Business

The ‘value added’ factor for sustainable businesses

Starbucks opened it’s first Belfast city centre branch in 2004
Starbucks opened it’s first Belfast city centre branch in 2004 Starbucks opened it’s first Belfast city centre branch in 2004

STARBUCKS first appeared in the UK in 1998. On August 12 in 2004, it opened it’s first Belfast city centre branch (Castle Lane), which was the second store to open in the region. The Junction One Starbucks café in Antrim was the first.

Selling a strawberry and cream frappuccino and skinny blueberry muffin, it would have seemed exotic at that time. Of course, it would have cost more than the regular café but it oozed novelty. Whether customers realised it or not, the experience was the driver of sales and ultimately profit, not the coffee.

Back in 2004 Starbucks was offering an experience in Northern Ireland because the coffee landscape and the coffee culture barely existed. At this time, if it existed at all, it did so because one independent coffee chain had been promoting the coffee culture since 1999. At the turn of the noughties coffee was still a commodity, a case of supply and demand.

That was, until it became an experience. Today most cafés in the city strive to offer an experience (at least in terms of decor) but the trouble is that over time the experience itself has become commoditised. It has become so plentiful that it is no longer perceived as special, but reverts to being a commodity and merely a service.

The Australian Starbucks story is one that illustrates a lot of what we need to take account of today in Belfast. Less so, the things that are purported to have gone well for Starbucks, but rather the lessons learned. Going right back, Starbucks opened their very first store in Seattle’s historic Pike Place market in 1971.

In July 2000 Starbucks had opened its first store in Australia in Sydney, but unlike the states, it would prove to be their toughest market. This was because Starbucks had opened stores across the Australian continent without considering the huge café culture that existed there at that time, or what value they could add to an already existing market. Starbucks wasn’t adding something new, but more of the same to an already saturated market. They hadn’t paid attention to the context. They hadn’t aligned the business offer to the culture or factored in the needs of the people who lived their, or adapted as difficulties arose.

Like any other city Belfast citizens appreciate novelty, as keenly demonstrated by the numbers in the door when a new café or restaurant opens. If the market, however, is already saturated or the culture doesn’t exist, the business will struggle. For a business to be sustainable they need to add value to the customers they serve. This could be saving time, or accessing a plug-point that allows them to take a breather from the office or home. It could be a layout that allows space to park a buggy, or WIFI access or a WIFI freezone.

Ziferblat is a café in London that charges for time, £4.20 for the first hour, and £2.40 for the second, third and fourth hours. Once in, you can grab a book and read from their book selection, hold a meeting, tinkle about on the piano. You can make new friends over a cup of coffee, play a board game, attend a performance event, or learn a new skill at a workshop. The value added is community, a space to met others and connect.

Understanding what the value added changes everything that happens next, from layout to staff-customer interactions to the business model itself. Businesses that build their offer with the customer at the heart of their concept understand what value they are adding and can adapt as the context and environment changes, as customer tastes change. The question of added value needs to be the forefront of business discussions at the concept development and right throughout the business lifecycle. One great way of starting to do this is when a customer gives feedback, instead of explaining that it’s not the way we do that here, ask more to understand how that helps, and think about the value added. If one customer has felt this way, the probability that others have is significant.

:: Elizabeth Meehan (info@coffeenosugar.co.uk) trained as a service designer in Milan and has a PhD in Sociology from Queen's University. She strives to educate businesses about the changing economy and the challenges this brings.