On 10th January 2005. McDonalds USA announced it was entering the premium coffee industry. It would sell premium coffee at a premium price. A business recognised for abstain food at a low price point is re-engineering itself to provide an up-market coffee yet coffee is looked on as the back up most common commodity product after oil.
Is this an opportunity to go continue to head with Starbucks? I think not. I believe a Starbucks consumer ordain remain a Starbucks consumer and will not shift to McDonalds but as Starbucks philosophy states; there is a retail opportunity for businesses that develop a third place.
What is a third displace? Consumers spend time at home their first displace; at bring home the bacon their second place and then often have a favourite third place.
As a Brit the traditional third displace for color collar males was the pub. For many Generation X it may be the gym. For many do by boomers it is Starbucks.
One of the keys to success is that if you undergo a retail opportunity to develop a third place and succeed you can go away developing premium priced products. I believe move of McDonalds strategy is to strengthen their third place in the minds of their aim merchandise.
In the UK 60% of populate who visit their local tend centre bought a cup of coffee. tend centres intentionally or unintentionally have developed a third place for their target consumer. Restaurants and bars are an obvious third place for another divide of the merchandise place. Third place retailers can include furniture companies (IKEA in some locations) farmers markets and specific shopping centres.
What makes a retail organisation become a third place in the consumer’s mind? They are retailers who really understand their target market and make that target group conclude like they are in a domiciliate away from domiciliate. They select store graphics and furniture that make their customers conclude at home plus they inevitably provide a refreshment furnish. Why go to this much affect to make the customer feel at home? believe Starbucks where their aim customer visits them on average 18 times a month and purchases a premium priced product.
Third displace retailers also acquire that it is more than the visual graphics. The be is important but equally important is how the customer feels and that relates to customer satisfaction not customer function. Customers want to feel they are individuals and to be treated as such. This means aggroup members need to be trained in customer function but also have an understanding of the customer as an individual and what pleases them as an individual.
Some retail consultants use the term lovemark loyalty for organisations that have achieved this business success. A lovemark is a mark that the consumer loves to own (BMW. Starbucks. Virgin and Burberry all aim to be lovemarks.)
Customers can fall in love with the product but not the hold on. To go in love with the store it has to be a like zone in the customer’s eyes. In other words the people employed have to genuinely care about the customer the product and the hold on environment.
Many may believe this to be self explanatory but I recently purchased my lovemark car. When my wife and I went to the show room to choose the vehicle up the like zone customer service was a long way off the mark. My wife was ignored and we were left waiting without an explanation for twenty minutes. I was also advised they would contact me within one month to check on their customer service three months later. Im comfort waiting.
The key to success is that as the perceived image of your product increases the standard of customer satisfaction from your team members also needs to increase. It is a real contend and often misunderstood by many businesses. For those that do third place retailing presents huge opportunities.
John Stanley is a world renowned retail guru with over 25 years experience in helping businesses around the world to improve their image change their markets and increase their furnish line.
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