Business - Issue 7 - Magazine | Monocle

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Starbucks opened its first café in Russia in September, after a decade of trying. Last year, the company won a court case that finally gave it the right to use its trademark, which was bought up by a crafty Moscow lawyer five years ago.

“Starbucks is very positive about Russia,” says company spokesperson Kerry Irwin. However, she is coy about revealing the company’s plans beyond the first café, which will be located in Moscow’s Mega shopping mall.

Many are wondering if the world’s largest coffee-shop chain has left it too late to crack the Slavic market. At the start of the decade, coffee shops in Moscow were few and far between, but aggressively expanding Russian chains, such as Coffee House and Shokoladnitsa, have brought Muscovites round to the soothing delights of the brown bean. The former now has 90 cafés in Moscow alone which do a roaring trade, despite serving dubious-quality coffee and soggy, microwaved sandwiches.

What they do offer, is round-the-clock opening hours and – unlike Starbucks – smoking. But the Seattle-based chain is confident that its business plan will change the market and not vice versa. “Starbucks has a global expansion plan and it doesn’t differentiate by country,” says Irwin, confirming that the Russian cafés will be non-smoking.

“We know about Starbucks, and it’s a pretty major event,” says a Coffee House spokesperson. “But the pattern of coffee drinking here is different.” While Starbucks will lose market share by cutting out smokers, it might create a culture of coffee “to go” among Moscow’s expanding middle class, and the quality of its coffee should force other market players to raise their game. Getting staff to smile is another matter.

Chain gang


Imagine a union of Harvey Nichols and Selfridges or Barneys and Bloomingdale’s. Next year, two of Japan’s most prestigious department stores, Isetan and Mitsukoshi, will merge to create the country’s biggest department store chain. When the new financial year begins in April, Isetan will effectively take over Mitsukoshi and the two stores will operate under a single holding company called Isetan Mitsukoshi Holdings.

Mitsukoshi, the oldest department store in Japan, was founded as a kimono shop in 1673. It has a strong property base (estimated to be worth ¥100bn), including a vast main store in Tokyo’s Nihonbashi district. But, like almost every other department store in Japan, it has struggled in recent years with decreasing sales caused by a combination of factors: a shrinking market, a decreasing population, and intense competition from increasingly diverse retail rivals ranging from shopping malls to convenience stores. Earlier this year, two other major department store operators, Daimaru and Matsuzakaya, agreed on their own merger.

Isetan has managed to buck the decline by cultivating a younger clientele, revamping its main store and opening its highly successful men’s building. Its flagship store in Shinjuku has the largest single-store sales of high-end fashion in the world.

Mitsukoshi and Isetan toyed with various permutations of partnership before concluding that swift management integration was the best solution. Isetan estimates that between them the two stores have a customer base of 3.5 million. With a mixture of Mitsukoshi’s old money and Isetan’s younger shoppers, they believe that the combined strength of Isetan’s three Shinjuku stores and Mitsukoshi’s Nihonbashi and Ginza oulets will cement their position in Tokyo, Japan’s largest consumer market.

Dough lane


Steen Skallebæk’s bakery in Haderslev, Denmark, is a hit. At weekends, up to 2,500 customers head to the shop, close to the German border. It’s not just the attraction of freshly baked rye bread and cream cakes that pull in the hungry masses. The bakery’s unique lure is that it is a drive-in. “People are tired of buying bread in supermarkets. They prefer bakeries like mine where the bread is always fresh. Here, you can get what you want without getting out of your car,” says Skallebæk.

Now, he is hoping to take his concept nationwide, starting next year with a second shop in nearby Aabenraa. Turnover for the first drive-in was DKK39m (€5.2m) in 2006. Monocle likes the idea of scooping up a Danish pastry without even getting off our Cykelmageren bicycle.

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