May 11 (NBD) -- Luckin Coffee, a new coffee-shop operator featuring new retail, announced Tuesday that it had opened 525 stores across China within 4 months of trial run.

Founded by Qian Zhiya, the former COO of the ride-sharing UCAR, the brand initiated trial operations in 13 Chinese cities including Beijing and Shanghai, starting from January 1, 2018.

Positioning itself as a new retail coffee-shop operator, Lukin Coffee provides mobile ordering and delivery services in addition to brick-and-mortar stores.

Lukin Coffee's CEO Qian Zhiya held that high prices and inconvenience to purchase a cup of coffee constitute the two major pain points existing in China's coffee market. The company's marketing activities were launched to address the pain points, making coffee affordable and convenient to purchase via large-scale sales promotion and intensive outlet network.

Qian gave her interpretation of new retail business model at a news briefing on Tuesday, saying that a new retail model is the best combination of "eat-in plus takeaway, online plus offline", and the core of new retail in the coffee domain is to optimally balance the product quality, price and convenience by leveraging massive data on the Internet.

Behind Lukin Coffee's ambition to shake up the landscape of coffee consumption with the ingredient of new retail lies the great potential hidden in China's coffee market.

It's reported that the global coffee market in 2017 grew at a rate of 2 percent, while China's coffee consumption increased with a speed of 15 percent. Coffee consumed in China was worth 70 billion yuan (11.0 billion U.S. dollars) in 2015 and China's coffee market was projected to hit a one-trillion-yuan level by 2025, according to the same report.

Qian was fully aware of the huge development opportunity. Qian introduced at the same event that coffee per capita consumption in mainland China stood at 4 cups, while the figure reached 750 in Europe, 400 in the U.S., and 200 in Japan and South Korea.

Qian said that her team had indeed set the goal of surpassing Starbucks. Chinese media outlet Beijing Business Today reported that Luckin Coffee has poached 1/7 Starbucks' staff in Beijing by offering salary three times that of the same position.

However, Starbucks has been dominating China's coffee market ever since it entered Chinese market in 1999 and is still expanding. In July last year, Starbucks acquired full ownership of 1,300 Starbucks stores in regional markets including Jiangsu, Zhejiang and Shanghai. Besides, the coffee chain has accelerated its extension in China. Belinda Wong, CEO of Starbucks China, once announced the plan to open 500 new Starbucks stores for fiscal year 2018. The number of Starbucks stores in China is expected to reach 5,000 by 2021.

A coffee industry insider told NBD that to challenge Starbucks in the traditional business arena where the old brand has established a dominant presence is highly difficult, but new products and services targeting young people can be a breakthrough point. The insider underlined the importance of differentiation.

The market circulated that facing the quick rise of Luckin Coffee, Starbucks tried to force suppliers to take sides and mulled to launch online delivery as well.

Email: gaohan@nbd.com.cn