Deep text | Why is costa always "always in second place" in China?

Core Tip: In the Chinese coffee chain market, Costa is always second, or on the way to second place...

Costa, the UK's largest coffee chain, introduced top-quality coffee products and a strong espresso culture to China in December 2006 as its business grew in size, speed and brand awareness.

However, both Shengyu and Shengliang, just like KFC to McDonald's, Pepsi to Coca-Cola, in the streets of many cities in China, you will see a Costa near Starbucks (special reading), or some popular business districts, and Ta also has a very low explosive name "Ka Shi Jia".

After ten years of deep cultivation in the Chinese market, why can't this British coffee market leader replace Starbucks in the hearts of Chinese people?

Image Source: Network Information Picture

Overseas stores expand slowly to become latecomers in the Chinese market

Founded in 1978, Costa was incorporated by Whitbread in 1995 and quickly became a globally renowned coffee chain. In terms of market share in the UK, Costa Rica surpassed Starbucks in 2010 to become the UK's largest coffee shop and largest chain store. Costa now has more than 2000 stores in the UK, including airports, shopping malls, hotels and office buildings.

However, Costa stores have been slow to expand overseas, especially in China. Costa opened its first store outside the UK in Dubai in 1999, opening its international journey. This year, Starbucks, one of Costa's main competitors, arrived in China. Costa has yet to enter the North American market.

It wasn't until late 2006 that Costa opened its first Chinese store on Nanjing East Road in Shanghai, the brand's first in the Asia-Pacific region. At this time, Starbucks, which has been deeply engaged in the Chinese market for many years, has more than 300 stores (direct-sale stores + authorized stores) in China.

Until now, although Costa has been developing under the banner of strong expansion in China, in fact, its expansion speed is still not as fast as Starbucks. As of March 13,2017, Costa had 244 stores in mainland China, according to its official website. By the end of 2016, Starbucks had more than 2400 stores in mainland China.

Product and location can only follow Starbucks ass

Starbucks and Costa, by contrast, do more than just sell coffee. Starbucks 'business is more diversified, including tea, non-brewed coffee, coffee beans, desserts, cups. In North America, brands also have take-out services; in China, stores sell zongzi and moon cakes on traditional festivals, as well as themed events, such as supporting environmental protection, where customers bring only cups and get a free cup of hand-brewed coffee.

Although Costa also sells coffee, desserts, coffee beans, etc., in contrast, Starbucks 'business philosophy is to constantly try and make mistakes. Costa gives people the feeling that it is probably trying to imitate Starbucks while maintaining quality.

In terms of store location, Starbucks has a set of "GIS data modeling location system", that is, through the multi-aspect investigation and statistics of the target, finally determine whether to choose to open a store here.

In the face of Starbucks 'strength, Costa began to look for a strong "backer" in China, and found Hualian and Yueda Group, which have strong strength and channel advantages, as local partners. Costa has obtained the right to quickly enter many shopping centers such as large supermarkets and department stores from Ta, and the stores have spread rapidly at low cost.

This approach is very different from Starbucks 'initial approach to entering the Chinese market, which has been transformed into a national direct sale. However, in recent years, Costa has been adopting a very aggressive expansion strategy, opening more next door to Starbucks or nearby in terms of site selection, and launching a battle for customers.

British brand positioning is not clear

Whether Starbucks or Costa, Ta are chain coffee shops, as long as they meet two conditions: fast, good products, most consumers will favor. Starbucks has always been very clear about these conditions. At the same time, brands also rely on these conditions, ahead of other brands, occupy the global fast food coffee market.

On the contrary, Costa's brand tone has always felt that "we have more quality, we have more style". Is this the difference between British brands and American brands?

To put it bluntly, if you really want to drink quality coffee, consumers will choose boutique cafes, will choose single-item coffee, rather than chain coffee shops Italian coffee. Costa has always had a strange "British pride", but did not fully understand where its product positioning is.

With the continuous expansion and adjustment of its strategy in China, Starbucks no longer deliberately emphasizes that it comes from the United States, and its geographical attributes have been weakened. Instead, Starbucks now emphasizes a way of life and has been deeply rooted in people's hearts through its famous crossover with big brands many times.

On the other hand, Starbucks 'brand strategy: take customer experience as the core appeal of Starbucks brand assets, and often carry out some online and offline activities and customer interaction to attract popularity.

Selling products alone does not tie brands to customer relationships. It's not that Costa doesn't cross borders, or doesn't succeed with other brands, or lacks interaction with consumers. But relatively speaking, Costa seems to have only coffee...

Mobile payment drags back in China only Alipay

Starbucks 'most brilliant record in mobile is mobile payments. Starbucks consumers who used mobile to complete transactions online accounted for 10 percent of all high-traffic restaurants in the United States in 2016. In China, Starbucks is also actively promoting mobile payments, in addition to apple pay, but also with WeChat and other institutions to reach cooperation. On February 10 this year, Starbucks announced the official launch of a new social gift experience created jointly with Tencent WeChat. As a result, Starbucks became the first retail brand to launch a social gift experience on WeChat.

On the other hand, Costa is in the field of mobile payment in China. Xiaobian searched for the latest news, which was Alipay access to Costa in 2015. Apart from this message, brands have no action in the field of mobile payments.

In addition, compare the apps developed by each of them. Starbucks app home page will be customized according to user needs, will tell consumers their own consumption level, business hours and the nearest store (if close to Starbucks store, mobile phone screen saver page will also appear Starbucks icon). Costa's pages are simple ads for new products.

Development is encountering Pacific coffee counterattack, the status of the second millennium is threatened

Don't think Costa has no rivals other than Starbucks. At present, Starbucks ranks first in the number of chain coffee stores in China, followed by Pacific Coffee owned by China Resources. As of December 2017, the number of Pacific Coffee stores worldwide has reached nearly 500, including more than 300 stores in the mainland of China. It has more stores than Costa.

In the eyes of consumers, Pacific Coffee has always been a "low-key and restrained" brand. And this brand seems to take advantage of Starbucks and Costa in the midst of a fierce battle, quietly found its own positioning, and successfully counterattacked.

The success of Pacific coffee counterattack may be related to China being a country without coffee history. Because of this, the preference and appreciation of coffee in China is still in its infancy. What's more, there are some people who approach coffee shops just to pretend to be literary.

We cannot deny that in China, many people choose a cafe only by the brand, environment and service quality of the cafe. Even some young people nowadays will consider whether this store is enough for people to take a photo, art elegantly posted a micro blog, circle of friends.

Therefore, in the Chinese market to do coffee, selling point is not only coffee, more important is the cafe atmosphere and consumer experience. Therefore, coffee shops need to create their own brand tone to strengthen consumers 'sense of value. Pacific Coffee, which entered the development of mainland China in 2011, obviously found its own customer group and development positioning very accurately in the highly competitive coffee market.

Now, Costa, who has been through a lot of blows, also realizes the criticality of customers. Costa is reportedly trying to redefine its brand value. One measure is whether the product allows consumers to take photos with their phones and share them with friends.

Costa did this, hopefully before it was too late...