1. Think about the comparison between Starbucks and Kusmi Tea
The key difference between Starbucks and Kusmi Tea is the brand experience. Starbucks offer fresh-made coffee that is generally to be consumed in-store. Because of this Starbucks has to ensure a consistent experience in all their stores. Kusmi Tea’s key product is packaged tea, and tea consumption is more geared towards in home consumption where out of home tea consumption is driven by need for premium tea experience. These different expectations of their customers will lead to different retail strategies for the two brands (see question 3).
Brand Awareness in France Awareness but no preference High awareness in premium tea segment Competitors
Starbucks and Thus, their overall logistics expenses are higher to cover the international transport. 1. OPEX: Assume 20% OPEX comprising of colorful in-store decoration and marketing promotions, etc. 2. Rent: The calculation assumed information provided in the case; EUR1800/ month is an average between 1,550 euro and 2,000euro) 3. Key money: Based on the information given in case, we assume the leasehold acquisition fee for a corner store with 30 m² could be 250,000 euro. 4. Other Cost: Assume a constant 2% other costs. 5. The negative net income of the first column based on our worst scenario of the sales income, which is relatively low.
3. Identify the main issues / priorities & recommendations
Main Issues: Profitability of diverse retail outlet networks, which varies from 30-150m2 1. Inconsistency of retail (company-owned store) formats 2. International Expansion—structure and strategy No issues found in selective retail distribution (in Monoprix).
Recommendation Manage stores by geographic locations. We propose to maintain current distribution through selective retailer (Monoprix) and manage 3 store format types in France and International expansion plan: Flagship Kusmi Tea Salon; Kusmi Stand alone outlets (for packaged tea only); Kusmi corner in shopping mall
