Starbucks (SB) is finally going to enter India, after years of speculation. The partnership with RPG has been finalized, with SB being the majority stakeholder with 51% share, thus ending the years of partner hunting. RPG is a diversified group, with quite a bit of prime real estate in major cities. This would go hand in hand with the SB policy having company owned stores rather than franchises. There are already many coffee chain players in India, such as Barista Coffee (a TATA company), Costa Coffee, Cafe Coffee Day etc. and all of them are expanding quite rapidly. SB has plans to expand at a rate of 100 stores for the next five years, aggressively trying to catch up. Since, it has lost the first player advantage, many see perils for SB in India, as it has faced problems in China and Japan. However, in common sense dictates, coming in now, gives a much better chance to SB as the coffee shop culture has already been established in Indian cities and towns.
SB, i think, likes to be underestimated, letting its competition get the wrong ideas. It has never changed the format of its drinks and stores anywhere in the world, the only difference is the food. As far as getting customers is concerned, it shouldn't be a problem, many middle class Indians already spend $2-3 on a cup of coffee and the buzz created around the brand will draw in many people. SB stores are impeccably run, even though the other local chains have quite a good variety of drinks, no one will ever match up to the atmosphere in a SB store. The reason being, in my opinion, the different franchises of Barista and Cafe Coffee Day vary quite a bit, even though the stores might look alike, you don't get the same atmosphere at each location. Certain locations are cleaner, better run as compared to others. They seem to be very inconsistent, in my opinion. SB, on the other hand, is same everywhere, you cannot tell one store from the other, they are all consistent in their feel and service.
However, this could also prove to be a problem for SB, as most of the customers at the local chains are college kids and people that have nothing better to do in the heat. That segment might not warm to the atmosphere at SB stores, but again, the chain has been known to shaping the market to its needs, so who knows. It'll still surely be an experience drinking a Pumpkin Spice Latte in Delhi next year. I hope i am there next year for Diwali.
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