Starbucks Links Store Experience with Mobile App

by Raymond Pucci 0

In-store customer experience falls flat without mobile innovation. At least that’s how Starbucks approaches their customer engagement strategy as the following article explains.

Over the past decade, traditional brick-and-mortar retailers have gone through a massive disruption as digital tools and the internet change the way people shop. Many have seen in-store sales drop substantially, forcing closures and even company shutdowns.

But Starbucks is an exception. The Seattle-based coffee giant is building 2,000 new physical stores around the globe per year and is seeing some of its highest in-store revenues ever.

So what’s the secret sauce? Speaking on stage at the GeekWire Summit in Seattle on Tuesday, Starbucks CEO Kevin Johnson revealed some of the company’s philosophy related to tying together a physical store experience with digital innovation.

Johnson, a respected veteran tech executive who replaced Howard Schultz as CEO last year, said that there are now more brick-and-mortar retail stores in the U.S. that can be supported. He said this disruption highlights two things for retailers to consider.

“One, you must be focused on experiential retail that creates an experience in your store that becomes a destination for the customer,” Johnson explained. “And number two, you have to extend that experience from brick-and-mortar to a digital-mobile relationship. So our approach to this is investing in elevating the experience we create in our stores, and investing in the digital-mobile connection we have with our customers.”

The company has long touted its “digital flywheel,” which includes everything from its rewards program, which grew by 8 percent over the past year, to its mobile order-ahead feature, which now represents 9 percent of transactions in U.S. stores. The CEO noted that while more and more people are using their smartphone to purchase Starbucks items, the company still needs to pay attention to the traditional in-store Starbucks experience.

Starbucks’ mobile app has delivered a double-shot, espresso-like jolt to its retail store traffic. The app provides exactly what consumers are looking for: a seamless payment, convenience, and immediacy. The integration of features such as mobile order and pay, loyalty, and targeted marketing offers, make the mobile platform a popular channel of choice at Starbucks cafes. Other retailers need take note: engaging, merchant mobile apps drive higher average ticket, frequent visits, and increased store capacity utilization. And that’s no small cup of coffee.

Overview by Raymond Pucci, Associate Director, Research Services at Mercator Advisory Group

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