Why don’t we see Starbucks at every busy corner in Paris? This was one of the things that struck me when I visited the city three years ago. It was not rare to see people walking on the streets and holding typical paper coffee cups, but it is much more common to see them sitting around small round tables in front of local cafés. This was an interesting example demonstrating the importance of sociocultural factors in market entry strategies.
French people are avid coffee drinkers. Per capita consumption of coffee in France is 25 percent higher than in the US, according to the International Coffee Organization (ICO) research. However, there are significant differences in how people in these two countries actually go about drinking coffee.
As the ICO states, out-of-home consumption takes up a similar share of total consumption in both countries, but specific locations for consumption differ in popularity. Coffee chains represent less than one percent of outside consumption in France, and almost four percent in the US. Sociocultural factors are one of the reasons why France was not a successful market entry for Starbucks, despite the company’s attempts to adjust its offerings.
Here is a picture of a Starbucks coffee shop on Boulevard de Capucines – large velvet armchairs grouped around tiny tables under shining chandeliers. The menu features little sandwiches, cheesecakes and tarte aux pommes (Starbucks, 2013). Starbucks coffee shops are filled with young crowd, but there is not much to earn off them. Slowly growing sales and high labour costs have resulted in a slim margin. Apparently, adult coffee drinkers did not find the Starbucks’ way of drinking coffee very appealing.
http://www.annabellebreakey.com/blog/wp-content/gallery/starbucks-paris/starbucks3.jpg
Did marketers at Starbucks expect the expansion to be challenging?
It’s chief operating officer for Europe, Asia and Middle East toured the region to learn about the local variations in tastes and preferences. The management is aware of the difficulties, and they are determined to expand beyond the North American market, which may be close to saturation (Alderman, 2012). It is important for Starbucks to keep its distinct brand and image. I think the brand’s close association with American style should help its expansion.
Alderman, L. (2012 March 30). Starbucks Tailors its Experience to Fit to European Tastes. The New York Times. Retrieved from http://www.nytimes.com/2012/03/31/business/starbucks-tailors-its-experience-to-fit-to-european-tastes.html?pagewanted=all&_r=0
International Coffee Organization (2011). Trends in Consumption. Retrieved from http://dev.ico.org/documents/icc-109-8e-trends-consumption.pdf
Starbucks (2013). Menu. Retrieved fromhttp://www.starbucks.fr/liste-de-menu
They are an interesting case when it comes to market entry in Europe