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Business Consulting Analysis Report
Introduction
This report examines Starbucks UK as the client organisation and explores the major challenges it faces within the British coffeehouse market. Starbucks operates in a highly competitive environment dominated by strong rivals like Costa Coffee and Caffè Nero. The company’s key concern is maintaining market share and profitability while responding to changing consumer behaviours, sustainability pressures, and economic instability. Using secondary research, this report critically analyses Starbucks’ market environment, competitors, and customers, identifies its top three business issues, and evaluates relevant secondary research sources.
Client Overview and Problem Summary
Starbucks Corporation is one of the world’s leading coffeehouse chains, with over 1,000 stores across the United Kingdom (Statista, 2024). Its business model combines high-quality coffee, an ethical supply chain, and a premium in-store experience. However, the UK market has become saturated, with customers increasingly seeking lower-cost or more sustainable alternatives (Mintel, 2023).
The client’s main problem can be defined as declining growth in a mature and highly competitive market, intensified by inflationary pressures and changing consumer expectations. Starbucks must therefore understand the evolving dynamics of competition, customer preferences, and external market factors to strengthen its positioning in the UK.
Competitor Analysis
The UK coffee market is dominated by three major players: Costa Coffee, Starbucks, and Caffè Nero. Costa currently leads with over 2,700 outlets, while Starbucks and Nero compete for second place (IBISWorld, 2024). Costa’s strength lies in its extensive footprint and integration with convenience locations such as petrol stations and supermarkets. Meanwhile, smaller independent cafes and artisan brands like Pret A Manger and Grind are growing rapidly by appealing to younger consumers seeking sustainability and local identity.
Starbucks differentiates itself through its global brand reputation and digital loyalty programmes. The company’s “Starbucks Rewards” app has over 1.6 million active users in the UK, providing a key advantage in customer retention (Starbucks, 2023). However, its premium pricing model limits its competitiveness during a cost-of-living crisis. According to Euromonitor (2024), price sensitivity has increased among UK consumers, pushing many towards cheaper alternatives such as Greggs or McDonald’s McCafé.
In short, Starbucks’ competitive challenge is balancing its premium image with the need to stay affordable and relevant in a price-conscious market.
Target Customers
Starbucks’ target customers are typically urban professionals, students, and millennials who value convenience, digital integration, and ethical sourcing. Research by YouGov (2024) shows that Starbucks customers tend to be between 18 and 35, digitally active, and socially aware. However, this demographic has also become more environmentally conscious and less brand-loyal.
Sustainability now plays a major role in purchasing behaviour. Deloitte’s (2023) survey revealed that over 60% of UK consumers prefer brands with transparent sustainability initiatives. Starbucks has responded by committing to carbon neutrality by 2050 and introducing reusable cup incentives. Despite these efforts, the brand has faced criticism for inconsistent recycling policies and continued use of disposable packaging.
Understanding and re-engaging this target group through authenticity, affordability, and sustainability remains crucial for Starbucks’ future strategy.
