I read an article last weekend in a UK newspaper, Daily Mail, about Starbucks and how it is performing in the UK coffee market. The crux of the issue for Starbucks in my view is how they have positioned themselves against competitors such a Costa Coffee and Caffe Nero. Starbucks don’t seem to have a story or essence behind them, but really just a cheap and artificial feeling.. plastic, therefore targeting the lower end of the market. Where as Caffe Nero or Costa Coffee are a more authentic, premium service orientated, and focused on delivering superior products at a premium price.
The challenge for Starbucks…
With the economic downturn in the UK it is seen that the more price conscious working class people are cutting back on their spending of “luxuries”, and coffee would be seen as one of these. Which chain suffers? Starbucks! Therefore Starbucks are losing customers and therefore market share as their target audience perhaps downgrade further to the likes of McDonalds for coffee, or simply abandon drinking coffee out at all and instead go for the instant offerings by the likes of Kenco or Nescafe! Starbucks’ own instant brand, Starbucks VIA, is too expensive.
For Caffe Nero and Costa Coffee…?
Starbucks’ downfall doesn’t really impact on Caffe Nero or Costa as they targeting the higher end and these people will continue to spend!