Starbucks’ New Experiment – Strategy With RS

Starbucks realised that it was leaving money on the table. It gave customers compelling reasons to visit it in the morning & afternoon but not in the late ‘evening’. It also realised that it has prime real estate in urban markets which it could be ‘monetising’ more efficiently & effectively in the late evening hours stretching till its closing time.

But is also realised that the beverage that find favour with its customers in late evening will not merely be coffee or tea but could be beer & wine.

Based on this realization, Starbucks, since 2010 has been testing the concept of serving wine and beer in a handful of US locations.

In these stores Starbucks, from 4 pm till closing time it has enhanced its menu to includes new premium food, like savoury snacks and hot flat breads, as well as wine and beer. The wine and beer selection reflects local tastes and preferences, and keeps on getting refined over time. In addition these stores have incorporated flexible seating to accommodate individual and small groups as well as larger parties that want to host community meetings or other events such as book clubs.

Business lesson for us:

1. Follow your customers & enhance there lifestyle through your product / service offering.
2. Sweat your assets.
3. Be flexible in your approach.
4. Keep evolving with time to remain relevant.

 

———-

rajesh-srivastava-insideiim

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous  Strategy with RS posts can be found here

Comments

2 comments

Harveen Singh Johar

It can never do so in India, however good the strategy might be. In Indian consumers mind, bar and cafe are two different places. Plus, excise department and other wanted/unwanted hassles might not be worth to make the effort.

Rajesh Srivastava

Harveen Johar. Yes in India it appears difficult to implement the ‘wine & beer’ because an establishment requires permit issued by the government to serve alcoholic beverages. Through this post I was attempting to make a larger point – How a company defines the business it is in, will define the direction & opportunities it will pursue. For instance Starbucks seems to have decided it wishes to be in Beverage business. And hence it is pursuing a path in which it is ‘beta’ testing the concept of serving wine & beer too during evening hours. Before taking any major shift in strategic directions it should be ‘beta tested’ & that is what it has been doing. It is also striving to localize the wine & beer selection to suit the local taste. Lesson for us: In India they may not introduce ‘wine & beer’ but they could launch any of the popular beverage form Indian menu – lasssi, mango panna, numbi pani, kalla khatta etc.