Starting with Starbucks’ first store in 1999, Starbucks has changed the entire Korean coffee market.When Starbucks first landed in Korea, there was no culture of drinking luxury coffee in Korea, and Starbucks felt very strange to Koreans at that time. The coffee price of 3000 won was similar to the price of a meal. Therefore, Korea had a negative view of Starbucks coffee in the early days to the extent that broadcasts criticizing Starbucks were aired. It even became a symbol of overspending. However, Starbucks has changed people’s coffee culture as a pioneer in the Korean coffee market, and the success of Starbucks has led to the creation of many coffee franchise companies. Currently, Starbucks accounts for more than 30 percent of the Korean coffee shop market and is recognized as a company that leads the trend by hiring talent without discrimination, actively utilizing it technology, and actively participating in eco-friendly policies.
Through this story, we will learn about Starbucks’ position in the Korean market and how it became a leader in the Korean coffee industry.
The profit from Korea
The number of Korean Starbucks stores
Starbucks presented the concept of a ‘third space’ in the Korean coffee market. The third space refers to a comfortable place like a house where you can rest and recharge. It’s simply a space between home and work. Before Starbucks appeared, coffee shops were simply places to sell coffee in Korea. However, Starbucks communicated the value of connecting with people while drinking coffee, spending time comfortably in space, and became a decisive factor for many consumers to come.
Ordering drinks with a smartphone is now a familiar look, but it was a concept that didn’t exist until a few years ago. In 2014, Siren Order, which orders in advance without waiting in line at stores with smartphones, was first developed in Korea. Currently, siren orders account for 30 percent of all orders. It is a method of ordering by designating a store in the Starbucks app. Consumers can easily pay for drinks with their smartphones, and orders are received when paying, and they can check the progress of orders such as how many drinks are being prepared on the app. When the drink comes out, a notification appears on the app and an electronic receipt is automatically issued. This method has spread to other countries since it was first introduced in Korea.
The popularity of the frequency event is so high that there are only Starbucks design teams in Korea except for the United States. If you collect a certain number of stickers, you can get a free gift such as a diary provided by Starbucks. Starbucks frequency events are so popular in Korea that free gifts are sold out early.
Preference of building owners
Korean building owners prefer Starbucks to enter their buildings. The reason is that Starbucks’ rent policy and the floating population increase due to Starbucks. Starbucks has a unique way of paying 23 percent of its monthly sales as rent. If Starbucks does not do well, it is a loss for building owners, but because Starbucks’ popularity and sales continue to increase and the number of people using the building increases, building owners hope Starbucks will enter. The building where Starbucks is located is a factor that increases the value of the building to a higher level than other buildings under the same conditions. Thanks to this preference for building owners, Starbucks has been able to keep stores in good commercial districts.