritual food". Therefore, Nilu Coffee provides snacks not just to satisfy customers' hunger, but to provide an "experience of Italian culture" that differentiates itself through the food business.

The experience was recognized by customers, and Nilu Coffee won the award for Best Sandwich seller in Coffee Shop of the year.

The excellent performance of Nilu Coffee Food business, and the promotion of the overall business, have been valued by the industry, have made great efforts in the food business.

The industry giant Starbucks, which at first only used snacks as a means of cheap promotion, had no intention in variety, but now it has brought the food business into the focus of the global strategy, with more than 40 food items and sales of 30% of the overall business. However, Starbucks food business lacks the corresponding theme guidance, and the effect of providing consumers with experience is not as effective as Nilu Coffee.

The previous article also mentioned the business proportion of Union Coffee, but changing the target customers from experiential to hungry conflicts with the image of their own brand chain coffee, but the prospect is not optimistic. It is a far cry from the food service that Nilu Coffee emphasizes experience.

Choose the location of the city center and seize the perceptual customers

With a good theme and content, so that customers can arrive easily and quickly, it has become another element of success. For operating chain stores, the location strategy is the top priority of the whole business strategy. Wal-Mart founder Sam Walton once summed up Wal-Mart's success: "there are three keys to the success of chain operation, one is location, the other is location, and the third is location." A smart location strategy brings not only passenger flow, but also a strong guarantee to establish a brand image and achieve experience. The core of Nilu Coffee site selection lies in two aspects, taking the city center as the core of development and occupying the surrounding second-and third-tier cities. The core of the development of Nilu Coffee is to seize the prime location in the city center. Nilu Coffee has more than 30 stores in central London, accounting for about 11 per cent of its total stores in the UK and about 40 per cent of the total in London. However, it is 26 years younger and has only a little more than half the number of stores. Nilu coffee has a significant advantage over Kashijia in the distribution and density of Nilu coffee in central London.

Thus it can be seen that the attack of Nilu Coffee on the downtown area is effective and rapid. In the face of high land rent, the use of mergers and acquisitions and cooperation has laid the foundation in the city center in a short period of 10 years.

Why is Nilu so determined to take the city center as the core of his development?

One of the reasons is, of course, the passenger flow in the city center, and the more important reason is to create an appropriate environment for the action experience. Nilu hopes to create a "third space" beyond the "workplace" and "living place", so that customers can inadvertently devote themselves to the cultural, emotional and sensory enjoyment created by the road. The most important element required to do so is convenience. The so-called "third space" is where people spend their leisure time in a busy space, relying on customers' aimless sexual behavior patterns. Just imagine, if there is a lack of convenience, then this mode of behavior of customers will not be arbitrary, and customers will change from aimless "perceptual consumers" to "rational consumers" with a certain purpose. However, the profit of the coffee shop is actually the part of "experience value-added" realized under the "perceptual consumption mode". So who does this convenience serve? It depends on the clients of "third Space"-students and white-collar workers. Of the two, because the schools are located in different corners of the city, the students are relatively scattered. Although Nilu has a network near the school and other academic institutions, it is not targeted because of its wide dispersion. The city center is different. As a gathering place for office buildings and business centers, it is also a distribution center for white-collar women who pursue experience, exquisite emotion and low price sensitivity. These white-collar workers, when they are busy at work, often need a "third space" to take them out of the work pressure temporarily, enjoy a few minutes to a few hours of leisurely time, avoid all troubles, and have a relaxed conversation with colleagues or friends. And when this time for self-relaxation is over, they will get back on track. On the one hand, they have great potential to experience consumption, on the other hand, they also have high requirements for convenience because of their busy work. Therefore, in order to successfully approach this group of white-collar workers with strong psychological needs, in order to create a "third space" and achieve a leap in value-added experience, Nilu Coffee developed this simple and clear location strategy-"occupy the city center". However, as a breakthrough point to realize the experience, the city center has naturally become a battleground for military personnel. Industry giant Starbucks with abundant capital and international well-known brand influence, early in the carpet offensive in central London to roll out its own chain network, the number of outlets far exceed Nilu coffee.

In the face of this strong offensive, is Nilu Coffee willing to be left behind?

Enter the second-and third-tier cities first

The answer is, of course, no. Nilu Coffee chose to meet the challenge in a different posture-attacked by the enemy's rear.

In fact, in addition to expanding in central London, another strategy of Nilu Coffee is to enter second-and third-tier cities earlier than its competitors and set up a defensive base.

According to our rough statistics, there are about 20 second-and third-tier cities where Nilu Coffee has landed and Starbucks has not yet entered. Although the population and commercial scale of these cities are not as large as those of London and Birmingham, their spending power is still something to be reckoned with. The south London city of Lancaster, for example, has a per capita income of £21427, even higher than the established industrial city of Manchester.

In the process of entering these cities, Nilu Coffee still adheres to the principle of downtown. Although there are only one or two stores in each city due to resource constraints, they are all located in the heart of the city.

Through these stores, Nilu Coffee takes the lead in establishing Italian coffee culture and influence, setting the tone of experience and expanding its "third space" in areas that have not yet been infiltrated by Starbucks-style coffee culture.

Inspiration for Chinese Coffee chain Industry

Nilu Coffee is accurately located and achieves unexpected results with fewer stores around the core values of "upper space" and "action experience". The return on assets has surpassed that of the industry giant Starbucks since mid-2001.

In 2005, it reached 2.21, far ahead of the three major brand coffee shops.

This is all due to Nilu Coffee's more efficient investment strategy and unique market vision, as well as a more important guiding philosophy-experience.

There is a huge market space for China's coffee chain industry. Since 1998, China's per capita coffee consumption has been increasing at a rate of 30% year by year. Pablo Dubois, director of the Operations Department of the International Coffee Organization (ICO), believes: "China will become the world's largest coffee consumption market."

Also in the face of giant Starbucks, many Chinese companies imitate its brand. For example, "Qingdao Starbucks Coffee Restaurant Co., Ltd." wanted to directly borrow the influence of the giant, openly used Starbucks' name and tone very similar trademarks, and was sentenced to stop the infringement of the "Starbucks" trademark rights and pay compensation of 500000 yuan.

In fact, the real value of Starbucks does not lie in the brand, but in the grasp of the nature of the industry and the successful business model. With the same "copying and using", Nilu Coffee is superior in skill, adopts the successful model of Starbucks, grasps the essence of the industry, cooperates with the unique business strategy, forms differentiation, stands out in the competition, and achieves great success.

(responsible Editor: Leo)