Kusmi tea case Essay

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1. Think about the comparison between Starbucks and Kusmi Tea The key difference between Starbucks and Kusmi Tea is the brand experience. Starbucks offer fresh-made coffee that is generally to be consumed in-store. Because of this Starbucks has to ensure a consistent experience in all their stores. Kusmi Tea’s key product is packaged tea, and tea consumption is more geared towards in home consumption where out of home tea consumption is driven by need for premium tea experience. These different expectations of their customers will lead to different retail strategies for the two brands (see question 3). Brand Awareness in France Awareness but no preference High awareness in premium tea segment Competitors Starbucks and…show more content…
5%  Normal time. 2. Conversion rate: Unlike Starbucks store, Kusmi store don’t provide ready-to-drink tea in the store; therefore different conversion rate represent different situation. 3. Items: Taken from current products offering in Kusmi France, customers usually place an order per visit. 4. Average Price: According to the case information, we don’t take extreme such as gift box of different size, the average price is between € 11.7~ € 14.5; therefore, we decide an average price on € 13. Economic Model Best, base and worst case Scenario calculations and annual net income figures are presented respectively: EUR -243,700/ EUR 872,130/ EUR 2,045,600. Worst Case Base Case Best Case Annual Sales 1,170,000 2,184,000 3,900,000 %Gross Margin 70% 70% 70% Net Margin 819,000 1,528,800 2,730,000 MARK DOWN Salaries 50,400 50,400 50,400 OPEX (20%) 234,000 436,800 780,000 Logistics (7%) 81,900 152,990 273,000 Rent 648,000 648,000 648,000 Key money 25,000 25,000 25,000 Other Costs (2%) 23,400 43,680 78,000 Total Operating Expense 1,062,700 1,356,870 1,854,400 Net Income (profit/loss) -243,700 827,130 2,045,600 1 Gross Margin%: the gross margin of Kusmi was 68.5% in 2011. With the increasing sales tendency, we assume the Gross Margin of 2013 could be 70% 2 Salaries: 2-4 staffs per store, depending
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