Starbucks Corporation (NASDAQ:SBUX) Might Be Digging Its Own Grave In China


Starbucks Corporation (NASDAQ:SBUX) recently announced its intention to boost its presence in China by increasing the number of its coffee shops in the country from 1,900 to 4,400 in five years. This plan might not be the best the firm because it can make it less appealing than it already is.

The plan to expand the firm’s presence to more locations might be the company’s own undoing because they might end up becoming a regular coffee shops rather than the iconic and premium places they already are.

Starbucks first made its debut in China towards the turn of the century and quickly rose to fame as a posh place for the rich and classy in the society. According to Ye Qiu from Ordos Kangbashi, Western China, Starbucks got its success because of the quality of coffee it offered and also because it was more expensive than other prices. The fact that Starbucks coffee shops are expensive and luxurious is the very reason it attracts the wealthy in the society.

It has become the place where people go to show off their new gadgets and their expensive clothes. The coffee shops themselves are designed with large windows so that people from outside can see who is in their living the Starbucks life. Another aspect of the firm is that its locations are often located in prime areas.

Having more locations in the country might end up transforming Starbucks into a regular coffee shop, and this might take away the appeal that it has built up in all the years it has been in existence. Therefore, a deviation from the strategy that has made it so successful in the past might spell doom for the firm if the rich no longer find it appealing. The company has been compared with Apple Inc. (NASDAQ:AAPL) because iPhones were the gadget that people used to show off to their friends because they were expensive and beyond reach by the regular Joe. But nowadays, most people can afford them. Starbucks is headed in this direction. Hopefully, it will retain the appeal.