READING COFFEE? BY LISA SPENCER format, fast delivery, and plenty of technology. For Starbucks, the With nearly 30,000 stores in 78 countries, coffee powerhouse bigger problem is Luckin's prices, which are 20 percent lower. Starbucks continues its push for global growth. However, seri- Price-sensitive Chinese consumers may be drawn to that differ- ous challenges face the coffee giant. In the United States, market ence if the Chinese economy slows. saturation looms as Starbucks stores abound and may cannibal- China has several consumer market segments, each with its ize each other's sales. In addition, competitors attack, with many own buying preferences. In the east, regions including Hong players aiming to take shares from Starbucks. Mcdonald's McCafe Kong, Guangshou, Shanghai, and Beijing are home to highly glo- has proven popular among cost-conscious American consumers, balized consumers with shopping preferences similar to those while more upscale competitors like Blue Bottle Coffee are also in developed Western economies. On the other hand, in cen- gaining popularity. To maintain its competitive edge, Starbucks tral and western China, rural communities prefer local, Chinese plans for about 2,000 of its company-owned stores to partner with companies and products. Finally, a third segment is a hybrid, UberEats for coffee delivery service. Greater use of technology embracing both global and local buying habits, in large cities in the ordering process will free employees to spend more time like Fuzjou, Shantou, and Huizhou. So far, Starbucks has chosen with customers, enhancing the service aspect of the business. The the low-hanging fruit by opening in the east, where consumers company is also using big data to study consumer preferences have readily accepted its products. Moving into more rural or and create new products.' hybrid areas may pose more of a challenge, if Starbucks chooses With half of its shops in the United States, China is Starbucks' to pursue those markets at all. second biggest market, where over 150 cities are home to 1. Will Starbucks be able to successfully battle competition at more than 3,600 shops. CEO Kevin Johnson plans a new deliv home and abroad as it continues its march for global growth? ery program from 2,000 of those stores, as well as a new virtual store on the Alibaba e-commerce platform, potentially reaching 2. What are some key differences among the various countries 600 million Chinese consumers. In addition, Shanghai boasts one that Starbucks serves, and how can it capitalize on these for of Starbucks' four Roasteries that have been opened worldwide. future success? At 30,000 square feet, these premium coffeehouse showpieces 3. What advantages might Starbucks have over local coffee busi- allow customers to experience coffee roasting firsthand, sampling nesses in global markets? In what way is it at a disadvantage to specialty products in a high-end atmosphere.' A recent partner- existing coffee houses in other countries? ship with rival Nestle to sell packaged coffee products in grocery Based on: stores and restaurants around the world is yet another way Star- Andrew Cheng, "How Starbucks Plans to Roast Its Coffeehouse Competition." bucks is seeking to add to its bottom line and expand its reach.' January 25, 2019. https://www.forbes.com/sites/andriacheng/2019/01/25/ 384/929 Competitors aim for the lucrative market, as Chinese con- how-starbucks-plans-to-roast-its-coffeehouse-competition/#3cc9d4b 1247a sumers increasingly reach for coffee. Starbucks' new CEO, Kevin Lila Maclellan, "The Countries with the Most Starbucks Locations." Quartz, Johnson, calls the Chinese competition "highly promotional and January 30, 2019. https://qz.com/1536009/the-countries-with-the-most- disruptive."2 Luckin Coffee, which began in late 2017 in Beijing, starbucks-locations/ opened nearly 2,000 stores in just over a year, with plans to reach Panos Mourdoukoutas, "Starbucks' Worst Nightmare in China Is Coming 4,500 stores soon. Luckin's business model has special appeal True." January 21, 2019. https://www.forbes.com/sites/panosmourdoukoutas/ among younger Chinese consumers, featuring a smaller store 2019/01/21/starbucks-worst-nightmare-in-china-is-coming-true/# 1aca 18ad17ec