Organization Espresso

The café market in India has grown leaps and bounds in past 5 years. There has been a surge in the local as well as global players. The new outlets have been opening up across the country like mushrooms. The café revolution has now ensured there is a huge competition in the space with big players like Café Coffee Day, Barista, Costa Cofee, The Cuppa, Qwikys along with niche players like Java city, Mocha, Matteo, Boca etc competing with obviously the local players too.

However, the focus of the coffee chains has been to extend reach and presence by opening the new stores at very fast pace, especially by Café Coffee Day & Barista primarily grew in this fashion. This has been a replica of what exactly was the growth mode by Starbucks in North America, with more than 30,000 stores opened in the growth frenzy the market didn’t seem to flourish as much as per expectations. We all the know the woes of Starbucks from then and it’s decision to close the non profitable stores.

I don’t deny that Indian markets appetite for the coffee stores, is huge and the market still has a lot of untapped potential in the tier 2 cities and also the metros. However, there is one aspect of the business that has been neglected by almost all the coffee chains, that is customer retention, brand loyalty and customer association.

Almost none of the coffee chains have a proper India website (except for Café Coffee Day and Barista (which recently created the site)) and loyalty programs in place. I remember the old tagline which was used to marked on the interiors of the Barista I used to frequent “It’s easier to change one’s religion than changing one’s café.” And I quite agree to this part that changing your coffee and acquiring the taste for a new coffee is not very easy. But in the end coffee is a commodity item and most of the café customers are not brew sensitive in India might make it redundant in the loyalty context.

The fact that the café chains acting in middle income group segments and above and it also entertains a huge amount of customers which are mobile, travelers and the so called young urban professionals. It produces all the more case for them to strengthen your ties with a customer, go a step and reward him for his loyalty with your brand. With technology moving towards mobile applications and GPS based applications it’s a strong case for them to put use to it and develop sites and application which would ensure the customers would know where is their nearest favorite café where they can spend some time and have coffee.

With the pace the new entrants are coming into this market and increasing competition, that one cup of coffee that your loyal customer had at your competitors’ might cost you the customer in longer term. All this just because he didn’t knew that you had a store operating right there in the next lane.

by Prats | on Friday, May 7th, 2010 at 6:58 am | Current Affairs and Issues, General Management . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.