DAVIDsTEA Case Study: Retail Sales, Strategies & Opportunities

This case study provides an in-depth analysis of DAVIDsTEA, a Canadian specialty tea retailer. It covers the company's history, mission, vision, values, objectives, and positioning within the market. A SWOT analysis identifies strengths, weaknesses, opportunities, and threats. The study explores DAVIDsTEA's target customers, loyalty strategies, and methods for acquiring new customers. It also examines communication and customer relationship strategies, sales management, space management, and opportunities for growth within the tea industry, emphasizing the use of social media and the increasing demand for organic and specialty teas. The document is submitted by a student and is available on Desklib, a platform with study tools for students.

DAVIDsTEA
410-DD3-AS RETAIL SALES SECT. 08082
By Thi Thanh Thao Nguyen
Thi Mai Huong Vo
Sovoitey Sovann
Presented to Professor Amine Mohamed Chbani
APRIL 11, 2018
LASALLE COLLEGE
2000 Saint-Catherine St W, Montreal, QC H3H 2T3

Table of Contents
1 COMPANY DESCRIPTION......................................................................2
1.1 BRIEF HISTORY....................................................................................................................... 2
1.2 MISSION................................................................................................................................2
1.3 VISION.................................................................................................................................. 2
1.4 VALUES................................................................................................................................ 2
1.5 OBJECTIVES........................................................................................................................... 2
1.6 POSITIONING.......................................................................................................................... 3
1.7 SWOT ANALYSIS....................................................................................................................4
2 CUSTOMER ANALYSIS.........................................................................4
2.1 TARGET CUSTOMERS............................................................................................................... 4
2.2 LOYALTY STRATEGIES...............................................................................................................5
2.3 ACQUISITION OF NEW CUSTOMERS..............................................................................................6
3 COMMUNICATION AND CUSTOMER RELATIONSHIP STRATEGIES.......................6
3.1 COMMUNICATION.................................................................................................................... 6
3.2 CUSTOMER RELATIONSHIP STRATEGIES........................................................................................6
4 MANAGEMENT OF SALES AND SPACE MANAGEMENT....................................6
4.1 MANAGEMENT OF SALES.......................................................................................................... 6
4.2 SPACE MANAGEMENT.............................................................................................................. 6
5 OPPORTUNITIES FOR GROWTH...............................................................6
REFERENCES.........................................................................................9
APPENDIX...........................................................................................11
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1 Company Description
1.1 Brief history
DAVIsTEA is a Canadian specialty tea and tea accessory retailer based in Montreal, Quebec. It
is the largest Canadian-based specialty tea boutique in the country. In 2008, David Segal and his
cousin_ Herschel Segal launched their first store in Toronto and then a year later, first store in
Montreal was established. During four years from 2008 to 2011, they have opened 50 stores across
Canada and by the end of 2012; DAVIsTEA had more than 75 stores. However, there is a big change
in the company at the time. In March 2016, co-founder David Segal resigned from DaVIsTEA then on
December 8, 2016, Bullen was named Interim President and CEO, effective February 1, 2017.
1.2 Mission
“Great tea, friendly stores, and above-and-beyond customer service.”
To make tea fun and accessible to all. It is what makes us a fun place to visit, an easy place to
love… and a great place to work.
1.3 Vision
1.4 To share our passion for tea with the whole world. At DAVIDsTEA, we share more than just the
love of amazing tea or a great sense of humor. We share a culture_ a philosophy. It’s all about
how we treat our customers, our products and each other
1.5 Values
a) FUN: Creating customers smiles with our special and unique light, energetic and un-
academic tone of tea flavours.
b) FRIENDLY: Demystifying tea associate with above-and-beyond service will surprising
and delighting our customers.
c) INNOVATION: We keen on innovating our products to be unique, exclusive blends
and in-house designed accessories to adapt to our customers’ desires.
d) RESPONSIBLE: Organic, compostable, recyclable, reusable.
e) PASSION: Commitment, enthusiasm, and pride in the company. Love and excitement
for what we sell and what we stand for.
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1.6 Objectives
1. To have the largest share of the North America loose-leaf tea market by the end of 2013
2. To grow to 550 stores with 320 stores in America and 230 stores in Canada by 2017
3. To concentrate on re-energizing the existing U.S. store base, as new store growth is
projected to be five stores by 2018
4. To launch a new online shopping platform to handle online orders, easing shopping and
accelerating e-commerce by the beginning of 2018
5. To have DAVIsTEA in each of Canada’s 100 most affluent communities
1.7 Positioning
Starbucks
Second Cup
DAVIsTEA
Tim Hortons
Lipton
Great Value
Low
price
High
price
High
experience
Low
experience
Tazo
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1.8 SWOT Analysis
Location of Factor STRENGTHS WEAKNESSES
INTERNAL
 High experience
 Existing distribution and sales
network
 Direct online marketing
 Customization for customers
experience
 Friendly and outgoing staff
 Good environment
 Premium quality products
 Fresh products
 Online purchase possibility with
customization
 Competitive market
 No seating inside
physical stores
 High turnover of
employees
 Focus on Caffeine free
product
 More expensive
products
 No selling offer for
coffee or hot chocolate
OPPORTUNITIES THREATS
EXTERNAL
 Growing demand in Canada
 Expansion to US and Europe
 Healthier life style adoption in
Canada and U.S.
 Creating a seating station inside
the stores
 Developing cheaper products
 Developing products containing
caffeine
 Immigration policy by the
government will increase
consumers
 Substitute products
such as coffee and
juice
 Increase on prices
 Increase on labor costs
 Increase market share
by competitors
 Reduce product quality
2 Customer Analysis
2.1 Target customers
David’s Tea will help in providing the local upper and middle-class community an effective
place to socialize. The customers will be facilitated to indulge in different varieties of fine teas. The
people will also find varieties of loose teas to gift their friends and family. This would be unique
present as souvenirs of their holidays. For tourists, David’s Tea will prove to be a destination centre
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when in town. It would be a break from the shopping and be a warm-up visit. The potential customers
will be glad to pay the premium price for the product in exchange for great taste, high quality and
sense of prestige that they will receive.
The sale of tea will increase due to the high charge applied. This is because people believe that
quality products are sold expensively, and consumers only go for the best. The targeted group is
highly educated to know the subtle differences. In the recent times, the tea market is rapidly
increasing. The sales of tea have increased up to 165% since the year 1990. The number of shops
selling loose tea has also increased to about 200 shops.
The interest of people in the tea business is also largely depending on the increase in the
proliferation of coffee shops. The working segment of Canada and America has a common belief that
hot beverages are affordable luxuries. Moreover, fashion within countries is always on the move.
Fancy coffee drinks are so widely accepted worldwide that now people are looking for more unique
and new treat to enjoy. Hence, the target markets are those consumers, who have been turning
towards tea as the more affordable and natural or original luxury as compared to coffee.
Example: 2008 Beverage Consumption of Canadian Adults study
19-30 31-50 51-70 71+
% of
consumed
beverage
(%)
Men Women Men Women Men Women Men Women
Coffee 40 39 71 64 79 74 75 68
Tea 20 30 27 35 33 47 49 56
Figure 1. Beverage consumption between Coffee and Tea
2.2 Loyalty strategies
In the gourmet teahouse segment, competition mostly depends on the skilled tea tenders, education,
and cultivation of loyal consumer base. Previously the consumer used to have tea bags and various
other low quality and tea dust offerings from the grocery stores. The range of textures, tastes, and
fragrance from the high and real quality tea amazes the target customers.
TEA DRINKERS: committed tea drinkers always choose quality over convenience and price. The
customers seek out completely fresh leaf as well as tippy varietals in the area. The customers also
drive largely to buy quality loose teas so that they bring home with them.
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COMESTIBLE GIFT BUYERS: in the recent times, the people want something different to gift their
friends and family. In earlier times, peoples used to gift local cheeses and organic meats to their
families and friends. Couples and teenagers look for unique and different items from standard
boutiques. Instead of some cheap box of chocolates, they want something more indulgent.
TOURISTS: the tourist has a variety of reasons for visiting any particular place. The tourist often
seeks high-quality foods, gifts, beverages, and service. The consumer prefers small-scale, local
businesses to larger chains. In addition to this, the consumers also want to be highly assured about
the quality. Once such tourist or visitors try the tea from David’s tea would does not want to return.
2.3 Acquisition of new customers
New tea drinkers who never had nice flavored tea are the other potential customers of David’s
Tea. Moreover, people pursuing healthy lifestyle are also the other potential customers that are to be
acquired by the Company.
3 Communication and Customer Relationship Strategies
3.1 Communication
3.2 Customer relationship strategies
4 Management of Sales and Space Management
4.1 Management of Sales
4.2 Space Management
5 Opportunities for growth
The tea industry in Canada and America is lucky to have huge domestic markets that annually
consumes around 20% of the tea produced in the countries. Tea is one of the cheapest beverages all
over the world besides water. There is many opportunities to increase the tea consumption in these
domestic markets. Tea is both a healthy and lifestyle drink that is served with variety. Tea especially
green tea is becoming popular among all the age group, and youngsters of all the age groups prefer
to take iced tea. Different flavours such as pepper, cinnamon, and mixed fruits should be promoted to
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the cola addicted young generation. Since the customers can mix several flavours, sometimes those
mixes might taste funny and different. In those cases, DAVIsTEA enforces that there are no problems
with the mixture; it is because not all possibilities are used. This approach almost forces the
customers to keep shopping and trying the products, which will increase the company’s revenue.
Figure 2. Tea mixture
Another unique attribute for DAVIsTEA is its use of social media. Usually, companies make use
of social media to promote their brands and business, but DAVIsTEA has a different approach to it.
Twitter is used as a tool whereas the customer can have their doubts and questions answered by the
company. A specific department inside the company makes sure that all questions made through
Twitter are properly answered. In addition, the customers can have orders placed by Twitter and
schedule its pick up in the physical stores that is the best for their convenience. DAVIsTEA has the
preference to use Twitter because they understand more efficient than Facebook. The customers
simply have to open the software and leave a quick message, while on Facebook the customer would
have to write a status, which makes it longer and more difficult, especially if using a mobile phone.
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Figure 3. DAVIsTEA’s Twitter page
The future is also great for all such tea company that deals with the organic certified handmade tea,
green tea, purple tea, white tea and other specialty teas. In the recent times, small tea growers have
started establishing their gardens and processing units to generate green teas. In addition to this, the
demand for a variety of teas has also lead to opening up job opportunities for various people. Small
cold storage also would prevent the tea from quality degradation. Other areas of opportunities for
DAVIsTEA includes value addition. Such as packaging of the tea with indigenous products like the
cane, jute, and bamboo highly appeal the target customers.
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References
Hollie Shaw. DavidsTea co-founder, namesake, David Segal resigns as chain’s brand ambassador.
Financial Post. (March 21, 2016). Retrieved from http://business.financialpost.com/news/retail-
marketing/davidstea-co-founder-namesake-david-segal-resigns-as-chains-brand-ambassador
Karl Moore. CEO Conversations: David Segal on David's Tea. Montreal Gazette. (October 29, 2014).
Retrieved from http://montrealgazette.com/business/local-business/ceo-conversations-david-segal-on-
davids-tea
Jasmine Budak. Steeped in success. Canadian Business. (June 8, 2011). Retrieved from
http://www.canadianbusiness.com/business-strategy/steeped-in-success/
DavidsTea. Wikipedia. (March 20, 2018). Retrieved from https://en.wikipedia.org/wiki/DavidsTea
DAVIsTEA. Our story. Retrieved from https://www.davidstea.com
Kim Vallee. Retail case study #1: How DAVIsTEA uses Twitter to generate more sales. (November
25, 2013. Retrieved from http://kimvallee.com/how-retailer-can-use-twitter-generate-sales/
Jeanie Hendrie. Brands We Love – David’s Tea. Sklar Wilton & Associates. (December 12, 2012).
Retrieved from http://www.sklarwilton.com/growing-your-brand/brands-we-love-davids-tea
Kyle Buyers. David’s Tea – Marketing Plan. Slideshare. (Fall 2012). Retrieved from
https://www.slideshare.net/KyleBuyers/davids-tea-marketing-plan
Emily Han. Caffeine-Free Hot Drinks: 5 Alternatives to Coffee and Tea. Kitchn. (January 8, 2013).
Retrieved from http://www.thekitchn.com/caffeine-free-hot-drinks-182397
Valerie Ward. A quality cuppa. Food in Canada. (September 2014). Retrieved from
http://www.foodincanada.com/features/quality-cuppa/
Ross Marowits. DavidsTea CEO calls Teavana store closures 'a definite positive'. CP 24. (September
7, 2017). Retrieved from https://www.cp24.com/lifestyle/davidstea-ceo-calls-teavana-store-closures-a-
definite-positive-1.3580296
DAVIsTEA Inc. Release. Globe Newswire. (June 7, 2017). Retrieved from
http://ir.davidstea.com/phoenix.zhtml?c=253953&p=irol-newsArticle&ID=2279622
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DAVIsTEA Inc. dtea at 2016 icr conference. (January 2012, 2016). Retrieved from
http://ir.davidstea.com/phoenix.zhtml?c=253953&p=irol-EventDetails&EventId=5214007
Didier Garriguet. Beverage consumption of Canadian adults. Statistics Canada. (November 2008).
Retrieved from http://www.statcan.gc.ca/pub/82-003-x/2008004/article/6500821-eng.pdf
Guèvremont, Amélie, and Bianca Grohmann. "Can good news be bad? The role of brand
communication strategy and brand commitment in the announcement of product
improvements." Journal of Marketing Communications 20.5 (2014): 352-365.
Gummesson, Evert, Hannu Kuusela, and Elina Närvänen. "Reinventing marketing strategy by
recasting supplier/customer roles." Journal of Service Management 25.2 (2014): 228-240.
Jaworski, Bernard J. "Commentary: advancing marketing strategy in the marketing discipline and
beyond." Journal of Marketing Management (2017): 1-8.
Kumar, V. "Evolution of marketing as a discipline: What has happened and what to look out
for." Journal of Marketing 79.1 (2015): 1-9.
Nobre, Helena, and Daniela Silva. "Social network marketing strategy and SME strategy
benefits." Journal of Transnational Management 19.2 (2014): 138-151.
Ruiz, Carlos A. Diaz, and Christian Kowalkowski. "Market representations in industrial marketing:
Could representations influence strategy?". Industrial Marketing Management 43.6 (2014): 1026-
1034.
Srivastava, Rajesh. "Measuring the effectiveness of the communication strategy by using the brand
score technique–a conceptual study." Journal of Asia Business Studies 9.2 (2015): 133-146.
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Appendix
Figure 1. Versatile store model with broad geography reach. Adapted from “dtea at 2016 icr
conference” by DAVIsTEA Inc., issued on January 12, 2016, page 19.
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Figure 2. Positioned in an attractive industry. Adapted from “dtea at 2016 icr conference” by
DAVIsTEA Inc., issued on January 12, 2016, page 14.
Figure 3. Breadth of unique tea products. Adapted from “dtea at 2016 icr conference” by
DAVIsTEA Inc., issued on January 12, 2016, page 10.
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