۱- Opportunities brewing in emerging markets

۲- Emerging markets opportunities: The transformation of retail and consumption in China

۳- A growing coffee culture

۴- Coffee shops in China

۵- Opportunities and challenges for coffee shops in China

۶- Strategies for future growth and a future research agenda

References

Abstract

Economic growth and a rising middle class consumer base make emerging markets an attractive prospect for many international businesses. Changing patterns of retail in these countries present opportunities for business expansion that many are keen to capitalize on, but also present challenges for reaching their ambitions. This article examines the growth of the coffee shop industry in China—considering its key dynamics and drivers—in order to address questions about successful retail expansion in emerging markets. We aim to explore how changing consumer cultures have contributed to a rapidly growing industry and what strategies businesses have used to enter the market and maintain growth, as well as considerations for potential retail success in the future.

Opportunities brewing in emerging markets

Due to market saturation for some areas of retail in mature markets, combined with economic growth and rising middle classes in emerging markets, many international businesses are turning their attention to emerging markets for future growth plans in order to exploit the potential of these rapidly transforming markets (Kardes, 2016). Expansion into these markets requires careful consideration. As multiple cases have shown, there are many challenges surrounding different national cultures as well as institutional arrangements and existing domestic competition (Miotto & Parente, 2015). The coffee shop industry in China represents a fast emerging area of retail, reaching $3 billion in revenue in 2016; forecasts predict continued positive growth for many years (Euromonitor, 2017). Largely situated in cities, coffee shops in China are becoming an ever-present feature of the urban landscape. In 2017, Starbucks opened its first international reserve roastery in China, a 30,000 square foot roastery and coffee shop described in the media as a “coffee wonderland” (Dwyer, 2017). The roastery is located in Shanghai, a city with 600 existing Starbucks stores; by opening this style and size of store, Starbucks demonstrated the importance of the Chinese market in its operations. However, the factors behind the growth of coffee shops are multifaceted, driven by the ambitions of coffee shop chains to expand into new markets as well as changing consumer cultures. This article explores the growth of the coffee shop industry in China and considers both the opportunities and challenges experienced in an emerging market. We utilize the example of China in an effort to demonstrate how some businesses are navigating the new retail landscapes and highlight potential strategies for operating in these regions. We conclude by outlining a series of recommendations for developing a business in the coffee shop industry in an emerging market–—and retail more broadly.