Starbucks boosts its focus on digital

05 November 2012

NEW YORK: Starbucks, the coffee house giant, is to make greater use of mobile, online loyalty schemes, digital publishing and other such tools in a bid to reflect a "seismic change" in shopper habits.

"I do think the burden of proof is on companies and consumer brands to recognise there is a seismic change in consumer behavior ... as a result of social and digital media and the emergence of mobile commerce and mobile payments,"  Howard Schultz, Starbuck's CEO, said on a conference call.

Over 2m transactions are now completed through the firm's mobile payment platform each week, and 100m purchases have been made via its smartphone app since this offering went live in January 2011.

"Our mobile payment platform has become the leading number one program for any consumer brand or retailer in North America," said Schultz.

As part of these efforts, Starbucks recently formed a tie-up with Square, the mobile wallet app developed by Jack Dorsey, a co-founder of Twitter, which will be usable in Starbucks in North America this month.

Looking forward, the company intends to add mobile tools like ordering, product personalisation and tipping features as it seeks to "push the envelope".

"We have the unprecedented ability to reach new customers, create awareness of new products, drive incremental transactions and explore new revenue streams in music and digital publishing," Schultz said.

Starbucks has long been seen as a bellwether in the area of social media, and today boasts over 32.5m fans on Facebook and 3m followers on Twitter, a figure standing at more than 880k on Instagram.

"The depth and breadth of our digital assets continues to grow with leadership positions and engagement across Twitter, Facebook, Instagram, Pinterest and many other relevant mediums," said Schultz.

Elsewhere, the My Starbucks loyalty scheme – now fully digital in the US and Canada – has over 10m members, half of which are active participants and have opted-in to receive communications from the firm.

However, while an offer on LivingSocial, the daily deals site, promising a $10 gift card for $5 attracted 1.5m consumers in less than 24 hours, a record uptake, such a strategy will not become common.

"I don't think that you are going to see Starbucks going to sale or anything like that," said Schultz. "I think all of us at Starbucks are deeply committed to preserving and enhancing the equity of the Starbucks' brand."

Data sourced from Morningstar; additional content by Warc staff