Retailer or Tech Company? For Starbucks, the answer is “both.”
With a loyal following and massive store presence, Starbucks has established itself as one of the most prominent brick and mortar retailers in the world. What might be less obvious is that Starbucks also leads the way when it comes to applying technology to enhance the consumer experience.
Virtually every brick and mortar retailer knows that technology will play a vital role in their future success. Industry leaders such as Starbucks have done much more than just see this opportunity—they are actively embracing it.
Last year, the leading coffee company announced their “digital flywheel” strategy, which includes four key capabilities enabled by the Starbucks mobile app: Rewards, Personalization, Payment & Ordering. The company’s efforts are already making an impact, as 36% of Starbucks revenue now comes from their rewards program, and 9% of transactions take place using their mobile order-ahead service.
Starbucks execs say that they are now heavily focused on broadening the company’s personalization efforts. The retailer will soon allow non-Rewards members to order-ahead via mobile. This effort is an attempt to grow the total number of customers engaging with them digitally beyond their core rewards members— allowing them to reach a much larger audience with their AI-fueled personalization engine.
Starbucks’ personalization activities include everything from from letting a barista know that it is the customer’s birthday, to suggesting food or beverage recommendations based on a customer’s past behavior or even based on the weather.
For Starbucks, and every other brick and mortar retailer, technology is critical to their future. In the short term, digital upgrades are enabling Starbucks to enhance the experience for their customers and drive continued revenue growth for the company. In the long term, technology investments are enabling brick and mortar retailers to compete with their online counterparts. Instead of playing catch-up, Starbucks is at the forefront when it comes to retail tech innovation. That’s because the company knows that technology-enabled storefronts are an incredibly valuable and powerful source of competitive advantage.